Water Water Water
The #1 thing buyers need to know about Cape Cod real estate.
This video report breaks down the Cape Cod real estate market into 7 Property Types – based on proximity to water and the location of the water.
These property types are the key drivers of Cape Cod home prices. This report introduces you to these property types and their median prices from 1999 – 2014. It also ranks the property types by: Price, Size, and ROI.
To learn which property types are the best investments – watch this Video Report. Just Click anywhere on the image below:
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Text for this report:
You have all heard the old saying about the three most important things in real estate: Location – Location – Location
Well, on Cape Cod we need to translate that into: Water – Water – Water
Understanding the effect of water is the # 1 thing buyers need to know about Cape Cod Real Estate because, Proximity to Water and the Location of the Water are the key drivers of Cape Cod home prices.
Typically, my market reports include ALL single family homes in Barnstable County. But, this report is different. It breaks down the Cape Cod real estate market into 7 property types based on Proximity to Water and the Location of the Water.
Proximity is all about how far you are from the water.
WaterFront – properties are immediately adjacent to the water.
Water View – properties are not WaterFront , but do have clear views of the water.
Water Near – properties are not WaterFront nor Water View, but are within ½ mile of the water.
Water Less – properties are not within ½ mile of the nearest water.
Not all bodies of water are the same. They may differ in physical characteristic – or real estate value. A waterfront property on Nantucket Sound and a waterfront property on Bucks Pond both have the same proximity to their water. But, one is near the OCEAN while the other is INLAND.
Factoring in the Location of the Water increases the number of property types to 7.
WaterFront Ocean – WaterFront Inland
Water View Ocean – Water View Inland
Water Near Ocean – Water Near Inland
Median Sold Prices:
Now we’ll look at median prices over the last 16 years for each of the 7 property types. Let’s start with: WaterFront Ocean.
We’re going to look at the change in median sold price – during three specific time frames. They are defined the same way for each property type – but the results are different for each property type.
The first time frame is what I call The BUBBLE. It starts in 1999 – and goes through the year with the highest median price for that property type. Starting in 1999, WaterFront Ocean prices went UP in 7 of 8 years – and its bubble didn’t burst until 2006. The result was a dramatic price increase of 201%.
The Second time frame is The Fall. It starts with the year that its bubble burst – and continues through the year with its lowest median price between the start of the fall and 2014. WaterFront Ocean prices started to Fall in 2007 – and went down for 4 straight years – reaching its low in 2010 – resulting in a decline of 29%.
The Third time frame is The Rebound – It starts the year after its Fall – and continues through 2014. WaterFront Ocean prices started to Rebound in 2011. During the last 4 years prices have been mixed – but overall, are UP 4% from 2010.
Starting in 1999 WaterFront Inland prices Bubbled UP for 7 straight years – and peaked in 2005 – an increase of 157%. Its Fall started in 2006 – and prices trended DOWN for 5 years – reaching a low in 2010 – resulting in a decline of 24%. Its Rebound started in 2011 – and prices trended UP during the next 4 years – with an overall increase of 31%.
Water View Ocean:
Starting in 1999 Water View Ocean prices went UP for 10 straight years – peaking in 2008 – long after the bubble burst for all other property types. The result was an increase of 136%. Water View Ocean prices did Fall in 2009 –but only for 1 year – a price decline of 15%. And these prices immediately started to Rebound in 2010 – with prices trending UP during the last 5 years – including price increases each of the last 3 years. As a result, prices were UP 17% from its low of 2009 – and are now within 2% of its high in 2008.
Water View Inland:
Starting in 1999 Water View Inland prices went UP during 7 of 8 years – peaking in 2006 – with an increase of 204%. The Water View Inland Fall came in 2007 –and lasted for 3 years – with prices declining 30%. Its Rebound started in 2010 – and prices went UP during 4 of the next 5 years. By the end of 2014 Water View Inland prices had rebounded by 39% and were within 3% of the high in 2006.
Water Near Ocean:
From 1999 Water Near Ocean prices went UP for 8 straight years – peaking in 2006 – with an overall price increase of 150%. The Water Near Ocean Fall – from 2007 to 2009 – resulted in a decline of 24%. The Water Near Ocean Rebound started in 2010 – and prices were UP and Down over the next 5 years – yet still gained back 13%.
Water Near Inland:
Starting in 1999 Water Near Inland prices went UP for 7 straight years – peaking in 2005 – and increasing by 143%. Its Fall started in 2006 –and lasted for 6 long years – with an overall price decline of 27%. Water Near Inland prices finally started to Rebound in 2012 and prices have gone up for the last 3 years – resulting in a 20% increase.
WaterLess – Our last property type:
Starting in 1999 WaterLess prices bubbled UP for 7 straight years – peaking in 2005 – and increased by 136%. This Fall also started in 2006 and prices went down for 4 years in a row – losing 24%. Prices Rebounded in 2010 – and were UP in 4 of the next 5 years – gaining back 12%.
The picture above shows the graphs for all 7 property types together. First look at the four property types based on Proximity to the OCEAN: WaterFront Ocean – Water View Ocean – Water Near Ocean – and WaterLess
Now let’s look at the three property types based on Proximity to INLAND water. First WaterFront Inland. You can see that it closely tracks the price history of Water View Ocean. Next: Water View Inland. It closely tracks Water Near Ocean. Lastly, Water Near Inland. It closely tracks WaterLess.
Now let me show you the 2014 distribution of property types – for # of Sales – and Sales Volume – which is the total number of dollars spent last year on each property type.
By far the most numerous property type is WaterLess. Followed by a high number of Water Near properties. Combined, all WaterFront and Water View properties amounted to less than a quarter of yearly sales.
Here are the 2014 median sold prices for each property type – sorted from highest to lowest. As you saw in the graphs, there are three pairs of property types that consistently have similar prices. Some years one is higher, some years the other.
For buyers, the good news here is that you have trade-off options. If that waterfront house on Nantucket Sound that you love doesn’t fit your budget, well think WaterFront on a pond. But, if your heart is set on watching the ocean every day, then consider looking across the street at water view ocean properties.
Similar tradeoffs may be possible between Water View Inland and Water Near Ocean properties – and between Water Near Inland and WaterLess properties.
2014 Living Area Size:
Another possible tradeoff involves property type vs. house size. For each property type, here are the 2014 results for median Square Feet of Living Space – again, sorted from highest to lowest.
WaterLess properties are not the smallest. That’s why their prices are comparable to Water Near Inland prices. On Cape Cod there are many nice WaterLess type neighborhoods – with big, beautiful, affordable homes. The tradeoff is –you have to drive to the beach.
Average Price Gain (1999 – 2014)
For each of the 7 property types there is a Gain/Loss spreadsheet. The slides for each of the 7 property types showed the Gain or Loss for each property type during 3 time frames: The Bubble, The Fall, and The Rebound. These Gain/Loss spreadsheets show the gain or loss for 136 time frames – that’s every possible year-to-year timeframe from 1999 through 2014.
Given that we know the 16-year average price gain for each of the 7 property types we can show how they rank – and compare each to their 2014 Median Price ranking.
In first place with the highest gain is:
Water View Ocean at – 18.4 %
WaterFront Inland at – 17.6 %
Water View Inland – at 15.9%
Water Near Ocean – at 15.2%
WaterFront Ocean – at 14.3%
Water Near Inland – at 11.2%
WaterLess – at 11.0%.
I want to leave you with 4 Takeaways:
1: There are many factors that affect the price of a house. On Cape Cod the # ONE Driver of home prices – is the home’s property type – again, its proximity to water and the location of that water.
2: No one likes to settle, but there tradeoffs between overall location, size of house, and price. These property types may help you make tradeoffs that are optimum for you.
3: When pricing a house it’s very important to use comps that have the same property type. Maybe it’s OK to use comps from two property types if they are one of the three property type pairs. These pairs do have similar 2014 sold prices and price per square foot. Maybe you can do it, but I wouldn’t!
4: Price alone does not determine the investment potential of a property on Cape Cod. It would be great to live ON THE OCEAN, but if equity growth is important to you then you may want to look at other property types.
Thanks for reading this Market Report.
Go to: www.BillSilverReports.com