1. Here'sWhat Happened to the
Falmouth
Real Estate
Market
by David F.Kelley
Look at that chart! It's strange looking, but that's what
Falmouth's recent real estate market looks like - it rose with such
fanfare, then receeded with a long moan. It took many casualties
and left a big question,how to avoid this in the future?
To answer, real estate is no longer a field for dabblers as there
are no more cute little summer cottages for 75K. The median price
of a home is almost 3X the '93 value, starter homes begin close to
250K and to buy or sell successfully requires realistic knowledge of
what you are doing.
Buyers and sellers are the engines that drive real estate and the
better informed they are, the smoother future markets will run.
Since fallout from the financial disaster effects everyone, serious
seminars for home buyers and sellers would be most beneficial.
They could be co-ordinated by the local Multiple Listing Service
and given by various experts in the industry from appraisers to
bankers to agents. Books, articles and websites are helpful, but
experts in our local market are more practical.
The attached chart covers the rise and fall of Falmouth's recent
"hot market" and features all the single family homes sold in
Falmouth through the Cape Cod MLS. The red line illustrates the
number of home sales by year and their median sales values by the
orange line. Here's a summary of what happened.
1. The market warms up. In 1996, after a slow period from the
previous market, sales exploded to a high of 651 in '98. This was
fueled by an improved economy, many reasonably priced homes
and buyer confidence. Sales under 200K were 330, 371 and 426
per year. Conditions were right, the market got hot and sales took
off. It was a great time to buy as price increases were still ahead.
2. Sales edge down. Following the hot start, sales slowed from
'99-'04 while values increased. Good purchases continued through
'03 but future problems began as buyers and sellers still rushed
into the hot market. This caused heavy activity in all forms of
financing, both good and bad. Higher prices reduced the low end
under 200K while homes under 100K disappeared from '02 to '07.
3. The Fall. Overpricing was a big factor as sales resumed their
decline in '05 from a high of 538 in '04 to 387 sales in '08, a
reduction of 264 sales from the 1998 peak. Prices finally reached
their peak and median values began to decline from a high of 425K
in '05 to a projected 354K by the end of this year.
4. What's happening? 2009 has been active for both 'short sales'
and foreclosures, but 62% of the money spent is over 400K. There
have been 272 home sales through September and at the this rate,
'09 may end with 363 sales. This is 24 less than '08, but a slowing of
the decline suggests the bottom is near. Today's median home
value of 354K matches 2003 which is significant as that may have
been the last year of profitable purchases.
Active Sales offer good opportunities for long term buyers since
the bottom may be near. With 424 homes for sale in Falmouth in
all price ranges vs. 268 at this time in '03, opportunity is calling.
With the fall market in progress and values on the downside,it may
be a good time to buy.
Expired Listings. Sellers are still struggling with pricing as 334
home listings either expired or withdrew from the market this year.
This will continue as the median list price of the 424 active listings
is 500K, almost 150K more than the median sold price of 354K. This
gap may also present good buying opportunities as more sellers
make serious price reductions.
To conclude. Most markets follow a similar pattern of rising,
overpricing, falling, cooling off for a few years then starting over
again. Each begins at a higher price, but with differences. The
internet played a major role in today's market, home buyers are
now represented by buyers agents, technology became a daily
tool, and home values entered the big business phase as cheap
houses are now selling 3X higher.
Since unrealistic pricing and bad financing decisions caused
serious problems in the market, it's imperative that buyers and
sellers gain the knowledge needed to perform more intelligently
and successfully in the future. Financial and real estate markets
will improve, prices will rise to new levels and informed buyers and
sellers should prepare for it as it will help reduce future disasters.
Copyright © 2016 by David Kelley Design,Falmouth,MA
Re-printed from the Falmouth Enterprise,October 27,2009
4
No.SingleFamilyHomeSales
650
600
550
500
450
400
350
300
250
200
150
100
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Y E A R
Copyright©2016byDavidKelleyDesign,Falmouth,MA
SalesUnder200K: 330 371 426 348 224 157 74 15 6 3 1 6 36 27
1
2
3
223
282
297
427
503
651
609
516
503
561
534
538
498
424 442
385K
387
363
120K 126K 125K 143K 138K
155K
183K
226K
252K
315K
351K
405K
425K
405K
421K
354K
# Annual Home Sales
Median SalesValues
(PROJECTED)
Previous
Market
David F.Kelley is a realtor in Falmouth with LAER Realty Partners and an exhibiting
fine artist locally and nationally. He lives in Falmouth Heights with his wife Lucia.
His email is dfkelley@pair.com.