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The Benefits of Investing in Cape Cod Real Estate

Cape Cod is one of the few real estate markets in the U.S. that remains lucrative even during challenging economic climates. People who invest in Cape Cod properties fare well and many times better than real estate investors elsewhere in the country.

Before you put your own money in Cape Cod real estate, you want to know that it truly can give the return you expect from any sound investment. You can make the best decision about whether or not to buy Cape Cod properties in 2017 by learning more about the local market.

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Cape Cod Sales

The real estate market in Cape Cod is a mixture of single family homes, commercial properties, and vacation rentals. As an investor, you could reap your biggest dividends by purchasing rental properties and leasing out condos, town homes, or houses to vacationers.

In fact, tourism accounts for a significant portion of the economy in Cape Cod. The cape's Chamber of Commerce reported that more than four million people visit the area each year.

The months of May through September are the busiest for tourism during the year. From May through August 2016 alone, the cape hosted more than two million visitors, many of whom needed homes to rent during their stays.

However, months that normally comprise the tourist off-season elsewhere are often busy for this part of Massachusetts. In particular, Cape Cod welcomes thousands during December who visit to take part in the area's Christmas festivities. Investors can turn a handsome profit by leasing vacation rentals to holiday travelers.

What is it about Cape Cod that makes it such a lucrative opportunity for investors? Much of the credit for the cape's healthy real estate market goes directly to the area's scenery. Home to 115 beaches, 13 lighthouses, and close to 560 miles of coastline, the cape is a major draw for tourists who want to indulge in outdoor fun like yachting, fishing, and swimming. Tour businesses take visitors out on the open waters for whale sighting while restaurants and pubs cater to people who want to soak in the local culture.

Moreover, Cape Cod hosts dozens of festivals, outdoor concerts, art shows, and other events that bring thousands to the area each year. During their stays, tourists shop at the more than 2000 local businesses and visit the 83 museums found on the cape. These tourist draws bolster the case that Cape Cod can be one of the most promising locations in which to invest if you want a solid return.

However, as with any investment it is important that you choose wisely before deciding what types of properties to buy. Visitors are not going to rent a house that is run down, unsightly, or fraught with maintenance issues. They also do not want to rent one that is too far away from the destinations they have come to the cape specifically to visit.

Still, they may not necessarily want to rent a house that is in the mix of both foot and vehicle traffic. Many tourists who come to the cape do so to relax, take in the scenery, and unwind from their busy lives at home. They do not want to be bothered with a crush of people and noise right outside of their doors.

With that, investors like you may have more success by purchasing properties in good condition that are off the proverbial beaten path and closer to the rustic and rural beaches and landscaping that appeal to many tourists. Your investment could reap you the dividends you look for to boost your income and make investing in Cape Cod real estate worthwhile.

To invest in the local real estate market, you need to know some of the basic prices for houses in the area. The Boston Globe in 2016 cited a study conducted by real estate firm The Warren Group that showed the average price for a Cape Cod home to be $340,000.

If you were to take out a mortgage to buy a home that price, your monthly payment would be around $1300. However, you could rent the house out as a vacation home for as much as $1700 a month. On a yearly average, after you covered your expenses, the Warren Group theorizes you could turn a profit of up to $28,000 if not more.

That amount of money would be enough to pay half of the amount of your mortgage payments that year. You will have cash to use to keep up your properties, make repairs, or even upgrade the homes to make them more appealing to renters.

You also would be able to put some of that money in your own personal bank account to supplement your income. You could possibly bring in enough money to cut back at work or even retire.

Again, however, much of your profitability would depend on what type of houses you invest in, where they are located in terms of giving tourists what they want in vacation housing, and what kind of condition in which you keep them as the owner. Your success also depends on the size of the houses you purchase.

Statistically, tourists either prefer smaller homes like studios or one-bedroom rentals that are small and intimate or houses that are bigger than three bedrooms that are large enough for families in which to host guests. You must anticipate your market and identify your target rental base before deciding what types of properties in which to invest in Cape Cod.

Even with all of these considerations, Cape Cod remains one of the most profitable markets for real estate investors. Tourists continually visit the area and are on the lookout all year long for housing to rent. Whether you are looking to supplement your primary income, create an income on which to sustain yourself, or generate money that would allow you to quit your job or retire, you may achieve your goals by investing in the Cape Cod real estate market.

Types of Properties Found in Cape Cod

Cape Cod has four regions, all with their own unique real estate markets. In terms of properties for rent or sale, the more expensive homes are typically found farther out on the cape in locations like Chatham, Orleans, and south toward Provincetown.

A majority of these pricier homes are owned by permanent Cape Cod residents. In contrast, the Mid-Cape and Upper Cape feature a mixture of summer cottages, working class homes, and estates.

Regardless, you can find four common types of residential real estate available throughout the cape. These varieties of properties that you can buy for primary purposes or as vacation or rental properties include estates, condominiums, single family homes, and townhouses.

Cape Cod is famous for its sprawling, luxurious estates. In fact, when many people think of homes for sale on Cape Cod, their first thoughts turn to the impressive homes owned by America's most affluent families.

Their thoughts would not be wrong as Cape Cod is home to estates that outshine their luxury counterparts found elsewhere in the U.S. One of these vast real estate properties can boast of upwards of five bedrooms and up to eight bathrooms. The home on a Cape Cod estate can encompass up to 10,000 square feet and be situated on 1.3 acres of land.

Some of the amenities and features you can find in most Cape Cod estates include:

These luxuries and more come at a price that put the estate in a unique class of Cape Cod real estate. The average asking price for an estate on the cape is close to $9 million.

On the opposite end of the Cape Cod real estate spectrum, condominiums also remain a favorite of investors, renters, and even home buyers. Cape Cod is home to thousands of condos, most of which are located in gated communities or condominium associations.

The typical price of a condo on the cape is around $70,000. For that price, you get around 200 square feet and at least one bedroom and one bath.

Buyers pay a monthly or yearly fee to the condo association. The fee covers additional expenses like:

Despite being much smaller than an estate or even a single family home, a condo can offer a convenient way of living in rustic and cozy settings. Many condos for sale on the cape are also pet-friendly and allow at least one cat or dog.

Single family homes Cape Cod also offer comfortable living for both buyers and renters. Whether you plan to buy a single family house as a primary or secondary residence or as an investment property, you can expect your money to get you 1200 to 1500 square feet on average and a home with two to three bedrooms and at least one full bath.

The price for the typical Cape Cod single family home can sell for around $325,000 to $340,000 if not higher depend on its location. For this price, you get perks like a full basement, a private balcony or patio, a garage for at least one vehicle, and in some homes a family room.

Many of the single family houses for sale on the cape are within minutes from the beach. Homes with ocean views typically sell for more than homes located further in the cape.

The last type of home that you can expect to be up for sale in Cape Cod is a townhouse. The townhouses found here average from 1200 to 3000 square feet of space. They also are two to three level homes complete with at least one full bath, one or two car garages, private decks or balconies, and in some instances partial basements.

You can find townhouses for sale in residential neighborhoods or in upscale gated communities. The ones in residential working class neighbors are more modest in size and appearance.

However, the townhouses located in gated communities can sell for premium prices as high as $1 million. In exchange for a fee paid directly to the community association, you are entitled to ownership amenities like:

Most townhouses on the cape come with electric and gas kitchens and laundry rooms. They can be ideal for people wanting to become permanent residents in Cape Cod. Townhouses not situated in gated communities can be ideal vacation and rental properties for investors.

Regardless of the type of residential properties you decide to buy or invest in, you may be reassured in knowing that real estate in Cape Cod is steadily becoming more affordable. The Warren Group reports that the lowering of home values ranged from 1.4 to three percent at various points in 2016. The decrease in prices has created a buyer's market that could help you secure real estate that may have once been out of your budget.

Of course, the affordability of the house you want to buy also depends on its location on the cape. Cape Cod with its four distinct regions all feature different listing prices and market values.

You can find an eclectic mix of working class single family homes mingled with modest condos and townhouses in regions like the Mid and Upper Cape. If you want to become a permanent resident and indulge in a more luxurious home or estate, you may be more satisfied to look for a house to buy in areas like the Outer or Lower Cape regions.

2017 Cape Cod Real Estate Market Overview

The Cape Cod residential real estate market in 2017 has thus far been marked by a fast-paced high demand but low inventory of available and affordable housing. The lopsided environment of the market in this part of Massachusetts stems from two factors: an increase in the number of people wanting to move to the cape to live permanently as well as more people wanting to buy secondary or vacation homes in Cape Cod.

In fact, according to the New England Real Estate Journal (NEREJ), Cape Cod continues to be one of the most popular places to which to move and invest. Cities like Plymouth particularly appeal to newcomers because of the historical charm of existing buildings, the safe environment, and the thriving local economy.

In Plymouth, existing structures like the old Catholic seminary are being transformed into new businesses like hotels and restaurants. The repurposing of these buildings combined with new startups taking root throughout Plymouth draw newcomers from inside the state as well as across the country and globe to Cape Cod. More people are finding that the cape is the ideal place to live and in which to raise a family.

Still, the crush of new arrivals has put a serious strain on the number of affordable houses that working families can buy as primary homes. According to National Mortgage Professional Magazine, the average salary of working families in areas like Barnstable County is around $63,000 per year. However, the average price for a home in most regions of Cape Cod hovers at the $340,000 to $360,000 range.

This price alone can be difficult for the typical working family to buy a house. However, in 2017 average housing prices rose by at least $1000 in most parts of Massachusetts. This ever so slight increase could take around 153,000 potential home buyers out of the market.

In fact, according to the same report, in October 2017 the market was short 26,000 houses for working families on the cape. This number included single family homes as well as condominiums and apartments.

The demand for affordable housing in this part of the state is expected to grow to 33,000 houses in the next 12 years. The increased number of people coming to Cape Cod to live as permanent residents has created a high demand for new homes to be built.

While the primary housing market may fall short on satisfying consumer demand, the secondary and vacation housing market is booming. Cape Cod welcomes more than six million tourists each year to all four of its regions. Businesses that cater to visitors perform exceedingly well particularly in the months from May to September.

After school is back in session and the summer holidays come to an end, many of these businesses close for the year. It is during the seasonal economic boom that both the demand and availability of secondary and vacation housing tends to be at its highest.

In fact, the demand for vacation housing is expected to grow by six percent in the next eight years in Cape Cod. Much of this increased demand stems from the falling prices for vacation and secondary homes in the area.

According to the Warren Group, the price for homes in some parts of Cape Cod, most notably Barnstable County, fell by 1.4 percent in 2016. This lowering of prices has caused many home prices in the area to be considerably lower than prices found elsewhere in Massachusetts.

However, some parts of Cape Cod have not followed suit and in fact have seen housing prices rise significantly. Provincetown, for example, has experienced a 40 percent increase in its housing prices. The typical asking price for a home there averages around $593,000.

Likewise, cities like Centerville, Chatham, and Truro have also seen housing price hikes. The average price for homes in Chatham and Truro are $689,000 and $538,000, respectively.

Given the lopsided 2017 Cape Cod residential real estate market, it may be little wonder that the number of homes sold in the area is slightly lower than the number sold in 2016. As of July 2017, home buyers purchased a total of 2009 single family homes and 479 condominiums. The average price for a single family home sold for $390,000 while the average price of a condominium was $260,000.

In contrast, buyers purchased 2085 single family homes and 473 condominiums by July 2016. The price of a single family home then was $365,000 while the asking price for a condominium was $265,000. The difference accounts for a 25.4 and 38.8 percent decrease, respectively, from the prior year in housing sold.

Real estate insiders in Cape Cod argue that the decrease in housing purchases does not stem from the lack of demand but rather the increase in prices and relatively few affordable primary homes from which to choose. The first-time home buyer's market especially is feeling the crunch because of many homes being sold in less than ideal conditions. People cannot afford to buy a home and then put the money into it that would be needed to get it back up to code.

This realization leaves many would-be first-time home buyers out in the cold. They find it difficult or even impossible to move to Cape Cod as permanent residents who want to work, raise families, and enjoy the lifestyle that comes with living in this part of the state.

This reality is not one shared with people who have the time and money to invest in vacation properties and secondary houses. This part of the real estate market continues to reach new levels even with the increasing shortage of these types of houses on the market. The lopsidedness of the market is not expected to correct itself anytime soon.

In fact, real estate insiders expect the housing market to continue its high demand and low inventory trend well into 2018. This trend will make it challenging for people who want to become permanent Cape Cod residents or live there during the busy tourist season.

Overview of the Cape Cod Commercial Real Estate

The Cape Cod tourist season brings in the largest share of revenue to the area. Studies have shown that up to six million people visit the cape each year. They spend billions of dollars at local shops, hotels, restaurants, and other businesses.

Visitors come from across the U.S. and increasingly from around the world to spend time in Cape Cod. Biz Journal recently reported on the marked increase in international visitors in 2016 to the area. During that particular tourist season, international guests spend more than $2.8 billion and generated more than $1.4 billion in tax revenue for the state.

Those numbers are up drastically from the 2.1 decrease in international tourism throughout the rest of the U.S. However, they are a 5.1 increase for the state since 2015. They also explain the more than 4100 tourism-related jobs created in Cape Cod and throughout the state in the last year.

As central as tourism is to the Cape Cod economy, it is not the only industry that has fared well in 2017. In fact, local real estate and marketing insiders note that the economy in Cape Cod typically does well even during tough economic years. There is always the opportunity to establish oneself in the market and to grow one's business.

Along with tourism, businesses that specialize in healthcare and social assistance perform well in Cape Cod. Likewise, the area is seeing growth in industries related to hydroponics and sustainable farming and agriculture as well as geothermal energy. These sustainable industries have opened the door for ample growth for businesses that specialize in related products and services for those markets.

However, established industries like fishing also contribute to the $1.5 billion economic revenue brought in each year on average in Cape Cod. While the area by and large embraces new market sectors like hydroponics and sustainable energy, fishing and crabbing remain vital to the local economy.

For people who move to Cape Cod with the hopes of building a business from the ground up, they often look at cities like Plymouth as their first choice. Plymouth one of the fastest growing cities in the cape thanks to its charm and history.

However, it also is dedicating both time and money to renovating existing structures and building new ones to foster its rapidly growing commercial market. The city recently proposed a $100 million renovation to an old seminary to transform it into a hotel and retail shops.

These efforts explain in part why the state including Cape Cod ranks 15 in the U.S. for being the best place to start a new business. This top ranking combined with the fact that close to 50 percent of area residents are college educated create the ideal conditions to attract entrepreneurs to Cape Cod.

The opportunity for new startup businesses has not gone unappreciated by appraisers in the area. Recent reports show that land in Cape Cod is becoming more valuable. In 2017, the total value of land in the cape totaled $6.7 billion. This value increased by 5.1 percent in the last year alone.

However, thanks to numerous multi-million dollar property sales, the tax rate in Cape Cod is expected to drop by 5.1 percent during the 2018 fiscal year. This lowered tax rate benefits business owners whose property values have held the same or even decreased. Their tax bills should be significantly lower next year. Property owners whose properties have increased in value will pay slightly higher taxes during the 2018 fiscal year.

Moreover, Massachusetts' Department of Revenue estimates that the growth of new businesses in the cape contributes $1.1 million, or about one-third of a three-year average in revenue to the area. All of the commercial properties account for six percent of the total value of real estate in Cape Cod.

Because there are fewer business owners than homeowners in Cape Cod, economic and civic leaders debate how to levy taxes on local commercial property owners. A recent proposal suggested creating a single tax rate for both home and business owners. This single rate in theory is designed to level the amount of money paid into the infrastructure and the increased number of firemen and police officers the cape must hire during the busy tourist season.

However, other leaders argue that the single tax rate would be divisive and not fair to commercial property owners. According to these individuals, business owners should not have to pay the same rate as homeowners because their numbers are fewer and because they help generate much of the money brought into the area.

In fact, Cape Cod is home to hundreds of businesses and as many commercial properties for sale at any given time. In 2016 alone, buyers purchased 287 commercial properties for an average price of $445,000. These numbers are up from 2015 when 275 business properties were sold for $374,000 on average.

The number of commercial properties sold in 2016 rose 15.8 percent from the previous year. The total number of days that a commercial property stays on the market for sale is 261 days in 2016, down slightly from 276 in 2015.

While commercial properties are becoming increasingly hot commodities in Cape Cod, business owners acknowledge the rising threat of e-commerce to their livelihoods. Many area business owners have created a network of support to educate and assist each other in reaching out to local customers and tourists alike.

Many Cape Cod businesses have both websites and social networking pages. They also make it a priority to stress to area residents to spend and keep their money local rather than spending it online. They want customers to come into their shops and see and feel the products for sale in person.

Revenue from online sales do not contribute to the Cape Cod economy, and as local business owners argue, online shopping is a less satisfying experience than shopping in local stores.

Overall, Cape Cod's commercial real estate market continues to fare well thanks to tourism and industries related to healthcare, sustainable food production and energy, and other specialty niches. Prices for these properties are on the rise while taxes for both residential and commercial property owners are on the decline.

Overview of Luxury Condo Developments in Cape Cod

The need for residential housing in Cape Cod has reached an all-time high. With more people wanting to stay year round, the number of available houses up for sale continues to dwindle. This fact, combined with the influx of tourists and vacationers from May through September, has created a housing crunch that civic and government leaders as well as real estate agents and developers continue to debate how to solve.

The solution proposed by some real estate insiders is to build more condos in all four regions on the cape. These condominiums are taking the place of older and outdated houses that buyers are not interested in and would take too much to bring up to code. They are also being built on lots that normally would only accommodate one or two single family houses.

Condominiums have a unique capability of solving a crucial dilemma found in the lack of good housing in Cape Cod. These housing projects continue to get underway in all areas of the cape. Real estate developers and city and county leaders alike are working together to get the condos built as quickly as possible and get them up for sale on the market for the growing number of interested buyers. They also are partnering in their efforts to transform outdated housing and buildings into condos that are priced within range of the average home buyer.

In terms of real estate development, condominiums can be ideal investments because they do not take up as much space as traditional housing. Developers can build several in a single lot, erecting high-rise buildings or creating multi-level homes that can be divided up into individual condos.

Rather than take up a whole lot for a single house, a developer can build two or three condos, providing several individual home buyers with a place to live on the cape. Similarly, the property's investor essentially receives double or triple the amount of revenue for which he or she could have sold a single home.

Further, the condos being built in Cape Cod will be located in some of the most coveted residential neighborhoods in the area. Developers are building them in quiet family neighborhoods as well as along the water and beachfront. In many instances, they are taking the place of obsolete and outdated homes that bring down the property values.

Despite being classified as luxury condos, many of these homes are moderately priced and within the budgets of first-time and repeat home buyers. The typical size of one of these luxury condos is around 300 to 400 square feet.

They come with at least one bedroom and one full bathroom. Some also have private garages, patios, or balconies. Investors also are allowing many condo buyers to bring along pets with some restrictions on the animals' size and breed.

A condo can be the ideal home for someone who wants to move to the cape but cannot afford some of the larger homes on the market. It can also provide an investor with housing that can be rented out during the tourist season or used as a second or vacation home.

In fact, buyers can enjoy a wealth of amenities living in a condo that they may not have access to in a single family home, apartment, or other type of residential housing. Most condo buyers are required to pay a monthly or annual fee to the condominium housing association that oversees their properties. This fee pays for conveniences like:

The amenities vary with the properties being developed. Nonetheless, people who live in condos typically enjoy a more convenient and worry-free way of life than people who buy and must maintain their own single family homes.

As mentioned, condos can be ideal for people who do not have children and do not need a lot of space for family members. Retirees, single people, and couples with no kids could feel most at home in this type of housing. Investors also may find that they can rent out condos faster than they could single family houses during the busy tourist season.

Also as mentioned, condos typically sell for less than the single family homes for sale in Cape Cod. Depending on the type of condo for which a buyer is looking, these types of residences can hit the market at $70,000 and climb in price to exceed $1 million.

On average, however, the typical condo in Cape Cod sells for around $200,000. Condos with higher price tags are often located along the beach or in upscale areas like Hyannis or Provincetown. Condos with prices ranging from $70,000 to $100,000 tend to be located in Barnstable County and other working class areas of the cape.

Hyannis will soon join Provincetown with its own luxury condo developments. City leaders in Hyannis recently heard proposals from two real estate development companies.

Affordable housing also continues to in short supply in cities like Truro. Truro is one of the busier locations on the cape during the tourist season. When there is an influx of visitors, all of the available rental housing is taken quickly, leaving few places to rent or stay until the off-season starting in September.

Even then, however, people who want to stay on the cape as permanent residents find that available housing can be difficult to find. To solve this dilemma, some real estate developers and condo investors have asked the city to allow them to convert properties into year-round housing.

City leaders have warned developers and investors that bringing the seasonal housing up to code can be expensive. They have to address tasks like winterizing the plumbing and water lines and providing utilities during seasons that can be taxing on any home let alone one designed for summertime living.

Still, Truro leaders are not necessarily opposed to owners converting their seasonal condos into year-round spaces if they are willing to take on the $100,000 to $200,000 price tag to accomplish this goal. The condos in question were once used as motel and hotel rooms. Investors and property developers transformed them into condos that are typically leased out during the summer months and tourist season.

Most of these condos are located along the waterfront. Truro is home to 510 condos in total, half of which are found in Beach Point, which itself is situated between East Harbor and Cape Cod Bay.

The civic leaders who do question the wisdom of converting these condos into year-round housing wonder what impact this decision will have on the environment. Massachusetts is one of the most eco-friendly states in the country. Cape Cod in particular takes great pride in its care of the environment especially the beaches and waterfront areas.

People on the city council worry that this luxury condo development idea could tax the city's wastewater treatment facility with the increased use of this service. They also worry that wastewater could make its way into the harbor.

To combat this issue, it has been proposed that the city raise taxes to allow for more money to clean up wastewater and protect the environment. However, city residents and some leaders alike balk at the idea of raising taxes.

Finally, concern has been raised about what impact additional year-round residents would have on traffic in the area during the winter. They worry that out-of-town newcomers will not know how to drive in inclement conditions frequently experienced in Cape Cod.

Still, this willingness to take on the additional expense of converting seasonal housing shows how serious developers and many civic leaders are in solving the housing crunch experienced throughout Cape Cod. They realize that they must do something now to make more affordable housing available for newcomers and people who want to stay year-round instead of leaving in September.

Their solution could lie in paving the way for more luxury condo developments. This type of housing offers a convenient way of life for people who do not need a lot of space yet want to enjoy the best of modern living. Condos are also ideal to invest in for seasonal or secondary housing that can be rented out to vacationers.

Cape Cod is one of the most coveted places in which to live in the U.S. All four regions of the cape continue to experience high demands for housing and competitive inventories.

Business owners also enjoy booming demands for their products and services especially during the tourist season. Because it is one of the most stable real estate markets in the country, it can be the ideal opportunity for serious investors who want to turn a profit and buy real estate that they can rent out or use for their own purposes without worry of it losing its value.

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Cape Cod Sales