The marketing slogan for uber luxury watch producer Patek Philippe, “You never actually own a Patek Philippe, you merely look after it for the next generation”, seems an extraordinary claim for a wristwatch, but they use it to justify the high cost of their timepieces. Such a claim seems far less extraordinary, however, for a Cape Cod real estate purchase; indeed, I would even suggest that it expresses a simple truth. In real estate we refer to this as a ’generational purchase’.
Cape real estate prices, as elsewhere, have increased dramatically over the last several years, but it can be helpful to view the relative high cost of Cape Cod real estate through ‘generational eyes’. The following graph shows the median sales price of homes in Barnstable County from January 2004 thru September of 2022:
A quick glimpse is enough to understand the general trajectory, which is to say that even factoring periodic ‘corrections’ the trend is upward. If this graph were drawn to include prior decades it would have a very similar upward appearance.
We could do a similar graph for interest rates, however an interest rate graph—at least since the late 1970s—would appear as the inverse of the sales price graph, which is to say that despite the most recent uptick interest rates have dropped precipitously over the decades.
But why you may ask should any of this matter? All that really matters is what it costs to purchase today. I generally agree, which is why I advise my buyers to set their spending limits upfront and to not be swayed by market conditions, competing bids, etc. Today’s buyers can rest in the knowledge that, unlike many other investments, Cape Cod real estate always pays dividends—personal dividends. Who can put a price on a sublime afternoon at the beach, or at day’s end when the sun, rich as wine, funnels into the horizon?
From a strictly economic standpoint the future will remain somewhat uncertain, but even here–as the graph shows–there’s reason for optimism.
Doug
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