Cape Cod may become even less affordable
It's a tale of two markets, says Ryan Castle, CEO of the Cape Cod & Islands Association of Realtors. Like the restaurant and tourism industries, the real estate market took a big hit as the economy shut down this spring to stem the progress of COVID-19. Summer rentals flatlined and home sales plummeted as people faced an unknown future.
Beginning in May, the Cape and Islands real estate market came roaring back, and Castle said sales in July were $140 million more than any month the association had ever seen. July also showed a 15% increase in the median sales price to nearly $500,000.
"More people were buying more expensive homes than ever before," Castle said, largely because out-of-state buyers with disposable income, many with families, were seeking a refuge from urban areas hit hard by the coronavirus.
More people living here year-round is a good thing, participants in a Thursday housing summit said, but the Cape and Islands already had an affordable housing crisis before COVID-19, and the combination of an economic collapse and a hot real estate market eating up inventory and raising home prices worries housing advocates.
"A bad situation just got worse," Alisa Magnotta, CEO of Housing Assistance Corp., said at the virtual summit, "Cape Cod in the Time of COVID."
While those migrating from New York and New Jersey found housing they could afford, many Cape residents saw the gap widen between what they could pay for a mortgage or rent given their diminished economic circumstances.
Barnstable County went from a low single-digit unemployment rate before the pandemic to 17% in the height of the summer, when employment opportunities typically abound, said panelist Kara Galvin, executive director of MassHire's Cape & Islands Workforce Board.
"The wedding industry alone on Cape Cod generates $53 million in spending, but that has pretty much evaporated," Cape Cod Chamber of Commerce CEO Wendy Northcross said. Even so, the hospitality and tourism industries on the Cape were down 31%, compared with 72% in Boston. But Northcross warned that winter is coming and the Cape is in danger of losing a lot of the business, such as bus tours, that helped drive the shoulder season economy.
"What happens to that workforce?" she asked.
The cost of child care already had a big economic impact on working parents, but with school reopenings still in doubt and child care largely shut down, there are few good options left. Housing Assistance data showed a 241% increase in foreclosure prevention requests and a 451% increase in requests for help with past-due rent from mid-March to mid-August compared with the same time period last year. The agency already has spent nearly the same amount in rental and financial assistance, $514,000, as it did for all of last year.
"Pre-pandemic I would have argued that housing is the most urgent issue in the region," state Sen. Julian Cyr, D-Truro, said. COVID-19 exposed and magnified the cracks and inequities in the housing market, Cyr said.
Magnotta said many renters do not have enough savings to tide them over in a crisis. A Housing Assistance survey of more than 100 landlords showed that 45% of renters already were having a hard time paying rent before the pandemic and 53% were behind at least one month in their rent now.
"We're getting calls from people who can't pay the rent and can't see affording it any time in the future," Magnotta said. The loss of the federal weekly $600 unemployment stipend that recently lapsed after the U.S. Senate could not agree on a new rescue package could hit renters hard, she said.
The other side of the picture may not be any brighter, as many Cape landlords are relatively small businesses, owning fewer than three rental homes. Housing Assistance found that 63% of landlords were using rent to pay a mortgage, and Magnotta fears the current rental stock could suffer significant depletion if tenants can't pay the rent and landlords end up selling in this hot housing market.
"It could potentially displace someone working and living on Cape Cod, and it has given us cause for concern," Magnotta said.
The message coming out of Thursday's summit was that it was important to maintain the rental inventory by subsidizing renters so they can remain in their housing. The Housing Assistance survey showed that 75% of the more than 100 landlords interviewed were willing to work out a payment plan for tenants, and Magnotta thought it was important for the state, towns and private fundraising to create a safety net to preserve year-round rentals.
Housing Assistance has raised more than $875,000 toward the $1.5 million goal for its Workforce Housing Relief Fund, which provides assistance to Barnstable, Dukes or Nantucket county households affected by COVID-19 with rent or mortgage payments over a three-month period totaling up to $5,000. It also offers two state-funded rental and mortgage assistance programs that have income limitations and a private fund that does not.
While they considered holding the line on the current housing inventory to be important, panelists also would like to see more affordable and workforce housing built. They pushed for passage of Gov. Charlie Baker's Housing Choice legislation, which would lower the threshold for approval of higher-density affordable housing from a two-thirds vote to a simple majority. Baker hoped to get it passed before the Legislature's July recess, but that did not happen.
"This crisis has really punctuated that we need to invest in housing, the preservation and the building of it and to find ways to bridge the affordability gap," Magnotta said.