A slice of Cape Cod is getting a massive injection of cash

2022-06-15 20:40:54 By : Ms. Aileen Li

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On a recent Sunday at West Dennis Beach on the Nantucket Sound in the town of Dennis, Mass., something unusual happened: The parking lot filled up by 8 a.m.

Eight miles north, on the opposite shore of Cape Cod, popular spots such as Mayflower and Corporation beaches have always packed in early with wealthy summer expats from Boston and NYC. But at West Dennis Beach — a haven for families and fulltime locals, known for its laissez-faire, come-and-go atmosphere — anyone could score a parking spot at any time of day.

Now, West Dennis Beach, and the mid-Cape — a stretch of middle-class towns including Barnstable, Yarmouth and Dennis — is suddenly red-hot.

It’s a story that has played out across the US: As the pandemic drove prices in luxury vacation destinations like the Hamptons, Nantucket, Palm Beach and Cape Cod into the stratosphere, even relatively wealthy people were forced to weigh their options. The upshot has been real estate booms in once affordable, even down-market areas.

Drive along Route 28 through the mid-Cape today and you’ll see candy shops, mini-golf and family-owned restaurants — not imposing hedges or country clubs. Nevertheless, you’ll need deep pockets to stay there.

The median sales price for a single-family home in the mid-Cape in the first quarter of 2022 was $650,000 (a leap from an already inflated $590,000 in the same quarter last year), according to Cape Cod & Islands Association of Realtors. More than half of all sales closed above asking price and one-third of all sales closed in cash. Moreover, there were roughly half as many single-family homes listed for less than $500,000 as there were in the first quarter of last year. Inventory is at historic lows.

For your average Joe that’s a tall ask for a second home.

But for those being priced out of deep-pocketed Cape Cod towns like Wellfleet and Chatham, or even posher markets like Nantucket and Martha’s Vineyard, the mid-Cape is a value market.

“Five years ago there were around 2,700 single-family homes for sale on Cape Cod at any given time, and when I first started there were about 7,200 single-family homes for sale,” said Mike Karras, a lifelong mid-Cape resident and real estate agent with William Raveis in Yarmouthport. “We used to take people for marathon buyer trips, seeing eight houses in the morning and eight in the afternoon, spending maybe 15 minutes at each. Now you’re lucky if you can show your buyers three or four.”

Inventory is so low that some agents are selling the same houses just one or two years apart. Karras repped the seller of 9 Orchid Lane in West Yarmouth in November 2018 when the house sold for $299,000.

Two years later, he represented the 2018 buyers when they went to sell in October 2020. The sale price ballooned 51% in two years, closing at $450,000.

In another instance, Karras represented the seller of 11 Chase St. in Dennis Port, which sold in October 2020 for $595,000. In 2021, the same property sold — that time with a different agent — for $825,000, an increase of 39%.

Cassie Fruggiero-Lyons, a Compass agent and fellow mid-Cape local, saw one of her listings in Dennis receive eight offers. It ultimately sold for $200,000 over ask for $1.51 million — before the home even hit the market.

“It was all through word of mouth, and just through our internal Compass networks and the neighborhood association,” said Fruggiero-Lyons. “This market is crazy. Things are often going within a day, and everything is selling with multiple offers.”

It’s similar in the area’s rental market.

“By February, most of the rental market gets booked up,” said Fruggiero-Lyons. “You almost need to plan your rental for next summer by the end of this summer. Investors are also coming in because you can rent something for top dollar and it will be booked the entire summer.”

“You almost need to plan your rental for next summer by the end of this summer. Investors are also coming in because you can rent something for top dollar and it will be booked the entire summer.”

For locals, the mid-Cape boom is welcome.

Karen Mumford, who works for Pretty Picky Properties in Brewster, Mass., noticed a funny thing happen to the ordinary four-bedroom house across the street from her in South Yarmouth.

“The lady across the street from me passed away and her daughter inherited her house,” said Mumford. “A couple years ago, that house would be rented out on occasion for $1,500 a week. Instead of selling it, her daughter refurbished the house, she’s renting it out all summer, and she’s getting $5,500 a week for it.”

While the area isn’t known for flashy amenities, the new influx of cash has lured some tony new perks to the area.

Lark Hotels, which owns properties in Carmel-by-the-Sea, Calif., and on Nantucket, is opening the Bluebird Dennisport inn in the mid-Cape on June 3. Last November, EOS Investors — a New York firm which also owns the glam L’Ermitage Beverly Hills — acquired Red Jacket Resorts for an undisclosed sum. The portfolio of resorts is largely marketed towards middle-class families, but now a $30 million renovation after this summer season is planned. EOS also just acquired the Wequassett Resort and Golf Club (in mid-Cape-adjacent Harwich) for $102 million.

“We love that the mid-Cape has offered a convenient and well-priced vacation for generations, and we love that it’s easier to get to than other parts of Cape Cod,” said Tom Burns, EOS’s managing director.

During the pandemic, the Pelham House Resort in Dennis Port raised $20 million from a group of silent investors, and used the funds to transform into Pelham Hospitality Group, consisting of a refurbished main hotel, the addition of a neighboring events space and a rooftop restaurant overlooking Nantucket Sound. They also acquired two smaller inns — Pelham on Earle and Pelham on Main — to accommodate overflow when the main resort sells out, as well as a nearby farm to supply the resort’s restaurant with produce.

Now, the Pelham’s two-story oceanfront events facility is one of the most in-demand wedding venues on the Cape.

“I don’t want to be corporate. I want people to feel comfortable coming in here,” said John McCarthy, managing partner and son of Pelham House’s original founder. “It’s taken some time for me to get used to the changes, but the product is worth it. You’re getting that elevated level of service you maybe didn’t get on the mid-Cape a few years ago.”