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2005 Pricing Shows Homeowner Caution

FOR IMMEDIATE RELEASE
Contact: Elizabeth Weedon
Phone: (888) 281-8660
E-mail: elizabeth@weneedavacation.com

WELLESLEY – February 16, 2005

Although vacation rental prices increase every year, this year the % of increase was less than in previous years. Soft demand in 2004 has dampened expectations for Cape Cod rentals, but Martha’s Vineyard has rebounded from an especially soft 2003.

The information in this review is a year to year analysis based on NEW INFORMATION of the initial prices1 for the summer seasons of 1,402 properties that have been listed on our site for at least the last three summer seasons. An additional section will discuss rental prices for properties ‘on the beach,’ ‘on water but not on a beach,’ within ‘walking distance to the beach,’ and ‘not near the beach.’ For the purposes of this review, ‘beach’ in all cases includes both salt water and fresh water beaches.

A seasonal month-to-month review will be completed as we get further into 2005 and can begin to see how the vacationers respond. This will compare the then current price to the owner’s initial price.

The following is an analysis of 1,402 properties that have been listed on our site for the last three summer seasons and use an availability calendar that contains pricing for each summer week:

% increase yr to yr
Sample size
2003-2004
2004-2005
2005 avg. price
Cape Cod
1138
4.1%
2.2%
$2,113
Martha’s Vineyard
192
1.4%
3.4%
$2,792
Nantucket
72
3.0%
3.1%
$3,787
Total
1402
3.6%
2.5%
$2,292
Table 1: properties with us for 3 years

Table 1: properties with us for 3 years

The data reflects a difference between properties on the Cape and properties on the Islands. Price increases for the Cape reflected a higher percentage increase from 2003 to 2004 than from 2004 to 2005. From 2003 to 2004, Martha’s Vineyard properties reflected only a 1.4 percent increase, but rebounded this year for a 3.4% increase over last year. Nantucket has remained consistent from 2003 to 2004, and 2004 to 2005, with 3.0% and 3.1% increases respectively. Demand was soft last summer and many owners found themselves with unexpected availability as the season started. Thus, many dropped their pricing, some considerably, to attract demand. In light of this, they are obviously cautious about 2005. On the Vineyard, 2003 was especially bad and an abundance of supply and weakened demand left many owners with unbooked summer weeks. Thus a year ago, they dared raise prices only by 1.4%. Last summer, while soft, was not as bad as 2003, so they feel emboldened this year. Nantucket held steady, more impervious to yearly whims.

As the rental year progresses, we will compare any pricing changes to these initial prices and provide that information in subsequent releases.

Rental prices of properties near either a salt water or fresh water beach:

We compared price increases from 2004 to 2005 for all 1,875 properties listed on our site for the Cape and the Islands that have weekly pricing in their calendars. This analysis compared price increases from 2004 to 2005 for properties in four mutually exclusive groups:

‘on the beach’

‘on the water, not beach’ (homes on water but without a beach)

‘walk to beach’ (1/2 mile or less)

‘not near beach’

Once again, these prices reflect the homeowners’ initial prices entered at the beginning of the season. Assuming that these price changes reflect movement in the demand for vacation housing, they provide an interesting glimpse into the three markets. All information is in Table 3 below.

The most interesting numbers were totals for each of the three areas. They showed much higher year to year increases than in Table 1.

 
From Table 1:
Properties listed for 3+ years
From Table 3:
all properties
% increase yr to yr
2004-2005
2005 avg. price
2004-2005
2005 avg. price
Cape Cod
2.2%
$2,113
6.1%
$2,183
Martha’s Vineyard
3.4%
$2,792
9.0%
$2,887
Nantucket
3.1%
$3,787
5.8%
$3,917
Total
2.5%
$2,292
7.4%
$2,403
Table 2: comparison of the two data sets

Table 2: comparison of the two data sets

This remarkable difference is due to the nature of the two data sets. The properties in Table 1 are those that have advertised with us for at least three years. They have lived through some trying years and are cautious. The properties in Table 3 have been with us for less than three years and include new listings to us this year. Why would the latter’s prices and price increases be so much higher? We know anecdotally that many of them have recently purchased their homes, and they had to pay preciously, especially for homes anywhere near the water. Thus they are being more aggressive to cover new, high mortgage payments.

On Cape Cod, properties ‘on the water, not beach’ had a price increase three times that of properties either ‘on the beach’ or not within ‘walking distance to the beach’ (11.5%). Properties within ‘walking distance to the beach’ have rate increases twice that of those ‘on the beach’ or ‘not near the beach.’ This year’s rental rates for properties ‘on the beach’ are still almost twice those ‘not near the beach,’ but properties within ‘walking distance to the beach’ are only 17.7% higher than those not near the beach. It appears, therefore, that the demand for properties within ‘walking distance to the beach’ are becoming more reasonable alternatives, allowing for a greater increase in price. Rental rates for properties ‘on the water not beach,’ fall approximately halfway in between properties ‘on the beach’ and within ‘walking distance to the beach.’

Martha’s Vineyard had the greatest price increases for the past year overall (9%), with properties ‘NOT near the beach’ increasing the most (10%). On Martha’s Vineyard, the major price difference is determined by whether the property is on the water or not. ‘Walking distance to the beach’ is not a major influence in the rental rate. Rental prices on the beach are more than double the prices of properties not near the beach (104.2%), with properties ‘on the water not beach’ not far behind (86.4%). These properties are also priced 78% and 63% higher respectively than those properties within ‘walking distance to the beach.’ Properties within ‘walking distance to the beach’ have rental rates only 14.3% above those ‘not near the beach.’

Nantucket continues to sustain the highest rental rates over the Cape and Martha’s Vineyard, but our sample size is too small for homes on the water or on the beach to be meaningful. Nantucket continues to be an entirely different animal. Vacation rental prices for properties within walking distance to the beach increased a robust 9.7%. Properties not near the beach had a decrease in rental rates of -2.9%. This suggests that people are willing to pay higher vacation rental rates to be on the Island, but it appears to be just as important to be in town than it is to be on the water.

 
 
# of properties
2005 price
% increase 2004-2005
% higher than ‘not near beach’
% higher than ‘walk to beach’
Cape
On the beach
213
$3,304
3.6%
91.5%
62.8%
 
On the water not beach
122
$2,753
11.5%
59.6%
35.6%
 
Walk to beach
713
$2,030
7.6%
17.7%
 
 
Not near beach
433
$1,725
3.3%
 
 
 
Total Cape
1481
$2,183
6.1%
 
 
 
 
 
 
 
 
 
Martha’s
On the beach
12
$5,135
7.4%
104.2%
78.7%
Vineyard
On the water not beach
17
$4,687
8.0%
86.4%
63.1%
 
Walk to beach
82
$2,874
8.3%
14.3%
 
 
Not near beach
152
$2,515
10.0%
 
 
 
Total Vineyard
263
$2,887
9.0%
 
 
 
 
 
 
 
 
 
Nantucket
On the beach
6
Sample size too small to produce meaningful numbers.
 
On the water not beach
5
Sample size too small to produce meaningful numbers.
 
Walk to beach
70
$3,930
9.7%
2.8%
 
 
Not near beach
50
$3,822
-2.9%
 
 
 
Total Nantucket
131
$3,917
5.8%
 
 
 
 
 
 
 
 
 
Cape and
On the beach
231
$3,424
4.6%
64.7%
51.3%
Islands
On the water not beach
144
$3,034
14.7%
45.9%
34.1%
 
Walk to beach
865
$2,263
8.9%
8.9%
 
 
Not near beach
635
$2,079
4.7%
 
 
 
Total Cape & Islands
1875
$2,403
7.4%
 
 
Table 3: all properties and their water proximity

Table 3: all properties and their water proximity

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About WeNeedaVacation.com: Since 1997, WeNeedaVacation.com has been providing an efficient and inexpensive way of matching vacationers and vacation rental homeowners. The website lists more than 4,000 properties on Cape Cod, Martha's Vineyard, and Nantucket. The WeNeedaVacation.com Vacation Planner also offers extensive information to the 175,000+ vacationers who use our site yearly, including information about beaches, events, dining, activities, and shopping. Our amazing staff collectively has over 100 years of experience as Cape & Islands vacation rental homeowners. We love the Cape and Islands, work hard to promote this special place, and proudly belong to 17 local Chambers of Commerce.

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