Wellesley, February 13, 2006--Now that the 2006 summer rental season is under a full head of steam, we look again at homeowner pricing trends with a much larger sample than was available in November. With a month of very active vacationer interest, we can begin to see what the future might hold for this upcoming season.
We also wrap up vacationer demand and preferences for the full year of 2005 as compared with prior years, seeing subtle but important shifts in locale sought, willingness to pay, and so on.
1. Homeowner pricing
The trends reported in December have held: homeowners are raising prices a modest 2.3% over 2005 prices. With half again as many homes as in December’s study, we have a fuller picture, and the larger increases reported in December on the Outer Cape and Nantucket have come down to where the other areas are. We use homes listed with us for at least three years in order to have the most accurate sense of homeowner sentiment.
Table 1: price trends for homes with us for 3 years or more
|
|
|
|
|
|
|
|
% increase yr to yr
|
Sample size
|
2005 avg. price
|
2005-2006
|
2006 avg. price
|
|
|
|
$
|
%
|
$
|
$
|
|
Upper Cape
|
148
|
2,336
|
2.8
|
66
|
2,403
|
|
Mid Cape
|
188
|
1,879
|
1.8
|
34
|
1,913
|
|
Lower Cape
|
329
|
2,137
|
2.6
|
56
|
2,193
|
|
Outer Cape
|
164
|
2,280
|
1.9
|
43
|
2,323
|
|
Cape Cod total
|
829
|
2,142
|
2.3
|
50
|
2,193
|
|
Martha’s Vineyard
|
139
|
2,743
|
2.7
|
73
|
2,816
|
|
Nantucket
|
61
|
4,083
|
1.4
|
58
|
4,141
|
|
Total
|
1,029
|
2,339
|
2.3
|
54
|
2,392
|
|
Table 1: price trends for homes with us for 3 years or more
|
As the season unfolds, we’ll keep a close eye on pricing trends, particularly watchful for decreases in the price of individual homes that might suggest a soft demand condition.
2. Vacationer Demand
2005 Summary: As measured by views of our property listings, demand was up in 2005 over 2004. We’ve seen a 50% increase in traffic to our Cape Cod homes since 2004 and a 29% increase in our Island homes, as measured by views of our listings, which exceeded six million in 2005. Much of this we attribute to increased use of the Internet to find vacation rentals. We also believe that vacationers have fewer worries about the economy, jobs, international strife than in 2004, and therefore were more active.
Looking ahead to 2006: For the Cape & Islands, property views are up 23%, versus only 14% in January 2005, suggesting that the 2006 season is underway with a strong start.
3. Vacationer Preferences
Where are they looking?
In the past few years, we have seen a shift in demand from the Islands to the Cape. Higher prices on the Islands in uncertain economic times contribute to this shift. But that trend stopped in 2005, with no shifts at all from 2004; good news for the Islands.
|
Year
|
Cape Cod
|
Islands
|
|
2002
|
71%
|
29%
|
|
2003
|
73%
|
27%
|
|
2004
|
83%
|
17%
|
|
2005
|
83%
|
17%
|
Table 1. Demand for Cape Cod vs. the Islands
Drilling down further, the interest had been growing in the Outer Cape 1 most particularly, but again, 2005 mirrored 2004.
|
Year
|
Cape Cod
|
Islands
|
|
2002
|
71%
|
29%
|
|
2003
|
73%
|
27%
|
|
2004
|
83%
|
17%
|
|
2005
|
83%
|
17%
|
Table 2. Where they look, in more detail
The most popular towns in order in 2005 were Orleans, Chatham , Eastham, Dennis, Brewster, Wellfleet and Harwich.
The only change in January 2006 is a slight increase in interest in Martha’s Vineyard. This bears watching!
How much are they willing to spend?
Table 3 shows the price bands vacationers were willing to pay in 2005 compared with the past 4 years. From 2004 to 2005, Cape demand was unchanged. On the Islands, a slight shift to higher prices was apparent. This shift started last year when demand for more expensive homes grew considerably. This tells us that fears of booming prices on the Islands are not as daunting as some report, but that there just are not enough people willing to spend generally higher prices than Cape Cod to keep the overall Island demand as strong as it was three years ago. The January 2006 vs January 2005 data bears out this shift on the Islands with a shift of 8 percent from $2,000 - $4,000 homes to ones over $4,000. This early peek is encouraging in general.
|
|
Year
|
$0-999
|
$1,000-1,999
|
$2,000-2,999
|
$3,000-3,999
|
$4,000+
|
|
Cape Cod
|
2002
|
15%
|
37%
|
22%
|
14%
|
11%
|
|
|
2003
|
15%
|
45%
|
23%
|
10%
|
6%
|
|
|
2004
|
10%
|
42%
|
27%
|
12%
|
9%
|
|
|
2005
|
10%
|
42%
|
27%
|
13%
|
9%
|
|
|
Jan ‘05
|
6%
|
34%
|
27%
|
19%
|
14%
|
|
|
Jan ‘06
|
5%
|
35%
|
31%
|
15%
|
13%
|
|
The Islands
|
2002
|
17%
|
34%
|
22%
|
16%
|
11%
|
|
|
2003
|
14%
|
40%
|
25%
|
12%
|
9%
|
|
|
2004
|
9%
|
34%
|
28%
|
16%
|
13%
|
|
|
2005
|
8%
|
32%
|
30%
|
16%
|
15%
|
|
|
Jan ‘05
|
4%
|
23%
|
36%
|
22%
|
15%
|
|
|
Jan ‘06
|
4%
|
23%
|
31%
|
19%
|
23%
|
Table 3. Price preferences by year
How large are the homes they want?
Surprisingly, popularity of larger homes has waned a bit since 2002, as seen in Table 4. We saw a surge in interest in large homes in 2002 due to September 11th as families sought the comfort of each other, and the large family vacation boomed. Since then we are returning to a more normal demand. 2005 was essentially the same as 2004.
|
|
Year
|
$0-999
|
$1,000-1,999
|
$2,000-2,999
|
$3,000-3,999
|
$4,000+
|
|
Cape Cod
|
2002
|
15%
|
37%
|
22%
|
14%
|
11%
|
|
|
2003
|
15%
|
45%
|
23%
|
10%
|
6%
|
|
|
2004
|
10%
|
42%
|
27%
|
12%
|
9%
|
|
|
2005
|
10%
|
42%
|
27%
|
13%
|
9%
|
|
|
Jan ‘05
|
6%
|
34%
|
27%
|
19%
|
14%
|
|
|
Jan ‘06
|
5%
|
35%
|
31%
|
15%
|
13%
|
|
The Islands
|
2002
|
17%
|
34%
|
22%
|
16%
|
11%
|
|
|
2003
|
14%
|
40%
|
25%
|
12%
|
9%
|
|
|
2004
|
9%
|
34%
|
28%
|
16%
|
13%
|
|
|
2005
|
8%
|
32%
|
30%
|
16%
|
15%
|
|
|
Jan ‘05
|
4%
|
23%
|
36%
|
22%
|
15%
|
|
|
Jan ‘06
|
4%
|
23%
|
31%
|
19%
|
23%
|
Table 4. House size trends, yearly
In 2005, as in years past, the large homes are popular early season or right after the Christmas holidays, as shown in Table 5. In fact, all but 2 and 3 bedroom homes, popular throughout the year, fluctuate quite significantly throughout the year. Owners of larger homes are wise to advertise during December to take advantage of the post-holiday rush; conversely, they are gambling if they wait until spring when demand drops off. The flip side is that demand for smaller homes peaks closest to the actual summer season. Early 2006 data is consistent with past trends.
|
|
Year
|
$0-999
|
$1,000-1,999
|
$2,000-2,999
|
$3,000-3,999
|
$4,000+
|
|
Cape Cod
|
2002
|
15%
|
37%
|
22%
|
14%
|
11%
|
|
|
2003
|
15%
|
45%
|
23%
|
10%
|
6%
|
|
|
2004
|
10%
|
42%
|
27%
|
12%
|
9%
|
|
|
2005
|
10%
|
42%
|
27%
|
13%
|
9%
|
|
|
Jan ‘05
|
6%
|
34%
|
27%
|
19%
|
14%
|
|
|
Jan ‘06
|
5%
|
35%
|
31%
|
15%
|
13%
|
|
The Islands
|
2002
|
17%
|
34%
|
22%
|
16%
|
11%
|
|
|
2003
|
14%
|
40%
|
25%
|
12%
|
9%
|
|
|
2004
|
9%
|
34%
|
28%
|
16%
|
13%
|
|
|
2005
|
8%
|
32%
|
30%
|
16%
|
15%
|
|
|
Jan ‘05
|
4%
|
23%
|
36%
|
22%
|
15%
|
|
|
Jan ‘06
|
4%
|
23%
|
31%
|
19%
|
23%
|
Table 5. House size trends, monthly 2005
How long do they want to stay?
Gone are the days of the family spending the summer on Cape Cod, at least in rental homes. Even the 2, 3 and 4 week vacation are a vanishing breed. As people’s lives get busier and choices for destinations grow in an ever-shrinking world, the one-week stay is now the staple of the Cape & Island vacation.
|
|
Year
|
$0-999
|
$1,000-1,999
|
$2,000-2,999
|
$3,000-3,999
|
$4,000+
|
|
Cape Cod
|
2002
|
15%
|
37%
|
22%
|
14%
|
11%
|
|
|
2003
|
15%
|
45%
|
23%
|
10%
|
6%
|
|
|
2004
|
10%
|
42%
|
27%
|
12%
|
9%
|
|
|
2005
|
10%
|
42%
|
27%
|
13%
|
9%
|
|
|
Jan ‘05
|
6%
|
34%
|
27%
|
19%
|
14%
|
|
|
Jan ‘06
|
5%
|
35%
|
31%
|
15%
|
13%
|
|
The Islands
|
2002
|
17%
|
34%
|
22%
|
16%
|
11%
|
|
|
2003
|
14%
|
40%
|
25%
|
12%
|
9%
|
|
|
2004
|
9%
|
34%
|
28%
|
16%
|
13%
|
|
|
2005
|
8%
|
32%
|
30%
|
16%
|
15%
|
|
|
Jan ‘05
|
4%
|
23%
|
36%
|
22%
|
15%
|
|
|
Jan ‘06
|
4%
|
23%
|
31%
|
19%
|
23%
|
Table 6. Length sought on Cape & Islands
Those that do seek the longer vacations do so early in the rental season, many starting in the all. 13.2% of January 2006 searches were for 2 or more weeks, vs. only 4% of June 2005’s. This is an increase over past years in interest in two-week vacations, so these traditions may be resurging a bit.
When do they want to vacation?
The Cape & Islands are one of the world’s great summer vacation spots, but they are open for business year-round. How much demand is there for varying parts of the year? Many of our homes are available for rent any time of year. All new construction are for year-round homes. Many owners use the summer income to pay the bills and off-season for profit. As the inventory of homes grows, demand for off-season remains stable. Supply of homes in the off-season greatly exceeds demand, so excellent values abound.
|
|
Year
|
$0-999
|
$1,000-1,999
|
$2,000-2,999
|
$3,000-3,999
|
$4,000+
|
|
Cape Cod
|
2002
|
15%
|
37%
|
22%
|
14%
|
11%
|
|
|
2003
|
15%
|
45%
|
23%
|
10%
|
6%
|
|
|
2004
|
10%
|
42%
|
27%
|
12%
|
9%
|
|
|
2005
|
10%
|
42%
|
27%
|
13%
|
9%
|
|
|
Jan ‘05
|
6%
|
34%
|
27%
|
19%
|
14%
|
|
|
Jan ‘06
|
5%
|
35%
|
31%
|
15%
|
13%
|
|
The Islands
|
2002
|
17%
|
34%
|
22%
|
16%
|
11%
|
|
|
2003
|
14%
|
40%
|
25%
|
12%
|
9%
|
|
|
2004
|
9%
|
34%
|
28%
|
16%
|
13%
|
|
|
2005
|
8%
|
32%
|
30%
|
16%
|
15%
|
|
|
Jan ‘05
|
4%
|
23%
|
36%
|
22%
|
15%
|
|
|
Jan ‘06
|
4%
|
23%
|
31%
|
19%
|
23%
|
Table 7. Demand for times of year
When do they conduct their search for their vacation rental?
When are vacationers looking? When we began WeNeedaVacation.com in 1998, the pattern was that January through March were the busiest months for vacationer traffic. This was true until the past few years.
Table 8 shows when vacationers have been seeking July and August vacations over the past 3 years. The first column is the time of the actual vacation. The “Previous Yr.” means searches for the following summer in the prior year. The other columns are when vacationers actually were looking.
|
Vacation
|
Previous Yr.
|
Jan
|
Feb
|
Mar
|
Apr
|
May
|
Jun
|
Jul
|
Aug
|
|
July 03
|
8%
|
17%
|
13%
|
16%
|
17%
|
14
|
8
|
7
|
n/a
|
|
July 04
|
13
|
19
|
15
|
13
|
7
|
14
|
14
|
6
|
n/a
|
|
July 05
|
10
|
14
|
16
|
15
|
12
|
11
|
15
|
7
|
n/a
|
|
Aug 03
|
5
|
11
|
9
|
18
|
14
|
11
|
9
|
24
|
6
|
|
Aug 04
|
10
|
13
|
10
|
10
|
6
|
12
|
14
|
17
|
7
|
|
Aug 05
|
8
|
11
|
12
|
11
|
10
|
10
|
13
|
18
|
8
|
Table 8. When are vacationers looking?
The main conclusion is that vacationers are deferring their decisions later into the season to look for vacation rentals. This is due to several important factors. 2003 & 2004 were marked with a very uncertain spring internationally, not the least event of which was the Iraq war. The economy has been recovering, but the middle class has been squeezed by continued loss of employment to overseas alternatives.
Interestingly, last season not only show signs of procrastination, but also of attenuation. Note the growth of demand in previous years. The Cape & Islands have become a year-round destination with year-round interest!
Note that a full 22% of the interest in July came in June and July itself. This compares to 15% only 2 years ago!