• State of the Cape – Insights into the housing market

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    State of the Cape by Mathew Cole of Cape Associates
    Cape Associates
    Cape Associates is a full-service Cape Cod custom homebuilder that offers design, permitting and cost-estimating services.


    Matthew Cole, president of Cape Associates, was asked to share his thoughts on the current housing market. This is one in a continuing series provided by Luxx  to provide you with insights behind the Cape economy.

    For a beachside community like Cape Cod, springtime pokes through the defrosted gray of winter with an exhilarating feeling of rebirth—or in another word, “change.” Perhaps most noticeably, the beaches of last summer are carved out and displaced. The annual reforming of our coastline is an appropriate metaphor for the societal reformation our community is undergoing on many fronts, from construction to sustainable living to the quality of life.

    Starting broadly and drilling down, at the national level, there has been increased regulation related to lead-safe work practices, general workplace safety, and energy codes. However, the most significant change is the pending modification to the Federal Insurance Rate Maps (FIRM), which calls to raise flood elevations by one foot.

    It’s hard to pin down exactly how one foot of vertical change will translate (horizontally) into new flood lines, but for sure, thousands of houses on Cape, previously outside of flood zones, will now be within them. Most homeowners with mortgaged properties are required to carry flood insurance, and when regulating bodies impose changes that cause rates to balloon from hundreds of dollars a year to in excess of $10,000 per year for some, emotions rise. There has been vocal pushback on the issue, and as a result, local legislators have taken these concerns to Washington.

    Many people close to the matter speculate (and it’s only that) the new maps will come into effect this summer but rate increases will be delayed for more than a year. This leaves time for homeowners to implement solutions that may abate rate increases, such as installing smart vents, raising the elevation of the house, advantageous grading of the property, filling in the basement with soil, moving mechanical equipment to a higher elevation, and many others. The Cape Cod Commission does a good job of illustrating the mapping changes on its web tool here.

    At the state level we have seen multiple new building codes and new energy codes with variable levels of increased energy efficiency required. The term ‘Stretch Energy Code’ has been given to the energy code that is one evolution more stringent than the current state-wide energy code at any point in time.

    The Stretch Energy Code was added to the state building code on July 24, 2009. Towns can choose whether or not to adopt the Stretch Energy Code and doing so comes with increased regulation and strings attached to funding for municipal renewable energy projects. Since 2009, three towns on Cape have chosen to adopt it. Mashpee was first in 2011, then Truro in early 2012 and most recently, Provincetown in July of 2012. The effects of this are just beginning to be realized.

    The benefit of more intense regulation is more energy-efficient, weather-resistant homes. However, this benefit comes with a higher cost of building for homeowners. Locally, the regulatory process for project approval is more complex than ever.

    It is not uncommon for a project to require approval from more than one local regulatory board as part of the building permit application. Going before the board of health, zoning, planning, conservation, historic district, among others, is costly. Recently we have seen a higher incident rate of large homes triggering an uproar in the community, causing other residents to propose zoning changes aimed at preventing these large homes.

    There are many large houses on the Cape that are occupied but a few weeks or months a year. These homeowners put minimal wear and tear on local infrastructure and provide a strong tax base that will help fund my children’s primary and secondary education, to name one benefit.

    Ultimately most of these anti-large-home zoning initiatives have failed, some have succeeded. Zoning is a means to shape a community. By being progressive about zoning changes, communities can determine the destiny of their towns. For instance, I believe in zoning that allows designated areas to have increased housing density. Higher densities in areas where it makes sense will, by nature, provide more housing units and help contain, or lower, the cost of dwellings in those areas.

    Call it affordable housing or workforce housing or what have you, but it is necessary for maintaining a vibrant year-round community on Cape Cod. Hopefully, zoning initiatives aimed at targeting higher-density areas will attract developers who will build for-sale and rental units at or below the median house price, which for Barnstable County in 2009 was $378,000. On Cape, “affordable housing” is not the Section 8 housing projects one might associate with the term.

    There is a whole spectrum of housing below the median house price that can be well built, energy efficient, and attainable by proud homeowners and renters who make a life here. I’ve heard an argument against affordable housing make the point that it’s okay if everyone can’t afford to live on Cape Cod. Just like winter storms wash away sand, the changing economy will wash some people off the Cape.

    From 2000 to 2010, the Cape saw residents age 25-44 decline by 26%.  Many who are left face an uphill battle against poverty. In 2011, 1 in 4 residents (roughly 50,630 individuals) was making only two times the poverty level, which for a family of four was $44,700. For a full report, please click here.

    Such an argument is shortsighted. Anyone who thinks a less-diverse community can thrive has not considered the issue fully. We need teachers, police officers, firefighters, town employees, tradesmen, small-business owners, and a wealth of others to make a town. Another way to look at it is: we need a town that can support the people who make it.

    At Cape Associates, our mission is to be your singular resource for construction projects and property maintenance—from pre-construction and regulatory approval through post-occupancy.

    By enabling my employees to support their families, they can make it possible for Cape Associates to sustain life-long, multi-generational client relationships grounded in commitment, quality, and integrity. As one of the most frigid winters in recent times winds down, I’m overcome with optimism that the coming summer season will also be a record setter by many measures.

    I expect traffic levels and occupancy rates will be high, business on Cape will continue to grow, and new opportunities will continue to emerge for professionals of all ages who want to live and work on this sandy peninsula so many of us work hard to call home.

    April 01, 2014