“Who’s going to cut your filet mignon?” – Realtors On The Cape Housing Crisis

CAPE COD – Lindsey O’Connell, a realtor with Orleans Village Properties,  lives in Chatham “on a cul-de-sac with eight homes. I am one of two year-round residents on the street,” she said.

Joe Arnao, area manager for the Lower Cape and the Outer Cape for William Raveis Real Estate, lives in Sandwich on a street 10 minutes from the Cape Cod Canal bridges. “We’re not near the beach by any means,” he said. “This is a family neighborhood.”

And yet there are four seasonal homes on his street, he said. “To me, it seems kind of weird,” said Arnao, who has been on the same street for 26 years.

** This story was originally published March 17 **

This is a story about the housing crisis on Cape Cod as seen from the perspective of a handful of real estate agents across the Cape. Cape Cod Wave Magazine was curious as to what agents are seeing and what they think can be done to improve the situation. So we asked.

The vacant homes are “not just waterfront homes, but all over in all kinds of neighborhoods.” – Laura Clements, Cove Road Real Estate, Orleans

“There are some entire streets that are empty this time of year,” said O’Connell of winter. “I’d say 90 percent of the homes in Chatham are unoccupied summer residences,” she said.

The vacant homes are “not just waterfront homes, but all over in all kinds of neighborhoods,” said Laura Clements, owner/broker of Cove Road Real Estate in Orleans. 

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“The housing crisis on the Cape means rentals.”

While there are homes all over Cape Cod that are empty most of the year, there are also people on Cape Cod desperate for a place to rent.

“For me, the housing crisis on the Cape means rentals,” said Ned Chatelain, owner of Chatelain Real Estate of South Dennis. “There are almost no rentals at all on Cape Cod,” he said.

“Here in Provincetown,” said Bob O’Malley, broker/owner of Beachfront Realty in Provincetown, “it’s all history. We were the canary in the coal mine. “The canary is dead. The coal mine has exploded.”

The situation is so bad in Provincetown, he said, the town has “made it a priority. We created a town position [to deal with the crisis] at the highest executive level of the town.”

The situation is certainly different, or perhaps in different stages, in the 15 towns of the Cape. But agents agree that the housing situation, with its many moving parts, is getting worse.

“Because we live in such a high-end resort community, rentals are few and far between, and affordable rentals are even worse. The majority of rentals we have right now are summer rentals,” said O’Connell.

“The rental market is tight,” said Arnao. “There’s not much inventory out there. Many who have investment properties are using them as summer rentals.”

Greg Kiely, a managing broker for Southeby’s International, overseeing 75 agents in both Osterville and Falmouth, gave as an example a certain house in Osterville that is a winter rental but when summer comes it will turn into a weekly rental for vacationers.

“Because we live in such a high-end resort community, rentals are few and far between, and affordable rentals are even worse. The majority of rentals we have right now are summer rentals.” – Lindsey O’Connell, Orleans Village Properties

“It will be more expensive per week than it is per month right now,” he said. “Our communities are so desirable that the homeowner has no choice but to rent it out at a significantly higher rate,” said Kiely.

This is especially true of an investor who may have recently purchased and thus needs the income to offset the cost of purchasing the house, he said. This “double-edged sword,” as Kiely called it, causes many people living in nice winter rentals to scramble to find summer housing.

For some year-round residents, Ron Bourgeois, owner manager of Bass River Properties of West Dennis, said, summer housing means camping in Nickerson State Park. For others, he said, it means couch surfing. This is just part of the entire trickle-down effect of the current situation.

“It’s a tough way,” he said. “You don’t have stability for your children.”

Bourgeois is not just an agent. He is also a landlord of 174 rental units in the mid-Cape, and, he said, he manages 125 units for 35 different owners. “There is tremendous demand here on the Cape.”

Bourgeois, who started his business by sleeping in his office and “keeping my pillow in my filing cabinet,” said he understood the struggle of tenants to pay rent.

“My lowest units, a studio, “goes for $900,” he said. “Two bedrooms go for $1,400 or $1,500,” he said. He acknowledged the numbers sound high but said all landlords charge that “because they can get it. Everybody needs a roof over their head.”

“Since I started in 1994,” said Bourgeois, “rents have basically doubled, but people’s incomes have not.”

“I work with a lot of immigrants. Brazilians, Ecuadorians. They worked hard to get out of their country. They spend every dollar smartly. They go to food pantries. They work hard. They don’t go out to dinner like I do.”

“These people are decent people. They’re honorable people,” he said. “Unfortunately that’s the way it is. Everybody has got to make their way in this world.”

Bourgeois said he had vacationed in the Caribbean on Mustique Island, where Mick Jagger and Bryan Adams have houses, and there was “a certain area that had housing for workers.” More workforce housing similar to what is available on an exclusive vacation area like that may be what is needed on the Cape, he said.

 

“I live and breath the housing crisis every day.”

The Cape Cod & Islands Association of Realtors is very involved in trying to solve the housing crisis, said Kiely, who serves as president of the organization this year.

“People are surprised,” he said. “Realtors don’t have a reputation for getting involved in this stuff.”

But, said Kiely, “Realtors are very strong partners” with government officials, the nonprofit Housing Assistance Corporation and with the Cape Cod Chamber of Commerce in discussions about solutions.

But beyond those agency-wide discussions, Realtors say the housing crisis is part of their profession.

“Yes, I am an agent,” said O’Connell. “I live and breath the housing crisis every day by being in the job I am in,” she said.

“Realtors are just members of the community,” said Kiely.

“We are kind of the first point of access to members of the community,” he said.

As that point of access, agents have a unique perspective on those with a dream, or a plan, of owning a home. They know of the intense and somewhat unfair competition from investors and retirees, and they know that first-time home owners rent before they buy. Thus, it is all related.

And the web is even more tangled because a community, after all, is an actual place.

O’Connell, who is a board member of the Chatham Community Housing Partnership, said she has heard people opposed to any zoning change that would allow more renters because “they think it will bring in riff-raff.”

“They stigmatize rentals,” she said. She specifically remembered, “this group of older gentleman, the cigar club… talking about how, We don’t want those people [who might be renting in proposed accessory dwelling units.] We don’t want Chatham going down the drain.”

But as she recalled the story of this conversation about “those people,” she said many people do not understand how life on Cape Cod is connected. As for the cigar club and their ilk, she said, “Who’s going to cut your beef when you go into the Chatham Village Market? Who’s going to cut your filet mignon?”

“And when you live in your house in the middle of the woods somewhere, and you need to call someone because of an emergency, don’t call the Fire Department. They can’t afford to live there anymore,” said O’Connell.

 

Cape Cod Is Related To Massachusetts, But Different

According to O’Connell, “A lot is happening in Massachusetts. A lot of things are booming right now.”

Kiely “spent the first two-thirds of my career in the immediate Boston suburbs,” he said.

“Right now, we talk about an inventory crisis statewide,” he said. “There are fewer [houses for sale] than there have ever been before,” said Kiely.

The good news, he said, is that 20 percent of all houses available in the state are on the Cape. “It’s hard here, but it’s harder elsewhere,” he said. “There are houses twice as large and a third less expensive on the Cape than in Brookline,” he said.

“There are great opportunities for people who want to move to the Cape,” said Kiely. As for people already on the Cape, things are stagnating.

Arnao said, “There is a huge crunch in the mid and lower part of the market. It seems there is less and less development for these 400 [thousand dollars] and down properties.”

Bourgeois said, “Across the whole country, the middle class and the lower-middle class is getting screwed.”

On the Cape, said Arnao, “There are multiple markets. It’s primary residents, second home owners and investors. They are all vying for the same limited land. There is such a slowdown on building attainable houses. I don’t even want to say affordable.”

“Forty-five years ago,” said Chatelain, “there were still huge swaths of land available on the Cape.” There was one developer with a particular design, said Chatelain, and “he built about a zillion of them in the mid-Cape.”

It was a time “when a waitress could own a three bedroom house,” he said.

But that was long ago. “These are basic economic things,” said Chatelain. “There is a scarcity of land, so the costs go way up.”

“These are basic economic things. There is a scarcity of land, so the costs go way up.” – Ned Chatelain, Chatelain Real Estate of South Dennis

Because the price of land has increased, a developer feels financially pressured to put a larger house on a property, he said.

While homes on the Cape “are still significantly cheaper than near Boston,” Kiely said, the homes that are newly available on the Cape are “are coming in at much higher price points.”

This new market of “disproportionately higher-priced homes,” said Kiely has caused something of a freeze in both upsizing and downsizing, he said.

“People who have always made the Cape what it is can’t move out of the house they bought five or six years ago. There is nothing to move up to and nothing to move down to,” he said.

“It’s kept seniors in a house they can’t downsize from,” he said. “It’s kept seasonal homeowners from finding a different house… Turnover is not happening,” he said.

The housing market on Cape “just doesn’t work,” he said. “You need to have movement in all sectors for it to flow.”

 

The “Starter Home” Market

According to Clements, of Cove Real Estate in Orleans, “Forty percent of all people looking for homes on the Cape are looking for homes under $400,00.”

As of late Febuary, said Clements, “Seventeen percent of all homes active or being shown on the Cape are under $400,000.”

There are more people who want lower-end priced homes than there are such homes. And those prices are rising.

“Where prices have gone up is on the low end,” said Clements. “Two years ago, for example, someone could purchase a home in Brewster for under $300,000. Maybe 200 to 250. It needed renovation but not a complete overhaul.”

“Most of those homes now,” said Clements, cost $350,000 and they are in worse shape than those selling for 250 two years ago.”

Chatelain said, “It’s a challenge to find anything that is livable for under $300,000.”

In addition, said O’Connell, “There is less and less inventory hitting the market.”

The reason, said Clements, is “buyer confidence from folks looking for second homes or investment properties that they can rent to vacationers.”

“Say you have a three-bedroom cottage,” said O’Connell. “Some multi-millionaire scoops it up and puts up a mansion and there goes your affordable house. There is constant turnover of demolish and build bigger.”

Between primary homeowners, second-home owners, and investors, said Arnao, “two out of three can afford to buy something. But the ones that need to live there can’t.”

Chatelain said that if a reasonably-priced home is found, the down payment required “is not a ridiculous amount of money.” But rent prices are so high on the Cape that it makes saving that amount difficult to impossible for many people, he said.

“You are already paying a mortgage when you pay rent,” said Clements of the high rents on the Cape. “There’s no doubt about it.”

And then there is the competition from those with financial resources. 

“A lot of young families are trying to get their first home,” she said. “They are just struggling, trying to come up with a down payment and they are competing with investment buyers qualifying for large down payments… It’s absolutely a big circle. It’s horrible. And it’s getting worse faster.”

“The good side,” said Arnao, “is that there are some fantastic mortgage programs … a bunch are state programs. For municipal employees, doctors and nurses, first-time home buyers.”

Clements said, “A lot of towns have established community preservation trusts. They have allocated money for affordable housing. They help local buyers with down payments, mortgage assistance to closing costs.”

“It’s an excellent idea,” she said. “The problem occurs with these preservation funds when a buyer has to have an offer accepted on a property before they can go through the process to obtain those funds.”

“There is a whole other side to this,” she said. “Let’s say the local buyer gets their offer accepted. They get their funds. Now the house becomes deed-restricted as an affordable house. If they spend money and hours to improve the house, they won’t get their equity out.”

 

An FHA Loan, A Fixer-Upper & A Competitor With Cash – A Short Story

“I don’t know if a lot of people know what it is like for someone struggling to find affordable housing and what the process of purchasing a home really looks like for them,” said O’Connell.

“I had a client a couple of years ago that purchased a home in Yarmouth. It was a $325,000 house,” she said.

The client, she said, was a nurse who worked at a luxury assisted living facility. “She was a hustling single mom, but the only way she would purchase a home was with an [Federal Housing Administration] FHA loan,” said O’Connell.

“When you go through an FHA loan, they have stuff they like and stuff they don’t like. For instance, if the paint is chipping on the outside of the house, you’re not going to get the loan,” she said.

The paint on this particular house was, in fact, chipping.

“We were lucky to deal with a seller who was willing to paint it and fix it up a little bit. I told her [the seller] her [the nurse’s] story. She was very generous.” The seller had her house painted. “She didn’t have to do that,” said O’Connell.

There were others “who didn’t have to get FHA approval” who wanted the house “who could pay cash or get the money through traditional financing,” said O’Connell.

“It’s just a small example of how the cards are stacked against you, but it can blow the whole deal,” said O’Connell.

As a Realtor, O’Connell said, “We try to plead the case.”

 

Housing & Jobs, Rinse & Repeat

The housing crisis on Cape Cod, with many moving parts and tangents, has one very specific parallel line: jobs and the wages of those jobs.

This is, after all, Cape Cod – land of clam shacks and all sorts of small businesses, many surviving on low margins while employing folks who live here and work for wages in the range of minimum wage.

 “Affordable housing and jobs are one and the same,” said O’Connell. “They’re literally lying in the same bed together.”

One thing driving the hot housing market near Boston, said Kiely, is “all the job innovation. There are young professionals trying to attain housing for the first time and they need to attain it in those prime suburbs.”

That market is making the still-expensive Cape market look reasonable, he said, and some people are “abandoning the Boston suburbs,” said Kiely.

The problem on the Cape is that there are not enough of the type of jobs needed to sustain that market, he said. There is nothing like a hot biotech sector on the Cape. This is a tourism community.

“There aren’t a lot of jobs that offer a diverse opportunity for multiple people in the same family,” said Kiely. It’s a common story. One spouse can find a good paying job but the other, on Cape Cod, has a more difficult time.

The further one goes down the Cape, said Kiely, the more difficult it gets. “From the divided highway to the bridges, there is enough of a year-round population,” he said, that there is workforce housing and a variety of opportunities.

Plus those on the Upper Cape have an opportunity to commute off Cape for work, said Kiely, who lives in Centerville. “My wife commutes to Cambridge every day,” he said. “If we lived in Orleans, that wouldn’t work.”

“There aren’t a lot of jobs that offer a diverse opportunity for multiple people in the same family.” – Greg Kiely, Southeby’s International.

“Between Provincetown and Dennis,” he said, “unless you own your own company or you already have the infrastructure set up so you can telecommute, there’s not much year-round income available to you.”

And even if someone makes a good income, there is not rental housing available.

“I have a woman who works for me,” said O’Malley, of Beachfront Realty of Provincetown. “She’s a housepainter. I’ve known her for 30 years. She has a lot of clients. She is a good, high-end painter. The contractors like her, she is so neat and clean,” he said.

‘She is basically homeless,” he said. “She’s been staying with friends. Unfortunately, two friends passed away. She’s been staying with them, taking care of them while they were dying.”

“She’s a working person who makes good money and has good credit,” said O’Malley. “She has references. She used to have a dog, but she didn’t get another dog because it compounds her degree of difficulty in finding housing.”

She still is looking for housing, he said. “Even with a friend like me who is a Realtor,” he said.

And Arnao said, “On the Upper Cape, a lot of people can commute off Cape for work. Further down, there’s less opportunity for housing, and fewer jobs. You can’t commute and get paid. “

Chatelain noted that an ongoing public discussion has been, “how can we attract more year-round jobs and make the year-round economy a more winning proposition.”

There is talk of oyster farming, the Blue Economy and on and on.

Chatelain said there is a silver lining to all the seasonal homes because it is “a huge opportunity” for those who take care of those homes.

“There are opportunities in the winter that we are not filling as much as we can,” he said. “We need to get more creative about the seasonal economy.”

“The more year-round residents we can have here,” said O’Connell, “the more businesses are sustainable and the more money they can pay people to work there.”

“That is the equation,” said O’Connell. “It’s just where on the equation do you start to try to fix things.”

And yet, there is another side of the jobs plus housing equation: the actual work those people do. 

“You try to call a plumber right now to service your furnace,” said O’Connell. “And you are the new guy in the neighborhood. But he can’t take any new customers because he can’t hire any new guys because nobody can live here.”

And to make it more complicated, said Kiely, even if a young family with kids is able to find an affordable home, “Child care providers can’t make enough money to live here.”

The cautionary tale of Nantucket Island “comes up at every meeting” of the Chatham Community Housing Partnership, said O’Connell. “Nobody can work there and live there year round,” she said of Nantucket. “Teachers included. Teachers, health care workers, they are electing not to work there.”

So will Chatham become like Nantucket? “Personally, I think we are already there,” said O’Connell. In the winter, she said, it “turns into a ghost town.”

O’Malley, of Beachfront Realty in Provincetown, also said, “We are Nantucket… Nobody is living here in the winter. Truro is just as bad.”

“In Truro, there’s no stores open,” O’Malley said in late February. “There’s no place to go get milk or bread in the winter. That’s because nobody can live there.”

“There’s no magic answers,” said Bourgeois of Bass River Properties. “It’s going to get worse before it gets better.”

 

More Tangents – Wastewater, Zoning & The Word, “Quaint”

“It’s hard to live on Cape Cod year round,” said Kiely. “But it’s also a passion we all have to live on the Cape.” And, said Kiely, comparing Cape Cod to other places he has lived, “This community has a lot more stickiness. This is a place you live because you want to live here.”

“The challenge,” said Arnao, “is that the people who live here like it the way it is. They like it rural. They don’t want to see it change.”

It is a Cape-wide attitude and also very local. “Nobody wants it in their backyard,” said Arnao of any possible development of housing.

“People don’t want it in their backyard, and government doesn’t want to change the zoning,” said Arnao.

“The challenge is that the people who live here like it the way it is. They like it rural. They don’t want to see it change.” – Joe Arnao, William Raveis Real Estate

Plus, no one wants to raise taxes, said Bourgeois. “The voting public is getting older. I know multi-millionaires who will fight tooth and nail so their taxes don’t go up,” he said.

“I understand wanting to prevent Cape Cod from being built up like Miami Beach,” said O’Connell. “There is a right way to develop so it doesn’t look like that.”

O’Connell said, “The people that like to argue that they want to keep Cape Cod quaint are the ones tearing down small cottages and building mansions.”

To get housing for working people, Kiely said, “We need programs for more creative land use.” Most important, he said, “We need to fix the wastewater issue.”

“Once we switch out our antiquated use of septic systems and putting our wastewater in the ground… in certain neighborhoods that could handle it, you could put in four times as many houses,” said Kiely.

If wastewater issues can be solved, said Arnao, “You can loosen up some of the areas and actually put in some mixed use properties similar to Mashpee Commons. Housing and commerce in one spot.”

With a multi-purpose property of business and residential,” said O’Connell, “We could sustain businesses and give people a place to live.”

But economics makes even that a difficult task, said O’Connell. She cited new “luxury apartments” over a pizza shop on Main Street in Chatham as an example of the challenge.

Bourgeois said, “There’s no incentive for people to build apartments if you can build a McMansion and make a substantial profit.”

“It’s baby steps,” said Chatelain. “People don’t like change no matter what it looks like.”

 

A Multi-Layered Conversation

Beyond wastewater, housing and jobs, the conversation should include transportation, zoning and more to solve the region’s interrelated issues, said Kiely.

“There has to be a five or six or seven layer conversation all at once,” he said.

“It’s all intertwined,” said Kiely. “It’s all connected. Transportation, infrastructure, wastewater and housing. You can’t fix one without fixing the other three.”

The good news, said Kiely, is that the multi-layered conversation has started to happen.

“I’ve seen some big stakeholders really change the approach in the past two or three years to bring their voices together in a much more connected way,” said Kiely.

“There has been a shift in the Association of Realtors to much more prominently create these conversations,” said Kiely. “We’re at a time where a lot of interests realize we need to work together.”

Kiely credited the leaders of the various organizations for working to solve the housing problem. “We are a little ahead of the curve compared to other areas of the Commonwealth,” he said.

There have been productive conversations between the organizations and legislative leaders, he said. “There are a lot of different stakeholders.”

“I’ve never seen a group of independent organizations come together as well as these organizations have come together,” said Kiely.

“The ball is moving forward,” he said. “Slowly, but it is moving forward.”

 

Accessory Dwelling Units & Zoning Changes – Ideas

“There’s no silver bullet when it comes to this issue,” said Kiely.

And yet one solution that almost every Realtor interviewed for this story mentioned was the possibility of allowing and encouraging accessory dwelling units on single family homes.

“There is now a Cape wide conversation about accessory dwelling units,” said Kiely.

“We have the ability to turn it around,” he said of the housing crisis.

“Chatham passed an accessory dwelling unit law,” said O’Connell. The idea, she said, “is to incentivize people to create rental units in their home. For instance, in a finished basement or a space over a garage.”

The law, which passed in May 2019, allows an accessory dwelling unit to be constructed with only a building permit rather than also requiring a special permit. It allowed up to 20 units per year to be built. 

“Chatham has one application,” said O’Connell.

“A lot of people were hesitant to pass it,” she said. “They were opposed to having apartment dwellings on private property. They said there would be parking in the street and constant people in and out.”

“The rental market is stigmatized,” said O’Connell. “I find a lot of people refer to renters as ‘those people.’”

Beyond the spreading concept, with varying success. of accessory dwelling units, Arnao said, “There are definitely some efforts to craft zoning to create more housing.”

“Governments have to loosen up and allow developers to build housing that people need,” said Arnao.

One change that could put a check on the powerful not-in-my-backyard forces that always seem to arise with any suggested zoning change, said Arnao, would be to allow for change to be done by a majority vote of town meeting rather than two-thirds. The proposal has been endorsed by Governor Charlie Baker.

“This would allow more flexibility,” said Arnao. “Most of the issues arise when the NIMBY’s come around… I see it every time I’ve been to a town meeting.”

Of course, it’s easy to simply blame people who don’t want it in their backyard without also considering the fragile and yet spectacular environment that is Cape Cod.

Kiely said, “We’re not looking to destroy the character of the environment we have. That’s what makes us so desirable those eight or ten weeks a year.”

The idea, said Kiely is to “encourage smart growth on a number of levels.”

“If we do this, then businesses can feel comfortable knowing they have a stable workforce and people will set down roots more deeply than they do now,” he said.

Kiely is optimistic about the changes being tried on the Cape.

“There is an incredible opportunity right now with the money that is flowing in from short-term rental taxes,” said Kiely of new law that went into effect in July 2019. “Each town has control over how that money is going to be spent. The biggest fear is that this money is not going to be spent to address housing-related issues.”

The amount coming into Cape towns, said Kiely, will be “millions of dollars… This is the first year we will see it.”

 “We’re starting to control things that are controllable,” he said. “We have started to move the conversation forward.”

Using a baseball metaphor, Kiely said, “We’ve hit a single and we’re on first base. But we’re not going to score a run unless someone does something behind us.”

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