It's all a matter of ZIP code

Seeking real estate? You'll fall in love with some Cape Cod prices; Cambridge is another matter

(Century 21 Shoreland) Housing prices have fallen sharply in numerous places on Cape Cod, including Hyannis, where the median price at the end of 2008 was $205,000. This Pilgrim Lane house is currently listed at $136,500.

Finally, that place on Cape Cod may be affordable.

Hyannis was among the communities on the Cape that experienced significant drops in housing prices in 2008. The median price for a single-family house in that Barnstable village was a mere $205,000 by the end of the year, according to a review by Warren Group.

The towns of Brewster and Falmouth also saw large declines in real estate prices as the housing slowdown entered its fourth year, along with the Barnstable villages of Cotuit and Osterville.

This is the upside of a sluggish real estate market: For the first time in years, "we are seeing these folks having entry into first-time homes at prices that are reasonable," said Matthew Weider, the president of Century 21 Shoreland in Hyannis.

Statewide, the median home price fell almost 12 percent, to a five-year low of $305,000, new data show - the largest one-year drop since Warren Group began tracking the residential market in 1987.

Homes in some communities may now be a true bargain, said Celia Chen, senior director of housing economics at Moody's Economy.com. "In some markets, prices are probably lower than they should be because the [housing market] correction was so sharp," she said.

Also yesterday, Standard & Poor's released its monthly Case-Shiller home price indices, which lag the Warren data by one month.

For the Boston area, Case-Shiller reported that single-family home prices decreased 7.4 percent between November 2007 and November 2008. From the market's peak in September 2005, home prices in the region have dropped 15 percent.

But this being Massachusetts, some communities - including on Cape Cod - continued to defy gravity and actually saw home prices increase during sluggish 2008: Cambridge, Sherborn, and Winchester still enjoy their status as elite communities with ever-increasing house prices. In Cambridge, prices increased a remarkable 16 percent over the year, while Manchester-by-the-Sea posted a 13 percent rise. The Outer Cape duo of Truro and Wellfleet weren't far behind, at 11 and 8 percent, respectively.

John Angier, senior vice president of Coldwell Banker Residential Brokerage in Cambridge, said the city doesn't lack buyers: They come from around the world to attend or work at Harvard University, the Massachusetts Institute of Technology, and other top-tier schools, or to take jobs at the expanding hive of biotechnology companies.

The biggest challenge, Angier said, is the lack of properties to buy. Sales dropped in Cambridge by nearly 20 percent last year.

"There's been a steady interest," Angier said, adding that as many 200 prospective buyers showed up at open houses last weekend. "We are fortunate."

Generally, communities where prices went up also saw a drop in the number of properties sold, while the opposite was true in places with big price declines.

That would indicate the Massachusetts market is functioning normally: Buyers come out when prices come down, but stay home when they go up.

Statewide, the number of single-family home sales plunged 11.5 percent last year from 2007, for the fewest number of sales since 1991.

The pace did pick up by nearly 5 percent in December, however; it was the third month in 2008 with a higher number of sales than in the year-earlier period, Warren Group said.

"Prices have adjusted to the point that buyers are seeing real value and taking the opportunity to get back into the market, and that is a necessary first step to eventually turning things around," said Gary Rogers, president of the Massachusetts Association of Realtors.

Chen, the Moody's economist, expects home prices nationwide to stabilize by the end of 2009 as more bargain-hunters emerge.

Many of the communities hit hardest by the foreclosure crisis - including Lawrence, Lowell, Lynn, and the Mattapan section of Boston - continued to experience steep price declines. These urban areas also saw a spike in sales as investors and buyers took advantage of discount prices on foreclosed properties.

Two-thirds of the real estate activity in Lowell during an eight-month period in 2008 was from sales of foreclosed property, said David Turcotte, a research professor at the University of Massachusetts at Lowell.

"Prices are going down because people are buying foreclosed properties from lenders," said Turcotte, who also coedits the Merrimack Valley Housing Report. "If you were to take out foreclosure sales, there would not be much real estate activity in the region."

For people like retiree Linda Carroll, the slowdown has helped them buy their dream homes.

Carroll had been looking for a retirement property on Cape Cod for about a year, with little luck. She couldn't find anything she liked that she could afford. Last January, she spotted a Cape-style three-bedroom house about a mile from the beach on the Hyannis-Centerville line. She believes the house was a bargain - almost $100,000 less than it may have been a year before.

"It looked like the exact Cape house that I had in my mind, and I could afford it," Carroll said. "I thought I'd died and gone to heaven."

Jenifer McKim can be reached at jmckim@globe.com.