On the Cape, a waiting game

Sellers don't need to sell and buyers don't need to buy, leaving this vacation market treading water while housing prices settle

After they returned to Long Island from their Cape Cod vacation this summer, Julius and Jody Rao just couldn't get back into a groove.

"We both realized we were sad," said Jody Rao. They missed the Cape. "It was like an epiphany."

So, rather than retire to Florida or North Carolina, as most of their neighbors do, the Raos decided to buy on the Cape. Even with retirement a few years off, the couple decided to look now, to see if the soft Massachusetts real estate market offered any bargains.

But a funny thing happened on the way to the fire sale: "We found prices were a little high," Jody Rao said.

So they'll wait.

As will James and Rose Mulligan , who are at the other end of the sales spectrum. Owners of a five-bedroom home in Orleans in which they've spent the last 13 summers, the Mulligans have listed the house they built for $980,000. The house has boat access and lots of privacy.

The house has been on the market since June, and if it doesn't sell for the price the Mulligans want, no big deal.

"The good news for us is we'll still get to spend another summer there," said James Mulligan, who lives in Lady Lake, Fla. "The grandkids will get to come another summer. The market is quiet. We understand it's quiet. So we'll patiently wait."

Welcome to the vacation market on Cape Cod, where the vexing standoff between sellers and buyers that is bedeviling the broader real estate arena is especially pronounced.

Steve Perry of Buyer Brokerage of Osterville said the attitude on the Cape is different than, say, suburban markets. "Here, if a house sells, 'OK.' If not, 'Oh well, we'll spend another summer. Ho hum.' The sellers don't need to sell and the buyers don't need to buy."

Or, as Robert Wilkinson of Wilkinson & Associates Real Estate in Orleans bluntly put it: "There's no gun to their heads."

Despite indicators that typically signal reductions, prices on the Cape are holding strong. Single-family home sales through October were down 22 percent from a year earlier, compared to a statewide decline of 15 percent, according to Warren Group, real estate data publishers. There are also 51 percent more homes available for sale now than a year ago this time.

And Barnstable County had the steepest increase in the number of foreclosures -- 84 percent -- among Massachusetts counties for the 12 months ended Sept. 30, according to ForeclosuresMass.com.

Yet prices have not budged much: The median sale price for a single-family home, $372,500, is down just 1.97 percent from a year ago, compared to a 4.38 percent drop statewide.

The Mulligans approach to selling their home illustrates the situation: Owners of second homes are willing to wait things out. Mulligan, for example, said he's willing to wait two years, even three, to sell the Orleans house.

"In our situation, there's no reason to drop the price because we know the market will recover," James Mulligan said. And when it does, "we'll be there."

Indeed, a sampling of recent listings shows that just 15 percent of Cape homes, 173 out 1,135, had asking prices reduced during the last three months, a period in which the broader real estate market has been in decline . During the same period in Norfolk County, for example, 64 percent of listed homes had price reductions.

Real estate brokers said some sellers are reluctant to acknowledge that their homes, the setting for countless cherished memories, may not fetch the price they expect.

"If your neighbor sold his house 18 to 24 months ago for a fair bit more than you're going to get, that's really, really hard to accept," Wilkinson said.

Frank Moore and Banc Winsor took Wilkinson's advice, and then some. They listed their Eastham home at $785,000, $10,000 less than what Wilkinson's firm suggested as a sales price.

It worked. They accepted an offer just two months later, well under the 140-day average that Cape homes are sitting on the market, according to Multiple Listing Service.

With modern amenities, Cape Cod charm, and a location overlooking a salt marsh, the house "certainly showed very well," said Moore, a retired broker. "But I think the key, more than anything else, is that we weren't greedy. Part of the trick is getting a broker to represent you who's going to be honest about the price."

The house is scheduled for close later this month ; Moore declined to reveal the selling price, but said it is within 5 percent of the asking price.

"I knew that in this market, it would not pay to price too high," Moore said.

As sanguine as they might be, sellers of some long-idle Cape homes may one day be forced to adjust expectations to market realities. For example, sellers of a post-and-beam home on 1 1/3 acres in Yarmouth Port relisted the house in October for $829,000 after first putting it on the market in July 2005 for $50,000 more. And for three years, the owner of a 3-acre spread overlooking Nantucket Sound in Harwich Port stuck to a $4.3 million asking price, until dropping it to $3.75 million during the summer.

Though prices to her remain a bit high, Karen Berard Johnson of Buyer Brokers of Cape Cod argued that now is a good a time to buy: There are plenty of houses to choose from, and interest rates remain low.

Moreover, Cape homes are unlikely to get much cheaper, she said.

"I think for the next year, we're going to see continued price reductions, but nothing major," said Johnson, who is working with the Raos.

That teasing possibility of price reductions has created "fingernail chewers," said Perry, the Osterville buyer broker. "Buyers right now are cautious because of what they're seeing on TV and reading," he said. "They think that the theoretical bottom hasn't hit yet."

Despite such cautions, Jody Rao believes prices will fall considerably in the next year, making it a good time to be out shopping -- and possibly even buying.

She and her husband hope to find a house fairly close to the beach in the mid- to high-$300,000 range. Cape Cod is still a bargain compared to Long Island, where they now live.

"In the mid-threes, you're really kind of looking at a dump if you want to be close to the water" on Cape Cod, said Rao. "But on Long Island, I couldn't even get a dump for the mid-$300s."