Cape Cod faces extraordinary housing challenges: One in ten homes is a short-term rental and another 25% of all homes are set aside for seasonal or occasional use. Prices are unattainable for middle-income households, not to mention seasonal service workers. Housing development is limited by zoning constraints, exposure to climate risk, lack of wastewater infrastructure, and sensitive environmental resources. Older adults already constitute one-third of the Cape’s population and head up half of its households. EOHLC projects the region will see continued population declines over the coming decades, no growth of under-60 households, and large increases in householders over the age of 75. While the total number of year-round resident households on the Cape is not projected to see a net increase, the region has significant housing needs. To make up for the anticipated loss of year-round units to seasonal use and address the need for additional affordable housing units, new production or conversion of existing units will be necessary.
Regional Conditions
The Cape Cod region includes 15 towns that make up Barnstable County and the ancestral land of the Mashpee Wampanoag tribe. These coastal towns include suburban neighborhoods, historic town and village centers, and scattered rural homes, and the relatively urban downtown Hyannis in Barnstable. The region has long attracted tourists, second homeowners, and retirees attracted by the many beaches, ponds, and natural amenities. Historic development patterns and current zoning and regulatory factors encourage single-family homes in the region. Seventy-nine percent of the land in Barnstable County is zoned to allow single-family homes by right. By contrast, just 23% of land is zoned to allow two or more units by right (not including accessory dwelling units) and just 2% of land is zoned to allow three or more units.
The Cape is a major tourist destination. Second homes and short-term and vacation rentals occupy a significant portion of the region’s housing supply and limit options for year-round residents. Approximately 36% of housing units in Barnstable County are classified as “seasonal, recreational, or occasional use” properties, and 10% of the homes in the region were listed on the short-term rental registry and actively rented. For property owners, short term rentals are more financially advantageous than year-round usage: UMDI has estimated that a nightly rate of nearly $400 (the average for 2022), a property owner could provide short term leases for just 52 days per year and generate the same amount of revenue as the median year-round rent. In other words, it takes just two months for the revenue from the average 3-bedroom short-term rental to exceed the revenue from renting on year-round basis. The share of seasonal units is growing. EOHLC estimates that 5,800 year-round homes on Cape Cod were converted to seasonal use over the period 2009 – 2019, almost 6% of the total year-round homes.
The most recent Cape Cod housing needs assessment found that in 2022, a household would need to earn $210,000 annually to be able to affordably purchase a median-priced single-family home, far exceeding the 2022 estimated median household income of $91,400. (Affordable purchase means that a household is not spending more than 30% of their income on housing costs). The Cape’s housing market challenges threaten the region’s economy because businesses and municipalities struggle to recruit and retain employees who cannot afford or access year-round housing on the Cape. As a result of rising costs and limited supply of year-round housing, many renters face housing instability. The Mashpee Wampanoag Tribal Council unanimously declared a state of emergency due to the homelessness crisis impacting tribal members.
Development on Cape Cod is limited by numerous environmental factors: much of the land is protected open space, and development must consider the need to protect and preserve the area’s many freshwater ponds and nitrogen-sensitive embayments. Low-impact development, open space residential design, small-scale infill housing, and expanded sewer and wastewater disposal are all strategies or approaches that can enable new housing while protecting the Cape’s unique environmental resources.
Projections and Housing Need
The number of Cape Cod residents has risen and fallen over the past 35 years, with population declines projected for the coming decades. After rising during the 1990s, Cape Cod population fell by 6,300 residents from 2000 to 2010, and population estimates after 2010 indicated that the number of year-round residents continued to decline over the subsequent nine years. Driven in large part by temporary relocation to vacation homes during the COVID lockdowns, the 2020 Census showed an increase of population to 229,000, up about 7,000 from the decade prior.
Demographically, Cape Cod is a much older region than the rest of Massachusetts: 32% of the population is age 65 or older, up from 25% in 2010. Not only is the older adult population growing, but youth and younger adult populations are declining. From 2010 – 2020, the under-20 population on the Cape declined by 4,600 and the 20-50 population dropped by 3,700, while the older adult population increased by 19,900 residents. Post-2020 Census estimates indicate that the population has started to decline again. Population projections prepared by UMDI for the Statewide Housing Plan indicate that the number of year-round residents is likely to drop by six to ten percent over the next decade.
The aging of the Cape Cod population is as significant as the total number of residents. As a result of the aging population and decline of younger adults, the number of households in the region is projected to decline slightly in the coming years. The Statewide Housing Plan Projections indicate households with heads under age 60 will remain stable with no growth between 2025 and 2035, while households with heads over the age of 75 will see a substantial growth by 4,700 households, or 19%.
Most household growth among people over 75 will be in one- or two-person households with incomes below $75,000 per year.
While there is no projected net growth in the number of households on the Cape, the region has significant housing needs. To make up for anticipated loss of year-round units to seasonal use and address the need for additional affordable housing units, new production or conversion of existing units will be necessary. Specifically, EOHLC estimates that the region needs to add at least 3,130 homes to the supply over the next ten years to achieve a healthy vacancy rate and compensate for seasonal conversion. This change is largely driven by the need to compensate for anticipated seasonal conversion of more than 6,000 units and an estimated latent demand for household formation of more than 2,000 households—these drivers are only partially offset by the projected decline in households attributable to demographic changes. If the region experiences slower population decline consistent with the high-series projections, it could need as many as 4,500 homes over that same period.
Planning and Policy Efforts
The region is working to develop and implement strategies for growth that are “responsive to context, allowing for the restoration, preservation, and protection of the Cape’s unique resources while promoting economic and community resilience.” To combat the region’s housing challenges, some municipalities in the region are leveraging municipal tax revenue (often generated from the tourist economy) to support housing and infrastructure. Housing Cape Cod: The Regional Strategy (2024) notes several local examples that leverage municipal revenue generated from the tourist economy to support affordable housing. Provincetown dedicates 100% of its short-term rental community impact fee revenue and a portion of its rooms tax revenue to housing initiatives. Barnstable and Orleans dedicate 100% of their local option rooms occupancy tax revenue toward wastewater infrastructure. Falmouth dedicates 100% of its Short-term Rental Community Impact Fee revenues to its affordable housing fund. A pilot Regional Housing Services Office offers a collaborative and regional approach to shared housing challenges for municipalities in the region. Other regional entities and tools are being explored, such as a regional housing land bank and community land trust and year-round housing incentive programs.
External Resources:
- Cape Cod Commission: https://capecodcommission.org/
- Cape Cod Regional Housing Needs Assessment. Cape Cod Commission. https://www.capecodcommission.org/our-work/regional-housing-needs-assessment/
- Housing Cape Cod: The Regional Strategy. Cape Cod Commission. https://www.capecodcommission.org/our-work/regional-housing-strategy