We keep getting richer
by Glenn RittThe Cape’s household wealth stands at $49 billion, and growing.
There is a reason national brokerages such as Morgan Stanley and Merrill Lynch have moved to bigger, more lavish offices in Hyannis. Or why a traditional bank like Cape Cod Five Cents Savings Bank has constructed a stately building for its trust and asset department in Orleans. Or why Sotheby’s decided it was time to establish its high-end real estate brand across the Cape’s most affluent communities.
Wealth and family incomes are on the rise across Cape Cod. It’s reflected not only among those who live here year-round, but also among the growing second-home population – which spends an increasing amount of time here each year.
Cape Business and Rutherford Advisors of Marstons Mills have analyzed wealth and income trends since 2000, and have also projected the growing number of affluent Cape Codders through 2010. While the trends will attract more financial services and banking resources competing for hundreds of millions of savings and investment dollars, it also spells new opportunities for high-end retailers and service companies – both established and new.
In 2000, there were about 95,000 total households on Cape Cod. That number will reach 107,500 by 2010. That’s a 12 percent increase over a decade – at a time when the state as a whole is losing population.
Over the same 10 years, the percent of full-time households on Cape Cod with incomes of $200,000 or more will have risen by a third – from about 2,300 to 3,100.
The growth rate is similar among those earning $100,000 to $150,000 annually, according to numbers provided by Rutherford and MapInfo Corporation. In 2000, there was an estimated 5,300 households earning that much; by 2010, there will be nearly 7,000.
Now consider second-home owners.
More than 13,000 of 43,000 second homes on the Cape report family incomes exceeding $150,000 annually. Another 4,500 second-home owners earn $125,000 to $150,000 a year.
They may have primary addresses elsewhere, but 32,000 of them live in Massachusetts. They are spending more extended weekends on the Cape than ever, especially as they become empty nesters. Only about 8,700 of those 43,000 second homes are owned by families that have school-age children. In contrast, 23,000 – more than half – are owned by 45- to 65-year-olds.
These older second-home owners are apt to move here full-time as they reach retirement age. And because they live in Massachusetts, they won’t have to adjust their financial planning based on different tax systems or estate requirements.
In fact, these 45- to 65-year-olds are moving to Cape Cod at a dizzying pace. Their numbers will be rising between 15 percent and 30 percent from 2005 to 2010, according to Rutherford. As pre-retirees and semi-retirees, they come with built-in wealth and many plan to continue earning incomes.
At these ages, they still are accumulating wealth, but they also are beginning to plan ways to outlive it over an extended retirement.
Financial assets and overall wealth
Cape Cod’s family income numbers are attractive for banks, financial services firms, real estate brokers, accountants, insurers and luxury retailers. Now consider the picture when you include financial assets, real estate and personal property.
The same analysis by Rutherford, relying on data from MapInfo Corporation, anticipates an additional $2.8 billion in financial assets – including cash, CDs, stocks, bonds and REITs – arriving on Cape Cod between 2005 and 2010. That translates to $20,000 in more assets per household.
The number of full-time households with at least $500,000 in financial assets is expected to rise from 4,000 in 2005 to 5,300 in 2010.
Now add real estate – especially after nearly six years of double-digit price appreciation that has made paper millionaires out of thousands of Cape Codders. While that wealth may not be instantly liquid, and the majority of homeowners have no desire to cash in, many do plan to leverage that equity into their retirement years.
Aggregate wealth across Cape Cod in 2005 was nearly $49 billion, according to MapInfo. By 2010, it will reach $58 billion. The number of households reporting wealth exceeding $1.5 million should rise from 5,800 to 7,700; and those with $1 million to $1.5 million is expected to increase form 6,200 to 8,000 households.
Consider that in four years, about 40,000 of the projected 107,000 households will report wealth exceeding $500,000. Average household wealth across the entire Cape – factoring in the 7,000 households with less than $25,000 of wealth – will reach $546,000 in 2010.
Originally published in the Sept/Oct 2006 issue of Cape Business.
Glenn Ritt Glenn Ritt is editor and co-publisher of Cape Business Publishing LLC. He is the former publisher of Cape Cod Community Newspapers and editor of The Bergen Record in New Jersey. 
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