Life On The Sandbar: The "K" Economy

[Essay]

Here on Cape Cod, you can see the "K" economy firsthand, and it is right next door. The house went on the market around Memorial Day, and since I've been up here, not one person has stopped by to look at it.

When you look at home sales, what stands out is that nearly all the sales are for more than $1 million. In fact, the sweet spot seems to be around $1.25 million. Below that, sales are few and far between. There may be a reason for that: many of those smaller cottages are probably being kept in the families that have owned them for generations. But many other can no long afford a vacation home.

Economists describe today's economy as 'K-shaped': because those with assets keep getting richer while everyone else struggles to keep surviving. 

But in Provincetown, condos run into the low millions. When I was looking for a cottage here back in 2018, an agent showed me a place in P'town—a loft cottage about twenty feet wide and thirty feet long with a sleeping loft. The asking price was $300,000, and it didn't even include parking. You had to rent a parking space from the town.

Then there was the guy who bought a cottage for $5.5 million that was literally falling into the ocean. Everyone said it was falling into the ocean. The town and the National Park Service even took the previous owner to court in an attempt to stop the sale, arguing that the house would eventually be lost to erosion. The court ruled that it was the owner's land.

And guess what the new owner is doing now? He's suing the bank, claiming it was irresponsible to give him the loan. He's "claiming that the bank shouldn't have lent him the money because 'no rational person... would have considered purchasing the Property, and certainly not at the full asking price,'" according to the court filing.

I don't even know if the guy looked at the property before buying it. You would think he might have questioned why the first step off the back of the house was literally a fifty-foot drop to the ocean before shelling out five and half million. But that's what happens when people have so much money they think nothing of dropping millions on a house.

You see it in the grocery store parking lot: Lexus, Mercedes-Benz, BMW, and Audi. Meanwhile, the stores can't find help. Oh, people are willing to work there, they just can't find a place they can afford to live.

The big issue on the Cape right now is NIMBYism. Nobody wants affordable housing in their town, but then they complain because they can't get waited on or because the lines are too long.

Gas is about thirty cents more per gallon than on the mainland, but it's hard to complain because everything has to come an hour down the Cape.

So the Cape is a microcosm of the economy in general. For the upper arm of the "K," life is rosy. For the lower leg of the "K," life is about scraping by.

[/Essay]