Yesterday, I had a conversation with two successful local real estate experts;
So I had to ask both of them, one a Boston real estate developer and the other a large Beacon Hill apartment landlord; What their crystal ball says about the Boston real estate market? You know, like, what now? Or what’s next, one to five years from now?
In my conversation, both individuals mutually agreed on this:
”Anybody that says they know, they don’t know, about forecasting the future of the Boston real estate market.”
But one thing is certain. The Boston real estate market is forever changed
While both wouldn’t make predictions, they weren’t shy expressing their thoughts on how they think the Boston real estate business will react to the pandemic.
Beacon Hill real estate market
Both men agreed on this; “We are forever changed,”
They went on the say. The “social distancing” concept will alter how people buy, rent Beacon Hill condos well after the coronavirus crisis has ended.
Take virtual selling and renting. It’s become a necessity when face-to-face contact is a large no-no, whether due to government edicts or consumer preferences.
I asked. do really think this could replace physical viewing of Beacon Hill real estate? One chimed in, that while many people will still want to see where they may live, online or video sales pitches will become permanent and key parts of renting a Beacon Hill apartment or selling a downtown Boston condo.
As the conversation progressed we touch on the topic of roommates, specifically about college students and young professionals.
Roommates, or not
It’s too early to predict what Boston real estate changes are ahead. The industry must wait to see how consumer tastes evolve.
But I can tell you this, the Beacon Hill landlord was carefully watching “decoupling” rates. It’s a key factor that could impact the renting of three-bedroom apartments with Suffolk students.
Will parents still want their son or daughter to be roommates with a relative stranger, an option previously made largely for cost savings? If health fears stay high, will they want their children in a three-bedroom apartment? Will one-bedroom units become more popular?
And all the long-running talk of affordable housing begs the question: What if apartment hunters had significant lower-priced choices, especially micro-units. 150 – 200 sq ft micro-apartments – this would provide cost savings with safety for college students or young professionals -who are saving to purchase their own Boston condo, while still being able move-out of their parents home
Beacon Hill apartment vacancies
We all agreed, massive layoffs savaged many tenants’ budgets to be able to rent Beacon Hill luxury apartments. Why pay a broker fee for a fourth-floor walk-up when you can now go to the Seaport and rent out an apartment with no broker fee, 2 months free rent and have indoor parking.
In other words. Beacon Hill apartment rental vacancies will continue to soar throughout 2020.
Another point they agreed on: The shelter in place has done its part to help many prospective buyers and renters to realize that they want outdoor space in their next home. The thought of having a garden or a big outdoor deck sounds extremely appealing right now.
Boston Real Estate and the Bottom Line
We summed up our group conversation with; This isn’t the early 1990s or the Great Recession where Boston real estate market was stuffed with unsold downtown Boston condos, idle land, and empty commercial real estate. Still, they both agreed that the recent upheaval is creating historic business interruptions and unfathomable layoffs cannot be ignored.
But, so far, there are no coronavirus fire sales on Boston condos or Beacon Hill apartment buildings.
Both don’t think big landowners will be giving anything away anytime soon. But smaller Boston condo owners, perhaps with some financial challenges, or folks with one rental property with dim prospects of renting out this year are possible targets.
Both plan to be opportunistic.
To sum this blog post up, I was once read;
“Those who have the knowledge, don’t predict. Those who predict, don’t have knowledge. “
–Lao Tzu, 6th Century BC Chinese Poet
Wise words from a long time ago.