The Boston real estate market will likely mirror the course of the pandemic.
You’ve probably heard the comparison to the Roaring 20s – the boom that kicked off when World War 1 and the Spanish Flu of 1918 were over and automobiles and telephones fueled the new economy. Just the relief of seeing the coronavirus beginning to clear should cause more people to get and start going to open houses and buying downtown Boston condos. Well, that’s my hope.
Mortgage rates will reflect the improvement, and rise accordingly.
Don’t expect rates to budge the moment he takes the oath of office, but a Biden administration could eventually impact the direction of mortgage rates.
“Expect tax rates to rise, the Fed to offset increasing inflation with higher rates, and the economy to slow,” Guy Baker, founder of Wealth Teams Alliance, tells The Mortgage Reports.
And there’s this, from Rick Sharga, executive vice president at RealtyTrac: “Biden has called for more government investment in affordable housing, which could be funded in part by proceeds from fees attached to home sales backed by government agencies like Fannie Mae, Freddie Mac, and the FHA.”
Baker, Sharga and other experts polled by The Mortgage Reports in October predicted 30-year rates would rise to an average 3.51% in 2021 under a Biden administration.
When Boston condo buyers hear that rates are going up, two things may happen:
- They will be tempted to hit the brakes and wait until sellers start lowering their prices to compensate. Think sellers will lower their prices? Me neither and the market will probably stall out for months or years.
- They will gear up to buy Boston real estate while the rates are low. Thus, we will see a productive Boston real estate market in 2021
My guess is that once the vaccine is administered to the masses the downtown Boston real estate sales market and Boston apartment rental market will see more activity, although I think it will be a slow but steady process.
The wild card on my predictions is how the Fed handles interest rates. Raising interest rates too quickly can have a devastating effect on the economy.