Updated May 28, 2020:
It’s been over two months since I’ve updated this blog post. So where do we stand as we enter the month of June 2020.
May/June 2020 Boston real estate market
We all know the Boston economy is reopening but it’s still unclear what this will mean to the summer Boston condo market. But I will make an educated attempt. Traditionally, the summer is strong but a little slower than the spring market as more people go on vacations and spend the weekends in Cape Cod. But vacations and beaches aren’t expected to have as strong of a draw this particular summer. That could leave an opening for Boston downtown condo buyers with more time for house hunting.
From a national outlook, all real estate metrics of the last two months showed a decline in sales. Sources like Realtor.com and Zillow show that sales of homes have declined by about 15% so far in 2020. But most of the decline took place during April. Boston February numbers were healthy before coronavirus outbreak. We won’t see May numbers for a couple of more weeks. That leaves almost all of the slow down limited to the April time frame at this time.
With the limited information available, it appears that some aggressive buyers were expecting prices to decrease and waited to make offers after the discounts to affect. Those discounts so far never materialized. In downtown Boston, the average condo sales prices were up last month compared to a year ago. The rate of price increases slowed in April but did go up slightly.
At the same time, the National Association of Realtors reports a 48% decrease in homebuyer interest. What also happened is the inventory of Boston condos for sale shrank considerably during March and April. National inventory declined by 15.3% year-over-year. In a normal year, spring listings would increase but this year new listings declined 44.1% compared to the spring of 2019. Also, new construction is much lower compared to last year. Overall, both the buyer and seller sectors of the market took time off during March and April while everyone waited to see what would happen next.
All things considered, I expect a short-term bump in listings and sales for late summer and early fall due to pent up buyer Boston condo demand, less pandemic fear, and continuing low mortgage rates.
Probably the biggest remaining unknown is how healthy buyers will be after the financial shock they have gone through. We all know that unemployment is skyrocketing but in some cases, people are collecting more in unemployment than they did from their paychecks. There have also been government stimulus checks flowing into people’s bank accounts and the possibility of more stimulus money yet to come.
On the flip-side, a lot of rents are not being paid, which indicates financial stress. Some mortgages are also entering forbearance; this could lead to more houses being listed for sale. It’s a very mixed upmarket. A best-guess is that it will take all of June before the financial picture becomes clearer.
Below is the original Boston real estate Blog post written March 18, 2020
THE IMPACT OF COVID-19 ON THE BOSTON REAL ESTATE FOR SALE MARKET
The coronavirus has already changed our daily lives. Bars and restaurants closing, and many of our friends and family members practicing social distancing, self-quarantining, and generally spending more time alone in the home watching Netflix. Going into someone else’s home is just one more opportunity to come in contact with germs, and surely there are quite a few buyers foregoing showings at the present moment.
According to a survey performed by the National Association of REALTORs last week, only 16% of real estate agents said the coronavirus has affected buyer interest. However, I would have said the same thing last Monday when surveyed. More and more brokers are hearing from their clients that they would be holding off on their Boston real estate search until the Covid-19 scare blows over.
WILL THE CORONAVIRUS REDUCE THE NUMBER OF BOSTON CONDOS ON THE MARKET?
I’ve been noticing that sellers are having fears about letting strangers into their homes. As a result, fewer condominiums are coming on the market In Beacon Hill, Seaport, and Fenway we have had incredibly low inventory for far too long. There are simply not enough condominiums for sale to accommodate the buyer pool. Will this continue? Will sellers decide not to list their homes due to fears of contamination? It’s quite possible, and this will only exacerbate the low inventory issue. Builders too are seeing the effects of the coronavirus. Nearly 1/3 of our raw building materials come from China, and this doesn’t even account for assembled goods such as appliances and fixtures. A friend of mine in the flooring industry has already witnessed supply chain issues, with builders and contractors unable to get tile they had originally ordered since it was produced in China. If builders are delayed due to material delays, and sellers are reluctant to list, it won’t matter that interest rates are at historically low levels. Buyers won’t have any downtown Boston condos to buy. Couple that with Mayor Walsh halting construction of Boston high rise condos. How can this not have some kind of impact?
HOW WILL THE CORONA VIRUS IMPACT THE SPRING BOSTON REAL ESTATE MARKET
After St. Patrick’s Day, we historically enter what is typically the Boston real estate for the sale spring market. Usually, this is when the largest percentage of sellers list their downtown Boston condo and the majority of buyers purchase. Boston real estate sale prices are usually the highest in the coming months as buyers compete with one another. However, it’s unknown how the coronavirus will affect the seasonality of the Boston condo market. Will it delay the spring selling season? Will it have no effect at all? Or, will it cause a mass recession or worse a depression leaving buyers unmotivated or unable to make moves. After all, what good is an incredibly low-interest rate if you are not sure you will have a job next month.
WHAT CAN WE LEARN FROM THE PAST?
First everyone take a deep breath. In the past, Boston has been largely spared from any national housing market collapses. In 2009, the median sales price stayed relatively steady in most downtown Boston neighborhood markets. It increased to in 2010 and rose slightly in 2011. Since then, the median sales price has been steadily increasing. We wrapped up 2019 with record-high median sales price in the downtown Boston area.
With that said, It’s not unrealistic to think that the coronavirus may slow downtown Boston condo sales closing Furthermore if there is one area that may be more affected than others, I suspect it will be the luxury condo market. After the housing market crash, we saw Boston high rise condos suffer the most. Overall, it’s still too early to say how the coronavirus will affect the Boston real estate for sale market. But is there is one take away it is is this, Boston has a strong economic base especially in the health field, which is more needed than ever before. I see this as a slight blimp in our economy, and as your parents always told you this to shall pass. When it does the Boston economy will be as strong as ever.
If you have questions about how it may affect your specific real estate goals, give me a call. I’m happy to share my opinions with you.
Boston Real Estate for Sale