Let’s talk about the changes that are happening in the real estate industry as a result of the pandemic.
First, the good news. The combination of historically low-interest rates and people leaving big cities in droves has fueled the single-family housing market around the United States. These low rates are helping people who previously could not afford to buy a home to do so now. To get that ultra-low rate, lucky buyers who still have a job will be required, in some cases, to put at least 20% down and must have a credit score over 700 with proof of their ability to pay. Those unable to meet these requirements will largely remain in the rental pool.
But does a robust home buying flurry hurt the residential rental market? Not really, except Boston apartment rentals from which people are fleeing. Amid lockdown, people learned that they can actually work from home or anywhere that has an internet connection.
Even after the pandemic, will workers want to go back to the office? Likely not. Months of sheltering in place have soured many on big-city living. The effect we can predict is that rents in large cities, which have historically been extremely high, will go down as inventory increases. For those who are staying in the big cities, co-living, which had become popular, may see the waning interest. Co-living offers the cheaper alternative of a commune-like experience as opposed to renting an apartment and shorter-term or month-to-month leases. As rents drop and traditional apartments become more accessible, these new alternatives may lose popularity.
Many small shops and retail outlets and Beacon Real Estate offices are suffering greatly from this crisis. It is not just the business owners who have lost; it is also the owners of those rental properties that are now sitting vacant. Those investors still must make the mortgage, insurance, and tax payments, and there is no money coming in from rents to support those cost outlays. They, too, will suffer if they cannot re-rent the spaces and make the mortgage and tax payments as required.
For the restaurants, bars, small retail businesses, and large office-space holders, the near-term future is bleak — that is the bad news. Banks have not forgiven payments but in some cases have delayed them. That means that for many borrowers, large payments will be due before long. Because reopening is still not a sure thing, many will not be able to catch those payments up. Foreclosures loom unless there is a way found to give short-term support to investors with mass vacancies.
We’re in a changing Boston real estate market, and life, in general, is changing too – from how we grocery shop and meal prep to the ways we can interact with our friends and neighbors. Even practices for engaging with other Boston agents, lenders, and all of the players involved in a Boston condo for sale transactions are changing to a virtual format. What isn’t changing, however, is one key thing that can drive the local economy: buying a home.
Boston real estate and the coronavirus
We’re all being impacted in different ways by the effects of the coronavirus. If you’re in a position to buy a Boston high rise condo today, know that you’re a major economic force in your neighborhood. And while we all wait patiently for the current pandemic to pass, there are a lot of things you can do in the meantime to keep your Beacon Hill home search on track.
Every year the National Association of Realtors (NAR) shares a report that notes the full economic impact of home sales. This report summarizes:
“The total economic impact of real estate related industries on the state economy, as well as the expenditures that result from a single home sale, including aspects like home construction costs, real estate brokerage, mortgage lending and title insurance.”
Here’s the breakdown of how the average home sale boosts the economy:
When you buy a Seaport condo, you’re making an impact. You’re fulfilling your need for shelter and a place to live, and you’re also generating jobs and income for the appraiser, the loan officer, the title company, the Boston real estate agent, and many more contributors to the process. For every person or business that you work with throughout the transaction, there’s also likely a team behind the scenes making it all happen, so the effort multiplies substantially. As noted above in the circle on the right, the impact is almost double when you purchase new construction, given the extra labor it requires to build the home.
The report also breaks down the average economic impact by state: As a Seaport condo buyer, you have an essential need for a home – and you can make an essential impact with homeownership, too. That need for shelter, comfort, and a safe place to live will always be alive and well. And whenever you’re able to act on that need, whether now or later, you’ll truly be creating gains for you, your family, local business professionals, and the overall economy.
Whenever you purchase a Seaport condo, you’re an economic driver. Even if you’re not ready or able to make a move now, there are things you can do to keep your own process moving forward so you’re set when the time is right for you. Let’s connect to keep your Beacon Hill home search – and your local contributions – on track.