It’s unclear whether the coronavirus will bring on the next recession. But as it lingers on, unfortunately, it most likely will. 

If we do go into a recession, the housing market may actually aid the economy in recovering from the next recession — a role it has traditionally played in previous economic recoveries.

The Last Real Estate Recession

So what made the Great Recession different? The housing boom that preceded the last recession was largely driven by an explosion in both home-building activity and mortgage credit. Real estate buyers were able to get mortgages with no documentation of their income and no down payment, and many loans had introductory low interest periods that made them cheap to start but more expensive as time wore on.

These homeowners were over-leveraged. The housing crisis in the Great Recession was fueled heavily by the fact that job loss was paired with a significant share of homeowners who didn’t have much equity in their homes. This is different.

How’s This Real Estate Market Different

The growth in home prices seen during the current economic expansion (especially for the Boston condo market) has not been fueled by increased access to mortgage credit. Rather, it’s a simple reflection of supply and demand: Many Americans want to become homeowners, but the supply of homes available for sale is very low, pushing prices upward.

While this has made the prospect of buying a home unaffordable for millions of Americans, it has also meant that those who are homeowners have seen their home equity grow substantially in recent years. That decreases the likelihood that they would be underwater on their loan if home prices were to dip in the next recession.

According Doug Duncan, Fannie Mae’s chief economist FNMA:

We’re we to have a recession, I’d argue housing would provide a cushion because the shortage of supply at the entry-level suggests builders could actually continue to build.”

What about the Boston Real Estate for Sale Market?

There are numerous red flags that Boston real estate buyers and sellers should be on the lookout for when it comes to the coronavirus and how a potential recession might affect the Boston condo for sale market. For starters, many downtown Boston residents could lose their jobs, should this coronavirus last months, thus, having Boston business shut down for longer than anticipated.

Another issue: Due to loss of income (especially in the service fields) some downtown Boston downtown real estate owners (and renters) could fall behind on mortgage payments (apartment rents) in the wake of the cornavirus or a recession. Were these residents lose their jobs, they could easily fall into foreclosure (evictions). Research has shown that foreclosures (evictions) exacerbate economic downturns — and they can have a ripple effect through a local Boston real estate market, causing condo values to drop and apartment owners to lose rental income.

Fortunately, downtown Boston is more resilient than the rest of the country in the event of recession. We have a large high tech work force that can easily work from their high rise condos, and not showing up at a work place is not as devastating as in other less tech areas of the country.

Boston Real Estate for Sale and the Bottom Line

As you can imagine, I’ve been giving this coronranvirus pandemic a lot thought on how it will impact my business, more importantly how it will impact the Boston real estate for sale market and Beacon Hill apartment rentals.

My first thought/prediction

As we all know this horrible virus will pass, but even when it does, I think it will have a profound impact on how we conduct Boston real estate transactions moving forward. Lets start with apartment rentals.

Boston apartments:

I’m going to concentrate of Beacon Hill apartments, but it really applies to all Boston real estate rentals.

Although, as a Boston real estate broker, I and my colleagues due have some major hurdles to overcome. Even in our high tech society, we’re still in the infancy stages of renting a Beacon Hill apartment by using virtual tours. Renters and especially Boston condo buyers, want to physically see, touch the property of their choice before making any financial commitment. Although the coronavirus will most likely expedite the learning/acceptance curve at a more rapid pace moving forward.

I firmly believe that the coronavirus has dramatically changed how Colleges/Universities will conduct classes moving forward. I don’t think that tele-conferencing classes is a passing solution to the coronavirus, it’s here to stay. Just like my favorite Harvard Sq. bookstore disappeared so will large classroom college auditoriums.

If I’m correct, this will have a huge impact of Beacon Hill apartment owners, as less and less foreigners and out-of-state residents will no longer need to come to Beacon Hill to attend classes at Suffolk or Emerson College. It will result in a drop in demand for apartments (perhaps as much as 10%) more so in areas like Brighton/Allston which has a higher percentage of Colleges & Universities.

We’re all easing into the new normal—I think as brokers use more and more technology like virtual tours, it will cut back on the number of showings a Boston real estate agent will have to conduct. As a result, I think the standard one months broker fee that real estate agents typically charge will be a a thing of the past by 2021. That’s if, Mayor Walsh doesn’t step in sooner and ban the practice all together like what they did in NYC.

More to come soon….

(I had to shut off my comment section on this blog due to the abundance of spam comments, but if you’d like to start a conversation email me your comments at and I’ll post it here.

Boston real estate for sale



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