Is coronavirus slowing the boston housing market?
As we’ve all been advised to hunker down where we are, going out and buying a new house isn’t front of mind for most of us. And yet, local real estate agents say, the housing market rages on. “People are still coming out in droves wanting to see properties, and some of my busiest buyer’s agents are still super busy,” says Compass sales manager Chris Thoman.
It’s hard to reconcile a relatively thriving housing market with a city that all but has tumbleweeds rolling through the streets. So how is real estate essentially continuing with business as usual, while most other industries are closed for business? For one, interest rates are incredibly low. Two weeks ago, the rates for a 30-year fixed-rate mortgage dropped to 3.29%, hitting an all-time low. This week, they quickly rose to 3.65%, but that’s still significantly lower than the 4.28% from the same week last year.
These discounted rates translate to game-changing savings for buyers, Thoman points out. “Someone who could’ve afford an $800,000 condo in South Boston, for example, with the interest rates dropped, could now afford potentially $900,000 or even $1 million.” The chance to trade up for a nicer place, or lock down a piece of real estate at all, is apparently enough to lure many Bostonians out of their homes.
The other piece of the equation is that by the time the COVID-19 situation became state-of-emergency-level serious in Massachusetts, the housing market was already off to a strong start. Thanks in part to the winter that never was, the spring market kicked off around early February, and there’s all of this inventory to be snatched up. “There was a lot of properties that hit the market 30-45 days earlier than they normally would have, so there’ve been a lot of properties that have gone under agreement,” says Thoman.
Some agents had seen some instances of deals falling through, though. Reasons included the seller being a doctor who wouldn’t be available for the foreseeable future, the buyer getting laid off of their job and needing to be cautious with spending, the seller not wanting showings to come through their home, and the buyer living internationally and putting off the purchase. But people are finding reasons why now is a better time to buy or sell than any, and sometimes it is due to the coronavirus crisis. For instance, some buyers are feeling motivated by those low interest rates, some want to move their wealth from the stock market into real estate for increased security, and others are anxious to buy quickly because they fear the limiting possibility of a lockdown.
While the driving forces may be different, the market is moving similarly to this time last year. From March 16 to March 20 in 2019, Thoman says 97 listings “went pending,” or accepted offers. Compare that to the same date frame in 2020, when 86 listings changed status to pending. “It’s not a lot in the grand scheme of things,” he says.