We’ll get straight to the point – we don’t know how COVID-19 will impact real estate prices in the near term, medium term, or long term.
There is too much uncertainly right now around the many important variables: supply, demand, interest rates, credit standards, unemployment, foreclosures, treatments, vaccines, second waves, stay-at-home, working-from-home, aging-in-place, etc.
What we can tell you is what’s happening right now in the mortgage and residential market in and around Boston.
- Mortgage rates are starting to normalize in the low to mid 3% range for those with the best credit
- Some lenders, who are dealing with a wave of refinancing requests, are artificially inflating rates to turn business away since they’re having difficulty handling the current volume
- Refinancing is easier if you’re simply changing your interest rate and loan term; harder if you’re looking to take cash out
- Lenders will verify employment as close to the closing date as possible to make sure you’re still employed
- Appraisers and homeowners are both reluctant to do in-person appraisals so when they are required, many physical distancing precautions are taken
Residential Real Estate
- Open houses are very rare unless its new construction or the property is vacant; this will continue for the foreseeable future as buyers and sellers engage in social distancing
- Pre-recorded video tours and pre-scheduled, individual showings are the new normal
- Tire kicking and window shopping are out of the question; only serious, pre-qualified buyers are getting inside to see homes
- Listings are down, supply is low, and demand is unknown since many spring buyers are re-assessing their needs and financial situation
Catalysts For Change
- Massachusetts has been hit particularly hard by the coronavirus pandemic (3rd most cases in the US) because of our population density; Bostonians may look to move out of the city or buy a second home in a less dense area like the Cape or Berkshires
- With many working from home (and the potential for that to become a more common occurrence), homeowners are considering renovations to create a home office or even a larger home to accommodate
- We may see a boom in births over the next year which may require more spacious living arrangements for growing families
- We may also see a rise, unfortunately, in divorces which creates motivated sellers and the need for two homes
- And with long term care facilities being hit particularly hard, older adults may prefer to age in their homes which would constrain the supply of starter inventory for younger generations