Is this the right time to buy in Boston?
Dear home buyer,
Firstly, we hope everyone is keeping safe.
We are in a pandemic, but certainly adapting:
While we are day-to-day managing through a pandemic and adjusting, the truth is, people still need to move, buy a home, downsize, families continue to grow and lifestyles are most certainly continuing to change. The real estate industry; buyers, sellers, banks, realtors, inspectors, and appraisers similarly have adapted in the last 4 weeks and continue to do so to allow some business to go on, but while taking the corrective measures and precautions to avoid the spread of COVID-19. Realtors are providing live virtual tours and floor plans through 3D software. Inspectors are going into homes alone and reporting findings to their clients afterward. Appraisers are conducting desktop or drive-by appraisals for the bank. Banks work through emails, phone calls, and wire transfers.
Take advantage of potential opportunities or wait it out?:
It is believed by some that nationwide the number of home purchases will drop by roughly 50% 2019 vs. 2020 due to the impact of the virus. Many buyers who have been in the market for some time or have been nibbling at the thought of entering the housing market ask, is this the time? The truth is no one truly knows. There are two camps: those who jump in and take advantage of a potential opportunity and those who will wait it out. Here are a couple of indicators of what’s happening in the Boston area:
April 2019 vs. 2020 Boston area housing data:
Middlesex & Suffolk Counties (58 cities/towns) for all residential property types
Source: MLS, Bizjournals, YCharts; 04/14/2019 vs. 04/14/2020
Here are the facts and some predictions:
On market inventory was low to begin with, since the onset of the virus, sellers who can afford to wait have decided to pull their property off the market or push out listing altogether. Today vs. 1 year ago, on market properties have dropped 45%.
While inventories have gone down, pricing has ticked up roughly 3% both on average and on a median basis.
After the U.S. Federal Bank slashed interest rates in mid-March, the consumer level 30 year fixed mortgage rate has come down to 3.3%, a rough 23% drop from this time last year. In parallel, banks and lenders have tightened up the required qualifications given the unemployment uptick.
It is estimated that in the next 3 months, Massachusetts will have up to 570,000-670,000 layoffs.
What does all this mean for you?:
At this time, the Boston area home buyer is left with less housing stock to choose from, a lower cost of money, nominal pricing, but less competition. Home buyers who are adamant about buying and who can see through job and economic uncertainty right now have a window of opportunity for less competition. The home you were trying to buy months ago could now be yours simply due to fewer buyers in the buyer pool. While asking prices have not dropped to reflect the start of a recession, we do believe some sellers who today are actively selling will provide price cuts through negotiations behind closed doors.
A glimmer of hope:
While early, on the brighter side, per Mike DelPrete, there is early data that suggests listing volume improvements in the first markets hit by the pandemic such as Washington state counties. This week they are reflecting a 15-30% listing volume uptick vs. the weeks prior with pricing remaining in place.
So is this the time right to buy? Potentially yes, if you are confident, financially stable and have found the home you want. It is up to you! More to come in the weeks and months ahead.
Nuhom is a Boston based full-service real estate tech company making home buying convenient, fast, and rewarding. We have dismantled the traditional home buying process and replaced it with innovative technology, far fewer hurdles, and more savings for the home buyer. Learn more at www.nuhom.co