The coronavirus and COVID-19 have altered almost every aspect of our lives, from the business landscape to entertainment to schooling. Openings and closures are recurring concerns, and communities often have differing rules and guidelines based upon local conditions and municipal government leadership.
Real estate and the housing market in Boston have by no means come through unaffected. Massachusetts had court closures for many months that created a backlog for evictions as many renters had difficulty affording payments which, in turn, caused many property owners to request mortgage forbearance.
Real estate has been chugging along through all of this thanks to record-low interest rates and changes in the residential needs throughout the country. Many cities are seeing an exodus to the suburbs, creating tight inventory and bidding wars for any properties that hit the market (while many city condos are seeing price reductions and more seller concessions)
Through all of this, there are clearly changes that both buyers and sellers need to be aware of. Here are 5 ways that COVID-19 is impacting the housing market in Boston.
1. Low Mortgage Interest Rates
One way COVID-19 is impacting the housing market in Boston can be readily seen in interest rates at or near historic lows. And this in turn has led to many homeowners refinancing to take advantage of these rates.
Here’s how low-interest rates are affecting the housing market in Boston the Federal Reserve announced emergency interest rate cuts that brought the primary credit rate to .25%. These cuts came amid already rock-bottom mortgage rates, which have been dipping since the late 2019. And this means that owning property is more affordable than renting in many situations.
Low mortgage rates have also led to more homeowners refinancing existing mortgages to benefit from the low rates. The result is a more competitive market because a good number of people who would formerly have been in the market to buy a new home are now refinancing their current mortgages instead.
2. Business NOT as Usual
Another impact is that business is definitely not being conducted as usual in the real estate arena. COVID-19 has forced buyers, sellers, and especially agents to rethink and adjust the way they handle operations and conduct the various parts of transactions.
COVID-19 is impacting the housing market in Boston in that virtual tours are supplanting the traditional in-person open houses and showings. All this comes as a way to reduce exposure to and the risk of contracting the virus.
3. Foreign Investors Entering
A surprising way COVID-19 is impacting the housing market in Boston is in the increasing number of foreign investors entering local markets. Chinese investors dominate international activity in the U.S. residential market, especially in Boston, and although COVID-19 could have a significant impact on investor activity in general, it may have a positive impact on real estate investments since they tend to be less volatile than the stock market.
Typically, when the stock market takes a downturn, investors turn to hard assets like real estate. Residential real estate, then, is becoming a more attractive choice for long-term investors. And this is good news for sellers.
4. Uncertainty Rules
One thing that can be said with certainty is that uncertainty now rules – no less in real estate than in any other aspect of life after COVID.
COVID-19 is impacting the housing market in Boston and has changed everything for the immediate future. New details emerge every day and alter what the landscape for homebuying could look like after the pandemic passes. While studies of previous pandemics suggest that home prices won’t drop all that much, the economic fallout of COVID-19 could be sweeping.
Some of the major uncertainties in the housing market in Boston buyers and sellers will have to deal with are:
- Prolonged payment suspension causing an unsettled environment in the mortgage industry, possibly leading to a liquidity crunch
- Lenders lacking capital to lend to potential home buyers
- The disappearance of subprime and specialty mortgages, which would make it harder for people with less than perfect credit to qualify
- The possibility of the mortgage industry’s quick recovery (or not)
- A volatile stock market that is almost impossible to predict
- An economy that has a long recovery ahead
5. A Good Agent Is More Necessary Than Ever
The upshot of all this is that a good local agent is more necessary than ever. Since the full impact of COVID-19 is still largely unknown, making informed real estate decisions is tougher than ever. Keep in mind these uncertainties and points about how COVID-19 has affected the housing market and how it will continue to do so:
- The residential real estate market remains fairly unchanged, but economic shifts could impact the housing market in the future.
- Investors and homebuyers can take advantage of lowered interest rates, and existing homeowners could consider a refinance.
COVID-19 is definitely impacting the housing market in Boston, but one thing remains unchanged. And that is for buyers and sellers the expertise of a good Boston agent is needed now, during this time of uncertainty, more than ever. Our experienced agents at NextHome Titletown Real Estate are ready to give you the help you need. Send us a message or give us a call today at (617) 657-9811.
Boston and Beyond – Just Hit the Market!
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