We are living in the midst of a global virus pandemic and a national economic recession. Those scary facts should negatively impact housing demand. And yet, our local real estate market continues to be active. There are many reasons for that, and they bode well for the near future for people with secure jobs. That said, I want to acknowledge that the most vulnerable people in our state, particularly renters, the elderly, and low income residents, are faring very poorly. Their plight deserves a separate column.
Getting our footing
When the magnitude of the pandemic became clear in March, the market slowed as buyers, sellers and agents struggled to figure out whether, and how, properties should be shown. Without any clear guidance at the Federal level, the path forward was murky for all businesses. A sense of chaos pervaded our home and work lives. The virus became the ultimate disrupter not only of our businesses, but also of our lives and human relationships.
In times of crisis, strong leadership is critical. We are fortunate in Somerville and Cambridge that our governor, mayors and city councilors have shown prudent and clear leadership regarding COVID-19 best practices. This has both flattened our curve (for now) and bolstered consumer confidence at a time when the market could have gone into freefall. Real estate was quickly added to the list of the state’s essential businesses, opening the way for sales to continue. Real estate sales are a key economic indicator and a barometer of consumer confidence, so allowing residential sales to continue was important to keeping our local economy viable. (N.B.: I am not addressing residential rentals or commercial property here – those are topics for other columns.)
Initially, there was a brief period in March-April where activity slowed down. Buyers and sellers were trying to get a sense of what their futures looked like. Were their jobs secure? Would they be able to get financing? Were movers still packing and transporting furnishings? Agents struggled to get a sense of buyer demand and impact on prices. And a bigger question loomed: how and when would properties be shown?
Changing the way we market and show homes
Mixed messages abounded about what was safe. Some felt only vacant properties should be shown to one person at a time; others believed occupied properties could be shown to small groups with proper safety precautions (masks, gloves, shoe covers, social distancing, sanitizers). Showing guidelines are still a work in progress, and they vary from one municipality to the next and even from one property to the next.
The bottom line is that the way we show property has changed for the foreseeable future. Everyone is expected to wear a mask and practice social distancing. Disinfectants, gloves and shoe covers are also used at many properties. Buyers typically bring their own PPE, but agents often provide additional options. Most showings are now by private appointment. Crowded public open houses and casual lookers are a thing of the past. Many agents have had to modify their marketing materials to include 3-D tours and videos as well as floor plans and photographs. Some showings are done as virtual tours with the buyer viewing online from a remote location. Consequently, fewer people visit a property and often make an offer after just one private (or virtual) showing.
The factors that have kept our market active
There are two key factors that have kept our market strong now and for more than a decade prior. One is the underlying strength of the local economy, which rests on many stable industries, including pharmaceuticals, software, medical facilities/research, robotics, and biotechnology. Many of these jobs are secure right now. People with a sense of strong job security are more likely to buy or sell property. The second factor is the lack of buildable land, limited inventory, and steady demand for housing of all types and price ranges in Cambridge and Somerville.
COVID-19 has actually created situations that have increased demand for many residents. One factor propelling sales is a changing and immediate need for space. Buyers are forced to adapt to new space needs caused by working from home with a lack of childcare/school/camp/playdates for their kids.
Imagine a typical couple with two children and two jobs trying to operate out of a 2-bedroom condo or rental. They need at least one more room for private work and school activities. If they share common spaces (hallways, yards, etc.) with other families, they may feel further limited in how they can interact safely with them. That type of buyer is highly motivated right now to find a bigger space for their new needs, which are likely to continue for 1-2 years.
Another new trend that came out of the pandemic is people moving closer to their extended families in other areas of the country. This affects people moving out of, as well as into, the Boston area. Part of the draw is the need for the support of family in caring for young kids, but equally compelling is the desire to be near aging parents to help them.
This type of seller is motivated to leave quickly, but the process of house-shopping remotely and safely packing and moving can be daunting. These sellers often benefit from a quick sale with a use and occupancy agreement from the buyers to allow them to stay for a few weeks after closing to make the transition smoother. Buyers can sweeten their offers by offering a use and occupancy. In some cases, the convenience factor can be more valuable than money.
The factors I outlined above should keep prices stable (some have even increased) for the next quarter. It is hard to predict how the national political and social unrest will play out over the course of the year. What I see here are buyers and sellers seizing opportunities to make the most of their day-to-day lives by finding the best location they can for their current and future quarantine needs.
Thalia Tringo is the Owner and Broker of Thalia Tringo & Associates Real Estate, an independent agency based in Davis Square.