In January, temperatures topped 70 degrees in Boston and home buyers pressed past one another into crowded open houses. They squeezed shoulder to shoulder through doorways and down staircases; they shook hands with eager real estate agents and picked at complimentary cookies. A combination of low interest rates and warm winter weather had set off an early start to the 2020 real estate season, and realtors were readying for a feverish spring.
Then a very different fever hit. By the middle of March, such a scene had become unthinkable as the nation hunkered down to try to slow the spread of the coronavirus. In a matter of days, open houses all but vanished. Sellers pulled or postponed listings. Buyers grew cautious as layoffs mounted and stocks fell harder and faster than they had since the worst week of the 2008 financial crisis.
“So many listings have been temporarily withdrawn or canceled,” says Kiernan Middleman, an agent with Berkshire Hathaway HomeServices Warren Residential in Boston. “We’ve also seen many listings that were under agreement come back on the market. At best, people are getting cold feet a few days into a deal, and at worst, they are losing their jobs just before closing.”
It’s hard to say just how big of an impact the extended, near-total pause on civilian life will have on the real estate market. “This is uncharted territory,” says Jeff Tucker, an economist at Zillow. “It’s very hard to predict where prices will be when we come out the other side of this.”
The number of houses under agreement across the state was actually 2 percent higher this March than in March 2019, according to the Massachusetts Association of Realtors. But condo sales pulled back 18 percent, probably an early indicator of a recent National Association of Realtors survey that found a majority of its members expect buyers and sellers to delay plans for a couple of months.
However, Tucker says the conditions that defined the real estate market on the cusp of a pandemic in February may still be in place when the crisis fades: a severe shortage of inventory and new home construction, coupled with millions of millennials who are reaching their early- to mid-30s — the most common age range of first-time home buyers. “While that process might get put on hold due to the pandemic, I’d expect a lot of that demand to come rushing back once this is over,” he says.
And while there’s no perfect point of historical comparison, a Zillow study found that home prices mostly held steady in Hong Kong during the 2003 SARS outbreak and even in the United States amid the 1918 Spanish flu epidemic, despite short but sharp economic downturns. What dropped dramatically in both cases was sales activity. “One reason is there are many parts of the real estate purchase process that we’ve traditionally had to do in person,” Tucker says.
Realtors, though, are aggressively adapting to the new landscape. In the last week of March, the number of 3-D home tours available on Zillow had jumped 408 percent nationwide compared with a typical week before the pandemic, and real estate attorneys have pushed the state of Massachusetts to accept remote notarizations on legal documents.
Team Harborside, of Sagan Harborside Sotheby’s International in Marblehead, stopped all open houses in mid-March, says broker Matt Dolan. Instead, they began leaning more on video tours and other technology. While most people are unlikely to buy a house without ever setting foot in it, Dolan says, options like a live FaceTime showing “can at least help keep things moving forward,” filling some gaps to help buyers process their decisions. Because pandemic or not, people need a place to live, and life doesn’t always wait until it’s a good time, he adds. “If someone’s getting a divorce, that’s happening, they’re going to need to move.”
The hope — and Dolan acknowledges it may be mere optimism — is that a suddenly silent spring will simply shift sales activity into the typically slower summer months. “I’m sort of planning that my summer’s going to get ‘ruined,’ which will hopefully be a good problem to have,” Dolan says.
Even if COVID-19 tips us into a prolonged recession, home prices should be able to weather it, predicts Timothy Warren, CEO of The Warren Group. “Not all crashes are the same kind of depth,” he says. “We haven’t had the kind of bubble building in recent years that would lead to the 20 percent drop we saw [during the 2008 financial crisis].”
One thing is certain: Like confused winter buds bitten by a March frost, this year’s housing market will be a late bloomer. We don’t yet know when, but it will spring back to life. And if, after weeks quarantined inside your home, you’re darn well sick of the place and ready for something new, we’ve compiled our annual list of the top spots to live in Greater Boston to guide you.
EXPLORE THE TOP SPOTS TO LIVE PACKAGE BY REGION:
HERE’S HOW WE SELECTED THE TOP SPOTS TO LIVE FOR 2020:
We analyzed median home prices from 2014 to 2019 to find the biggest five-year gains across three price tiers: under $500,000, $500,000 to $750,000, and over $750,000. In the suburbs, we looked at single-family data from The Warren Group, excluding places with fewer than 75 single-family sales in either year. For Boston and Cambridge, we used median home price data — which include both single-family and condo sales — from real estate brokerage Redfin, excluding areas with fewer than 100 total sales. The $620,000 median price for single-family homes in the Boston area in 2019 is from the Greater Boston Association of Realtors.
Jon Gorey is a regular contributor to the Globe Magazine. Send comments to firstname.lastname@example.org.