The Covid-19 pandemic hit the Boston property market head on. Usually, spring is the season for new listings, and sales usually peak around September. Not in 2020. Third quarter condo sales are down 46% over last year in downtown, down 38% in Fenway/Kenmore, 31% in Back Bay and 28% in Beacon Hill. according to a report by Boston’s Berkshire Hathaway-Warren Residential.
2019 was a record year, and the good times continued into early 2020.
“We were going like hell until Covid hit,” said Kevin Ahearn, CEO of Douglas Elliman Real Estate’s Boston Division.
Overall, he says the market hasn’t shifted as much as might have been expected, especially at the high end. As of October 1, sales of units in the $1 million plus range are on level with October 2017.
New construction has pushed ahead. While costs have risen (The price of lumber is twice what it was last year.), and construction was delayed three months, low interest rates have pushed developers to lock in future deals. Ahearn said the Boston market is especially resilient, thanks to plentiful liquidity and a predominance of local buyers. Once there’s a vaccine or more, he predicts people will remember why they wanted to live in Boston in the first place. But a vaccine isn’t expected until next year. Right now, many prospective buyers have changed their goals or put their plans on hold. The most common response to the pandemic is caution. People are holding off on listings or offers, or simply stay out of the market.
“For the high-end condo market in Boston, it took a while for the reality to set in that we may be in this for another 12-18 months,” said Joshua Golden, Founder and Principle Broker of Luxury Residential Group LLC. He says consumers are only now starting to change their decisions, as they confront the possibility of quarantine precautions stretching into 2021.
The growth of remote work creates an opportunity to live outside the city, at a time when urban life is uniquely unattractive.
“Some city buyers, empty nesters for example, do not have the same sense of urgency, or desire to try living in town, that they did pre-pandemic,” Golden said. He added, “Until people feel more confident about socializing in public spaces, offices open up, remote work slows, and students are back to in-person learning, this trend will continue.” Political uncertainty is also affecting buyers and sellers alike.
“I’ve heard from a few dozen people that they don’t want to make a decision until after the election,” said Craig Brody, an agent with Berkshire Hathaway Warren Residential, which specializes in luxury condos and brownstones. Kevin Ahearn agreed that uncertainty about the political and economic consequences of the election have reduced buyer urgency.
The clearest movement in the market has been increased demand for suburban, single-family homes, described by various sources as “a spike”, “a surge”, and “on fire”. This has led to situations where ten or fifteen offers get placed on a single home. Consequently, most get out-bid, while the winner pays well above the previous market value. “People will come back to Boston,” Brody said, adding, “People are overpaying in the ‘burbs.”
Yet for those with money to spend, there’s no time like the present. A 7,838-square foot unit in the Back Bay’s One Dalton sold on August 26 for $31 million. As late as October 1, a 3,696-square foot unit in the same building went for $13,500,000.
