New England Housing Market Underwent Seismic Shift During COVID-19
Coldwell Banker Realty Agents Share How Pandemic Shaped Home Buyer Priorities
More than a year past the onset of COVID-19 and with hope of a full return to normalcy on the horizon, the pandemic is still influencing home buyer and seller decisions. The unprecedented events of 2020 caused a shift in the priorities for home buyers and sellers throughout New England, as well as forcing real estate agents to adapt how they serve these clients. Coldwell Banker Realty agents recently shared how COVID-19 shaped the local real estate market in ways that continue to surpass expectations.
“We’re in an unprecedented time when many home buyers are finding they have more freedom to select properties based on amenities over their daily commute,” said Pauline Bennett, president of Coldwell Banker Realty in New England. “They’ve been able to expand their search and even attain more home for their dollar. The challenging times that began in 2020 have brought family and lifestyle into greater focus.”
Amenities
“Since the pandemic began, we have seen an influx of buyers moving from the city to our market,” said Laura Semple of Coldwell Banker Realty in Sudbury, approximately 30-40 minutes outside of Boston. “Buyers are looking for space for home offices and space for kids to be home-schooled. Swimming pools used to be an obstacle. Now they are very desirable. Backyards with firepits, swing sets and lots of play area for kids are in big demand.”
“More buyers are converting one bedroom into an office or classroom for virtual school or meetings,” said Alexander Parmenidez of Coldwell Banker Realty in Providence, Rhode Island. Other popular amenities he’s seeing buyers request are more land to play outside, a finished basement for an entertainment room, and an attached garage for a potential gym or bedroom.
Multi-Generational Homes
According to the National Association of Realtors’ (NAR) “2020 Profile of Home Buyers and Sellers,” buyers were more likely to purchase a home that could fit multiple generations of their family during COVID-19 than before, by a 4% increase to 15%.
Beth Hettrich of Coldwell Banker Realty in Sudbury has witnessed this trend, particularly among the “sandwich generation” of buyers. “People are taking care of their parents and still taking care of their kids. They want their parents to be close by. They may not need to be in assisted living but cannot live alone.” One challenge locally, said Hettrich, is finding a home with a first-floor bedroom, or building an additional unit if a private septic system limits construction.
Lori Orchanian of Coldwell Banker Realty in Belmont said that some local builders are adapting to this trend in new construction. A builder she works with always includes a “granny suite.” These first-floor bedrooms include an en suite bathroom and an office that could function as a small TV room. “All of the buyers I am seeing love this idea, even if they don’t need it right now,” said Orchanian. “They always tell me they could use it in the future for a parent.” She is also seeing buyers join forces with their parents to purchase a home, making a suite for the main parents on the main level even more important.
Seller Motivations
NAR found that the primary reason people sold their existing homes during the pandemic was because they wanted more living space. “Having a small house is the key factor to sell,” said Parmenidez. However, he has also witnessed some homeowners who opt to refinance their existing home and increase its value by finishing the basement for added living space and updating kitchens and bathrooms.
Competitive Market
While the real estate market ground to a halt in March due to COVID-19 lockdown, it quickly recovered with momentum that has continued from spring 2020 into the present. NAR reported that existing home sales in the northeast during March 2021 were 16.9% greater than in March 2020.
“When the pandemic first hit, we lost multiple deals,” said Semple. Examples included a buyer who was laid off and had to cancel, and another who couldn’t achieve their down payment due to a moratorium their company placed on selling stock. “After a couple months of very limited activity, we went to the busiest months we have ever seen,” she said. “We were selling homes within days of coming on market. Multiple offers were 5%-10% over asking with buyers waiving financing and/or mortgage contingencies.” This was driven by low housing inventory as buyers sought large suburban homes and historically low interest rates.
Hettrich, who is Semple’s business partner, said, “We have been selling real estate for 12 years. What started out as a dismal year turned into our most successful year by far.”
The Massachusetts Association of REALTORS® (MAR) recently reported that the median sale price for a single-family home in the state was $485,000 in March, a 16.9% increase over the previous year, the month in 2020 when lockdowns took hold. Condos hit a record median sale price of $459,450. Meanwhile, inventory for both property types reached its lowest point since MAR began collecting data in 2004, at .6 months. Six months of housing inventory is generally considered a balanced market.
Business Adaptations
Parmenidez said that real estate brokerages quickly adapted during the pandemic, with virtual showings via Zoom and virtual 3D walkthrough becoming the norm. “We have received offers over asking price without stepping into the property thanks to the video. However, I recommend the client see the house in person to avoid a laundry list of repairs during the inspection period here in Rhode Island.” Real estate agents began enacting safety measures at showings that included face coverings, social distancing and proper hand hygiene, per Centers for Disease Control and Prevention guidelines.
“I sold a home sight unseen to a buyer relocating to Somerville from Canada,” said Orchanian. The buyer accepted a job in Boston but was not able to travel south at the time as the border was closed. “I FaceTimed him and he made a buying decision. He finally came out for the inspection after a rapid COVID-19 test and it all worked out.”
Orchanian also worked with sellers who are severely immunocompromised. “It is important that I keep my sellers safe and also accomplish the goal of selling their homes. It has involved a lot of trust, gloves, hand sanitizer, very specific instructions and rules including not touching anything in the house.”
“Communications technology has helped us ensure the safety of our clients during the pandemic and enabled them to stay in touch with their real estate agents through every step of a transaction. It has always been valuable to enlist the guidance of a professional who knows the local market; that is even more crucial in a remote environment,” said Bennett. As highlighted by NAR in their “2020 Profile of Home Buyers and Sellers,” 88% of buyers surveyed recently purchased their home through a real estate agent or broker.
