With the start of Autumn upon us in the city of Boston, the real estate market has held its own in the face of what has undoubtedly been, and continues to be, uncertain financial times for many in the face of the Covid-19 crisis. Considering the city was shut down for the better part of three months, it is an exciting time to be involved in buying, selling, or renting.
Boston, more or less the capital of New England, has proven in four months that there is a pent-up demand for housing. It has rebounded the best in the country with a diverse landscape and manageable size. While small, its rich history, diverse economy, and oceanfront make it among the most interesting and appealing to many, even as our future may be increasingly in telecommuting.
Within Boston, Southie is assisting in that boom, with condos, single & multi-units aplenty. Condos represent 90% of the year to date’s market sales with 352 purchases vs. 22 singles and 18 multis, according to the market reports at mlspin.com.
The medium sales price for condominiums YTD 2020 is $774,500, an increase of $5,500 or .72%. Multi-family home and single-family home prices have increased 1.38% and 5.79%, YTD, respectively.
Jackie Rooney, one of the city’s top brokers and owner of Rooney Real Estate, LLC in South Boston, shares his concern for the market. “ Although the real estate market has shown to have much resiliency, there are some red flags; As of October 1, there were still 297 apartments available for rent, and the current condo inventory is up to 206 units.”
This comes as no surprise as we have seen and heard news reports citing various reasons for vacancies, all of which Rooney echoes, “College graduates who were promised internships or employment suddenly had their offers pulled; existing tenants lost their jobs, were furloughed, or experienced some other sort of job uncertainty; students in higher education are unsure of their return to classes, all causing the city to have an oversupply of vacant homes; the push for baby boomers and empty nesters to return to the city, as has been happening over the last 15 years, has come to a halt citing the pandemic, density, & political unrest during a presidential election year as causes to remain in the suburbs at least for the time being.”
Additionally, permitted rental building real estate can be found in abundance. Reports of 4-5,000 permitted units in South Boston and the Seaport have us questioning whether there is enough demand in these buildings due to the pandemic or if the brakes ought to be put on said projects. With their flexibility in lowering rental costs or offering two to three months rent-free, there is certainly an effect on the 3-family entity. At what point does the population become incapable of absorbing such a saturated market?
Due to condo conversion, there are fewer multi-family homes. Last year at this time, 37 multis sold, versus 18 this year. The city’s cycle of growth has been on an upward trajectory for the past decade. However, the amount of property to be sold has the potential to skyrocket in this era of social distancing if investors do not see the desired profit and opt-out.
The current condo inventory is up over 68 units higher than this point last year, mostly attributed to the number of listed units YTD, 742 condos in 2020 vs. 611 condos in 2019. This has increased the month’s supply from 3.2 months in 2019 to 5.35 months in 2020.
Although we are 100 transactions off of last year’s pace in terms of closed sales, the amount that went pending (units that have gone under agreement) are only 30 units behind, indicating that the sales will eventually close the gap by year’s end. In particular, condos are 71 sales off last year’s pace, but within 14 for the YTD pending units.
Historically, January through June is the best time for the housing market, while August and September tend to down cycle as we take any opportunity to soak up summer vacation. Outside of this year’s standstill from March through May, much of this is dependent upon the winter’s snow accumulation, as well as the National Football League’s playoff season and Super Bowl.
We will continue to observe these listings regarding the spike in existing turnover while noting impressive market resiliency despite the odds and all that 2020 has thrown our way.
(Jackie Rooney of Rooney Real Estate is a Certified Luxury Home Specialist and one of the premiere listing agents in the Boston Area. He can be reached at 617-645-5370 or Jackie@Rooney-Re.com. )