The Massachusetts housing market is giving new meaning to the old phrase about how the more things change the more they stay the same.
Rocked by the coronavirus outbreak and subsequent economic lockdown this spring, real estate agents were forced to cancel open houses, ramp up their virtual-technology skills, don protective masks, break out the hand sanitizers, change marketing strategies and adopt to other first-ever procedures during the COVID-19 crisis.
And what did they get for their efforts? More of the same supply-and-demand imbalance, albeit exacerbated by the coronavirus mess, that last month sent home sales down and single-family and condo prices skyrocketing, once again, in Massachusetts.
And real estate agents this summer are expecting more of the same “new normal,” a borderline oxymoron that nevertheless captures one of the strangest and yet most familiar periods in local real estate history, a period expected to last for a while as the state slowly reopens the economy.
“It’s been insane,” Joan Witter, head of the Witter & Witter team at Compass, with offices on the Cape and in Boston, said of the roller-coaster market ride over the past two months.
Witter compared this spring’s virus-induced jolt to the immediate weeks and months after the 9/11 attacks in 2001, when yet another “new normal” ensued after a national trauma.
“A lot of trial and error has been going on,” said Linda O’Koniewski, CEO of Leading Edge Real Estate, with 11 offices located in eastern Massachusetts and southern New Hampshire.
Real estate agents have been forced to adopt to changes they never anticipated – and more changes are likely on the way, she said.
Demand Still Strong
Before getting into the new-normal changes that are expected to spill over into this summer’s post-reopening era, the state’s actual real estate numbers look vaguely familiar, or at least the general sales, price and inventory trends look familiar.
In April, the first full month of the coronavirus lockdown ordered by Gov. Charlie Baker, single-family home sales indeed plunged in Massachusetts by 13.7 percent, to 3,706, while condominium sales fell 19 percent, to 1,610, according to The Warren Group, publisher of Banker & Tradesman. Median prices, meanwhile, increased by nearly 12 percent for single-family homes, to $428,000, and by nearly 14 percent for condos, to $421,000.
In particular, the steepness of the April sales decline was indeed startling, real estate officials agree.
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But the numbers do follow a general downward trend of single-family sales, and a stagnant condo sales trend, dating back to 2016 – a trend caused by a familiar culprit: lack of inventory on the market.
According to data from the Massachusetts Association of Realtors, total inventory of both single-family homes and condos on the market have been significantly down in each of the past five months, since before the coronavirus outbreak. The monthly year-over-year inventory declines have ranged from about 24 percent to 38 percent since last December, according to MAR data.
“The drop in supply occurred before and after the outbreak,” said Peter Ruffini, an agent with Keller Williams Pioneer Valley in Palmer. “We still have the same problem: Lack of supply.”
Some real estate agents say that, after the governor’s initial state-of-emergency declaration in March, some sellers pulled back from selling their homes, not sure of the impact of the pandemic on the market and not sure of the subsequent economic carnage. Ruffini said some first-time homebuyers were also initially hesitant as well, fearful of the state of the economy and taking on a new financial burden amid so many economic unknowns.
Still, the demand for homes remained high – and eventually the market adjusted to the point where there were once again multiple offers on homes, Ruffini said.
The bottom line: Demand for housing in Massachusetts hasn’t let up simply because of a virus, highly contagious or not, and the combination of low supply and high demand led to a classic seller’s market with dramatic price increases last month.
As for new-normal business practices, below are some of the ways the business of real estate has changed over the past few months – changes most real estate agents expect to be around for a while.
3D cameras like Matterport have enabled a revolution in real estate marketing, with many more buyers able to tour houses remotely. But they haven’t solved the inventory problem. Photo courtesy of Matterport
Adieu, Open Houses?
Real estate agents report that most open houses simply disappeared starting in late March, when the governor first announced the coronavirus state of emergency in Massachusetts.
The main reason? Home sellers didn’t want crowds of potentially infected people trooping through their homes – and buyers weren’t too thrilled themselves about venturing into unfamiliar dwellings.
O’Koniewski is anticipating more of the same, even after the late spring/early summer reopening.
“I think it’s the end of open houses as we know them,” says O’Koniewski, who, along with other agents, has seen a dramatic increase in private by-appointment-only showings.
“There used to be a time when a couple would bring a parent or a sister or friend to a showing,” she said of current and future private showings. “Those days are gone. It’s now just the actual buyers.”
Meg Steere, an agent with Berkshire Hathaway Commonwealth Real Estate in Watertown, said she’s now conducting “rapid fire” private showings lasting only about 15 minutes each, rather than up to an hour, with potential buyers and agents all donning protective gloves and masks. Real estate agents and potential buyers then go outside to talk about matters, rather than staying inside dwellings too long, she said.
In some cases, condo showings in luxury multifamily buildings have been either discouraged or outright banned, largely by property management companies protecting the safety of existing unit owners, said Sue Hawkes, managing director of The Collaborative Cos., which represents owners of new residential projects such as Boston’s Echelon Seaport and Clippership Wharf developments.
Moving ahead, Hawkes said she expects very strict social-distancing and safety rules within large multifamily buildings, once things settle down. At under-construction sites, Hawkes said some trade unions are demanding that real estate agents and potential buyers touring units must wear protective gear and even take temperature tests, all to protect construction workers.
And real estate agents are predicting another trend moving forward: An increase in professional cleaning companies dispatched to disinfect homes and condos, before and after private showings.
Hello, Matterport and Virtual Tours
With new restrictions on open houses and private showings, real estate agents say they’re now relying more on virtual home tours, via technologies such as the now–popular Matterport 3D Camera, old-fashioned videos and cell-phone photos.
Communications via Zoom and other technologies are also on the rise, especially with many real-estate offices having closed for social-distancing reasons, agents say.
But are virtual tours as effective as in-person showings? Ultimately, no, agents say, adding that most buyers still strongly prefer in-person tours before making the big decision on buying a home.
Still, there are have been a number of recent sales based purely on virtual tours, industry officials say.
The Cape’s Witter said she recently sold two properties via virtual tours only, one in Centerville for about $750,000 and another in Osterville for about $450,000.
TCC’s Hawkes said she sold one luxury condo in Boston for $2 million – with the buyer never stepping in the unit.
“Can you believe it?” she said of the non-in-person sale. “It’s amazing.”
To attract clients back in the wake of the COVID-19 crisis, agents are boosting their spending on digital advertisements: Facebook for older clients, Instagram for younger ones and Google ads aimed at everyone.
Marketing in the New Normal
Most agents say the old-reliable Multiple Listing Service is the ultimate king of marketing within real estate – before and after the coronavirus outbreak.
But some say they’ve definitely changed the ways they market their services during the coronavirus era.
“We have totally stepped up our social-media marketing because everyone is stuck at home and online these days,” said Witter, whose firm has doubled its spending on social-media marketing.
Generally, Google ads are used across all demographics, Facebook for buyers 40 years old and up, and Instagram for younger buyers, Witter said.
Hawkes said her firm has also stepped up its online marketing, though she stressed her business has long relied on online marketing to reach potential buyers of higher-end units. When introducing new residential products, online marketing – and communications – is key, she said.
In some cases, marketing isn’t needed much at all during these coronavirus times. In the case of well-heeled New Yorkers and Bostonians trying to get way from virus-vulnerable urban areas, they’re eager and aggressive about buying new second homes these days, says Witter.
“They want outdoor space,” says Witter of potential buyers eyeing Cape vacation home. “They want to get away from the cities.”
Due Diligence
Again, with so many new social-distancing and safety restrictions, some agents – though not all – say it’s more important than ever to step up screening of potential clients to make sure they’re really serious about selling or purchasing homes, not just casually testing the waters.
“These [private] tours are so precious now,” says Witter. “We’ve always done screenings. But it’s more important now.”
Ruffini, of Keller Williams Pioneer Valley, said he really doesn’t have to be more selective when it comes to clients, either sellers or buyers, during the pandemic.
“I think people are self-screening themselves,” he said, noting that most people understand the home-sale process has changed to a “new normal” and that there’s too much at stake to treat the process casually.
