With everyday life stuck in suspended animation through at least May 4 thanks to the coronavirus pandemic, indications point to a challenging month for home sales.
Massachusetts’ twin public health and economic crises are starting to slow the region’s housing market, as sellers appear to be looking to wait out both.
The number of new home listings entered into MLS PIN, the state’s largest multiple listings service, dropped over 11 percent year-over-year in March, according to data provided to Banker & Tradesman.
March 2019 saw 8,631 new homes listed on MLS PIN through March 29, while that same figure for 2020 was a mere 7,630.
Much of that drop was likely concentrated in the last full week of March, said Lamacchia Realty Broker/Owner Anthony Lamacchia.
“Ordinarily, we’d be seeing around 3,000 homes a week being listed. Ten days ago, people were saying ‘I don’t give a damn. I’d put my house on the market,’” he said on March 31. “It’s getting to the point that [the only] sellers on the market are the ones who really have to get going on something.”
The drop followed a February that appeared to show the state heading for a strong spring real estate market, with new listings on MLS PIN rising to 6,775, an 11.16 percent jump over February 2019’s 6,095 new listings.
MLS PIN serves all of Massachusetts, although many homes on Cape Cod, Martha’s Vineyard and Nantucket are instead listed on the separate Cape Cod & Islands MLS, which is owned by the Cape and Islands Association of Realtors.
‘We Hit the Slo-Mo Button’
With the general public unable to see just how extensively COVID-19 has spread throughout Massachusetts, despite a recent ramp-up in testing, many buyers and sellers are skittish at the prospect of interacting with strangers, or inviting them to tour their homes.
“I think we hit the slo-mo button on sales. I can’t see too many people buying a home from the comforts of their current home,” said Tim Warren, CEO of real estate data firm The Warren Group, publisher of Banker & Tradesman. “‘Stay at home now’ means ‘Don’t buy a home now,’ and ‘don’t list a home now.’”
With social distancing expected to be the order of the day through at least May 4, under an executive order Gov. Charlie Baker issued last week, agents will be forced to incorporate as many remote tools into their repertoire as possible, Lamacchia said.
Strategic concerns may also be at play in shrinking the number of homes being listed, said Brian Dougherty, managing broker of Compass’ Boston operations.
“Everybody is holding off on listing properties on MLS. Why bother? You’re going to accrue that vicious metric of days on market,” he said on March 27.
Even while some agents express hope that virtual home tours could help keep the market moving or ready to spring to life once the virus is contained, concerns loom in the mortgage industry that could slow down the home sales or become bigger issues if the virus’ economic damage lasts.
Obstacles Loom in Mortgage Market
Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs have all adopted new rules that allow home appraisals to be done without entering a home during the pandemic. And the Baker administration has created a workaround for a crucial smoke detector inspection requirement.
Still unaddressed as of Banker & Tradesman’s April 3 deadline was Massachusetts’ requirement that closings be conducted and documents notarized in-person, said Debbie Sousa, executive director of the Massachusetts Mortgage Bankers Association. State legislation in process had to be scrapped late on March 30 thanks to sudden changes in policy at Fannie Mae and Freddie Mac, but movement on a new bill was expected soon.
With the state of the economy still volatile, she said, a bigger issue could be lenders’ ability to verify a buyer’s income, and therefore the size of the mortgage they can afford.
“Say you’re a restaurant. We can verify that you’re in business, but you can only make, say, 20 percent of what you have been making,” she said. “What if your bank statement [used in the preapproval process] was 30 days old? Now what does it look like?”
Despite the challenges, Sousa said, the state’s mortgage lenders were not running from the uncertainty brought on by the pandemic and economic crisis, and instead were trying to grapple with what is a fast-changing situation to find opportunities to lend.
“I’m really proud of our industry. With this hitting at a time of high volume and low interest rates, you throw a pandemic on top of that and we’re still doing a good job protecting consumers and getting those loans done to serve our customers,” she said.
