The desire for a bigger suburban home may make a comeback thanks to the coronavirus pandemic, but the need for downtown Boston luxury condominiums won’t go away.
Who thought a global pandemic would change life as we know it? COVID-19 has made us all pay closer attention to the things that really matter – including buyers in the luxury market.
Industries hit hard like travel and leisure will bounce back but will forever be changed. In contrast, the real estate industry in Boston never truly stopped – it was more of a pause. People need a roof over their heads, and as the “shelter in place” weeks progressed, those people fine-tuned their wish lists for their next home. We are hearing more requests for outdoor space, more than one office within the home, larger playrooms and even backup generators. Interest rates are the lowest they have ever been, dropping well below the 30–year average of 8 percent. Boston is ready to get back to work.
The pandemic will influence buyers’ tastes, but there will always be a demand for city luxury condominiums. A desire for a bigger suburban home will make a comeback. The global pandemic has resulted in families wanting more space for grandparents and the possibility of their children coming home from college. However, executives and foreign investors will still want to be close to the city, leveraging pieds-a-terre and smaller units within walking distance to office.
Three Trends to Watch
With 21 offices and over 400 Realtors, Gibson Sotheby’s International Realty is the luxury brand expert from Cape Ann to Cape Cod. It is our opinion that there will not be a mass exodus from Boston to the suburbs. For every seller that decides to head out of the city, there will always be someone to replace them. There will always be buyers that are drawn to the services, cultural activities and lifestyle that the city has to offer.
It has been a challenge to measure demand in the luxury space during the pandemic, as a number of larger condo buildings prevented non-residents from entering and withheld buyers and sellers from transacting within those buildings. However, a few trends stand out based on our experiences.
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First, consumers want to preview properties virtually – using Matterport, video and other technologies – to limit their in-person showings. Some buyers purchased properties sight-unseen. Without virtual technology, and only 10 years ago, it would have been impossible to move a home during a global pandemic.
The second trend is an increased demand for home offices. A significant number of Boston corporate professionals will continue to work from home for the foreseeable future. Therefore, it is critical to have space that allows them to be productive. With an increase in multiple heads of households working at home and an increase in homeschooling, we are receiving requests for more than one office within the home.
Colleen Barry
The third trend reflects a steady stream of sales activity in several second–home markets. Instead of moving to the suburbs, we’ve seen urban dwellers keeping their condo and purchasing a second home on Cape Cod. This strategy allows them to split time between homes for a change of pace and setting. Home sales on the Lower Cape have been strong. The number of pending sales were only down by 11 percent year-over-year in the last two weeks, although many of those homes were vacant and, therefore, easy to show.
The Future is Bright
With regards to a long-term effect of the global pandemic, there continues to be a lot that remains to be determined. Much will depend upon whether there is another wave of infections in the coming six to 12 months.
We believe that home offices will likely remain a common criterion for those who can afford the space. Employers will consider shifting how office spaces are used and employees may decide they like the flexibility of not commuting for all or part of the week. Now that we have adjusted to the virtual technologies that allow us to continue to do our jobs, there may not be a need to go back to the way things were.
Dino Confalone
Although the number of pending sales dropped considerably during the months of the shutdown – 40 to 60 percent year-over-year – in many regions of our state, those statistics tracked closely to available inventory and most have already begun to quickly rebound. Prices held strong and increased in some areas, the limited inventory creating multiple offer situations. Where there were fewer restrictions on showings, homes continued to sell, some even sight-unseen. Agents and clients adapted to the situation, taking precautions in order to ensure safety for everyone involved.
Unlike 2008, we are not in an economic crisis driven by a housing bubble. Therefore, we anticipate homes in eastern Massachusetts will continue to hold their values. Post–COVID-19, consumer confidence will adjust to a new normal. Boston remains a destination city with education, finance and technology as its anchor, and its future is bright.
Colleen Barry is the CEO of Gibson Sotheby’s International Realty. Dino Confalone is a Realtor with Gibson Sotheby’s and the 2020 president-elect of the Greater Boston Association of Realtors.
