“Totally Insane” — 2020 Massachusetts Real Estate Year In Review And Predictions for 2021
Local Real Estate Agents Recount The Year of the Pandemic, and Offer Some Hope (and Caution) for 2021
The year 2020 started out like most strong real estate years in recent Massachusetts history — very high buyer demand combined with low seller inventory, along with historically low interest rates, equated to a bustling busy real estate market. January and February were solid months even for winter. As we entered late February, however, we stared to hear about a concerning new virus originating from Wuhan, China, spreading quickly to Europe. They called it “Coronavirus” or “Covid-19,” names that would later be part of our permanent lexicon. Flashback to March, and the virus had quickly reached the United States. The country soon shut down. Offices and schools closed. Governors across the country issued “stay at home” and “social distancing” orders. Eviction and foreclosure moratoriums were enacted, including the strictest one here in the Bay State. Real estate attorneys here in Massachusetts sprung into action to help pass the Remote Notarization Act, which helped keep closings moving forward. And despite the pandemic, the real estate industry reacted and adapted quickly, with realtors and attorneys relying on virtual tours, Covid compliant open houses, lots of Zoom calls, and “drive-through” closings.
The year is now almost over. From speaking to all my real estate friends, agents, lawyers and lenders, the general consensus is that the Massachusetts real industry averted major disaster. Indeed, some agents reported a record year despite all the challenges. But I wanted to hear directly from those on the front lines. So naturally, I went to Facebook! I asked all my real estate friends several questions about how 2020 went. I told them to give me three words to describe 2020. (I didn’t censor!). How was your local market during Covid? How did you handle all the changes brought on by Covid? What are your predictions for the real estate market in 2021? Do you see any Covid related changes to business remaining permanent going forward?
Here is what they said:
Craig Lake (Compass Boston)
Shockingly 2020 was my best year yet. I didn’t experience the mass exodus to the burbs, but did see some upsizing within Boston. The Spring was still HOT, HOT, HOT! While the Fall was definitely more mellow. Rental market definitely went majorly downhill – with major bargains to be had around the city and a ton of inventory sitting empty. I think the condo market in Boston will bounce back this Spring with vaccines on the way. The rental market will likely be a little slower to recover, but hopefully by the Fall. There have been some covid deals in the City but I don’t think that will last long as work will resume after the vaccines are widespread. Most of all – I cannot wait to not have to wear masks on showings anymore and have normal Open Houses again.
Katherine Waters-Clark (Compass Arlington).
Transformational, Tribe-forming, Tragic, True Grit. My market was on fire, Covid did not slow it down and I was out there the entire time. I was scared but had to lead my clients. Honestly had to put my Mom hat on and say “listen you guys, my job is to keep you safe.” I had to turn on a dime daily, learning new ways of marketing, listing, open houses, staging remotely, safely working with buyers. Talking through a mask, what is that? It was an exhausting, rocky road shit show but ultimately I have many overjoyed (really) clients who bought and/or sold or both! My company, Compass, got me through it with daily innovations, mindset, weekly office meetings, so much sharing amoung agents, so much generosity, we really really were all in this collectively together. It was a very special time, in that way. Predictions for 2021: My roster for 2021 is fuller than it’s ever been in 15 years. It’s going to be fire. Buckle up. Moving forward, there WILL be more virtual meetings, 3d tours will be here to stay, paperless transactions here to stay, mobile offices here to stay. It will be a while until we can all gather at a ball game, an event, a concert. But once we can, we will all be having hugfests and going crazy, it will be so great to be together again!
Charlene Frary (Realty Executives Boston West)
My three words, wearing my real estate hat, to describe local 2020 real estate are “surprisingly not awful.” In March and April I really thought the pandemic might be the thing that finally slowed the “feeding frenzy” and in fact the market gained momentum with 10% value appreciation and less inventory. And because of this, and the fact that values have been rising solidly for years, I’m predicting a similar volume 2021 with 5% minimum appreciation. I think most homeowners in financial trouble will be able to sell and pay off debt thanks to recent years of value increases – not a pretty picture, and very sad and unfair… but less ugly than foreclosure for those homeowners and less impactful than a foreclosure wave. That’s here -may be totally different in other parts of the country.
Debbie Booras (Keller Williams Northwest)
Whoa…wow…wonderful. 2021 late spring early summer will shift to a buyers market as the inventory withheld will saturate the market quickly. Sellers will still expect a premium and the shift will begin.
Nick Aalerud (Multi-family development and investment)
Learned: How to lead in crisis. Making tough decisions, slashing expenses. Created a “bloodline” reporting system so we knew exactly how much cash we could operate with rolling 13 weeks out. Modified our buybox. Focused more on TEAM and PURPOSE than on making up for lost deals. Liquidated nearly 100% of rental portfolio to prepare for what is coming 2021: Expect a commercial capital collapse at the regional and perhaps state level, as 10 yr loans come due and there’s no occupancy or cash flow to support refis. Commercial (office, hospitality, retail, restaurant) will begin to feel the pain (even beyond what they are feeling now) in Q3, mostly Q4. Residential: After forbearances are over, based on current unemployment and economic data, people won’t be able to afford their mortgages, despite the fact of “COVID MODS” being offered. They’ll be forced to sell. No real change in 2021 on house values except that as these waves hit the market, the demand will finally start to be absorbed. 2022 is another story… As the third, 4th and 5th wave start to hit, I’m gambling that we are back in short sale territory. And we have amped up our short sale business to make sure we are ready, for the commercial defaults, and then the overwhelming residential ones we see coming…
Baris Berk (United Brokers)
Currently, there is lack of inventory and even after they lift the moratorium it will take some time and process for foreclosures to hit and it might not even hit by the end of next year or beginning of 2022 so due to some pent up demand for sellers as well, 2021 I do not see any market crash and in contrary we might even see 5% increase in the values.I think 2022 will be more murky waters
Heidi Zizza (mdm Realty Framingham)
Oh my not sure 3 words will cut it! Stressful, Relaxing, Crazy! It went in phases. I think 2021 will be just as busy but I do think some of the changes especially to brick and mortar will stay! I miss getting together but zoom has made it so you can be together anywhere.
Jonathan White (Managing Broker Vylla)
I think the biggest change that we’ll see is when the eviction/foreclosure moratorium is finally lifted. That will very likely result in the highest level of foreclosures that we’ve seen in at least five years. We’ll have to see if that is the catalyst to finally shift this crazy market.
Thank you to all the agents who participated in this article! May all of you have a very happy, healthy and prosperous 2021!