Happy Groundhog’s Day 2022. It is the turning point from winter, looking towards spring. The holiday runs parallel to, and takes from, earlier practices that recognize that we are roughly halfway through winter. In metro Boston, that usually leaves us in the middle of winter, during the snowiest part of the season. This year is no different.
When I looked back on 2020, last Groundhog’s Day, I mused about the year to come.
First I wrote about what to expect when the pandemic was over. Well, it’s not. Therefore, the long-term fallout of the pandemic is still up in the air. We remain in limbo about the economic fate of businesses in our communities. Some are thriving, and some are folding. Some are moving. Many are downsizing. Restaurants, hospitality, and travel seem to be taking the deepest hits.
In real estate:
Economic conditions in 2021 led to an extreme seller-favoring market, beginning in the summer of 2020 and running through July 2021. By August 2021, the market remained seller-favoring, but the frenzy was more like the normal high demand we are used to in this area.
Through July, the extreme demand led to more work for us, because of rejected offers. Why? Because of bidding wars. Because we watch the market, we can calculate which houses are priced below market value and which are priced at or above market value. That makes us able identify houses that may sell below asking price. Even in 2021, seventeen of our buyer households paid a total of $436,498 under asking price for their properties. That was $81,699 in the first half of the year, and $354,799 in the second half, when demand got back to more typical levels.
Looking back at 2020, we watched the changes in the rental market, since it affects the sales market. The residential rental market had weaker demand in 2021 than is usual for this region. This gave a slight break to people looking for better rentals last summer. We don’t do the rental business, but we are aware of it. Because the rental market did not favor owners as much as usual, there were more landlords who chose this year to renovate their rentals to sell them or re-rent them.
The single-family housing market was strongly seller-favoring all year, getting a little better for buyers around the end of July into September. Choice remains limited. Bidding wars remain common.
Condos with private entrances remained popular. Condos on hallways, and in big buildings, were a bit easier to buy because there was less demand.
What did our clients want?
The changes from 2020 to 2021 are few. It was predicted that urban housing would become unpopular. We have not found that to be true in residential cities like Cambridge, Somerville, and Brookline. Being near the Boston is still a selling point.
Buyers are buying. They are more particular about the size of their interior space and the privacy of their common spaces in condos. They still love the city life. Those who can pay the steep prices in residential city areas are doing so.
The trends from 2020, mostly, remain true:
- Buyers are mostly not using the MBTA right now; however, being near subway lines remains important to them.
- Although buildings with shared hallways and elevators are not popular in Covid times, we have clients who moved from renting to owning in a building like that.
- Condos in small associations frequently have yards. Private yards are more desirable than shared ones.
- Single-family houses in cities are hot! There is a lot of competition for houses with yards in Somerville, Cambridge, and Brookline. Similarly, there is steady demand in the towns around Boston, like Arlington and Watertown.
- Interior spaces with three bedrooms are always worth more than properties with two bedrooms, but more so this year. There is higher demand, and sometimes that leads to higher prices.
Will remote work options linger after the pandemic? Some people are banking on that, and buying properties farther from work
What makes buyers delay buying?
Like 2021, people who are happy enough where they are living are choosing to stay put in 2021. The overheated market put a damper on their plans. The deterrents to buying that existed in Covid 2020 remained in Covid (Omicron) 2021.
- If a client is renting and has a lease, they may choose to delay. They may have trouble finding someone to take over the lease.
- If a client is buying property that needs renovation before they move in, they may choose to delay. Getting contractors has been a problem during the pandemic. Contractor delays can prolong the time that a new owner pays the new mortgage, and the old rent or mortgage.
A 2022 wish for you:
I wrote this on Friday, January 28. The sky was overcast, but entirely calm. The news was full of predictions for “up to 28 inches” of “unprecedented” snowfall. My Facebook feed is full of pictures from the “blizzard of 1978” and the “snow apocalypse of 2015.”
I hope that when you are reading this on Wednesday, February 2, or after, you are warm and safe. Good luck to us all in the second half of winter 2022.