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In the wake of the COVID-19 pandemic, buyers are more focused on “quality of life” concerns like access to nature trails, when deciding where to settle.
None of us could have foreseen how 2020 would end. At its beginning, we were all optimistic that it would be perhaps the best year yet in our different industries.
Then along came COVID-19.
While COVID did not grind the real estate industry to a halt here on the North Shore and elsewhere in Massachusetts, it certainly threw a stick in the spokes initially.
We’ve seen rises and falls in the industry over our many years. We can all recall the downturn in 2008 and 2009 which had devastating effects on the construction and design industry, with some spillover into real estate.
None of us knew quite what to expect in 2020. Would prospective buyers hit the pause button to ride out the pandemic? Would the commercial side of our industry suffer as more and more people were forced to work remotely? What would happen to commercial office space?
We’re very optimistic about the real estate market in 2021 and beyond. Yes, there has been some hesitancy – and some soul-searching – by both buyers and sellers. But signs are hopeful. In fact, the Massachusetts Association of Realtors anticipates a continued shortage of inventory – meaning the “seller’s market” will continue for a while longer.
There is reason to believe that the market will become even stronger. As COVID-19 vaccines become more commonplace, and as people become impatient to get “back to normal” or as close to it as they can, there is reason to believe that this will have a positive impact both on the real estate market and the economy here.
At the same time, a many corporations are increasingly accepting of remote work. A number of industries have discovered that remote working can be done efficiently and it can also save on a company’s bottom line.
What it means for employees is that they do not need to make the five-times-per-week commute, and that affords them greater flexibility in where they can live. A home that is situated further from the office is more appealing if the commute is only twice or three times a week, for example. It’s a lot easier to walk from the kitchen to a home office than to sit on our traffic-snarled highways. With more work flexibility, communities that seemed out of reach geographically may be added into the mix for home shoppers. For sellers, this may mean that their prospective pool of buyers will expand considerably.
Inventory Boosts Sellers’ Power
As some people look toward moving away from the city in favor of suburban living, the kinds of homes that we’ve seen attracting the most attention north of Boston are larger homes, either with in-home offices or the capability of easily converting a room for that use, and outdoor space.
However, here on the North Shore it is difficult to permit new land for development. That, plus a lack of supply of existing units for sale, has made this a great time to be a seller. We’re fortunate to be marketing a subdivision of new homes in Rowley. But there just aren’t that many new home subdivisions planned here. With less new home construction, there is premium on the value of existing properties. We sold a home for a Hamilton resident who is relocating to Georgia who was able to swap a 1,200–square–foot property here for a 3,500–square—foot home in Georgia for the same price.
We are seeing increased interest in upscale communities, as well, as people reevaluate what is important in their real estate selection. After the collective experience we have all gone through, “quality of life” issues loom larger. Schools are important to buyers; in addition to the desire for outdoor space and being near conservation or walking trails, other more practical considerations include communities with strong infrastructure services (such as WiFi which will become increasingly important for the remote worker).
Two Topics to Watch
Mortgage rates remain low right now, although a bit higher than their all-time low. It is still a good time for purchase and sale of property.
As the year unfolds, watch whether the Biden administration’s proposed tax hikes will drag down the economy. As long as the economy remains strong, so, too, should the real estate market.
Watch the state and local tax deduction debate, too. Under the previous administration, there was a $10,000 cap placed on state and local property tax deductions. If President Joe Biden and Congress repeal portions of the Trump tax cuts, and this cap goes away, that one change could provide an additional incentive to purchase in towns where property taxes are higher.
Our industry has always been about personal service. Even with the advancement of technology, the knowledge that a broker has about a community and property is invaluable to a buyer. Our industry will and must continue to adapt with the times, but we must always remember that our role is to serve our customers – whether that’s in person, over Zoom or some combination of the two. This remains a strong market, and there are opportunities for both buyers and sellers. And we believe, as we have for years, that this a great profession to be in, COVID notwithstanding.
Paul Herrick is a partner at Herrick Lutts Realty Partners, located in Beverly.
