Real Estate Insights & Advice In Uncertain Times
Life has changed abruptly. Much is uncertain. How long will the pandemic last? What does the future hold?
There are few, if any, clear answers. But for those anxious about the real estate market, a snapshot of the moment offers some useful guidance.
How is the Lexington Real Estate Market Faring?
Judy Moore, of Barrett-Sotheby’s International Realty, counsels everyone to remain calm. Based on her 30 years of experience as a local realtor, Moore emphasized that Lexington remains in a strong position.
“This is the right place to be if you’re going to go through something like this,” Moore said, noting that the 2008 economic crisis was based on the mortgage industry, while the pandemic crisis is not. “Lexington is amazingly resilient. We are close to Boston— and obviously the schools are a big asset. Real estate has always been one of the best investments you can make here. I don’t think that’s going away any time soon.”
Joyce Murphy of The Murphy Group/William Raveis has been in the Lexington real estate business for 25 years. She believes that Lexington’s historic qualities, proximity to area hospitals, and convenient location to the city and Logan Airport maintain the town’s appeal.
“I’ve been through a number of these drops in the market,” Murphy recalled. “Lexington historically has not had the same drop prices as many of the other communities inside Rte. 95 have. Lexington is a great place to live. It will always be desirable. It’s like a blue-chip stock”
Current data shows that the early April 2020 market remains a seller’s market. Residential prices have not softened, although what happens in the future will depend on how long the pandemic continues. For the moment, realty web traffic seems to indicate that buyers are still looking from afar, even if much of their bandwidth is being consumed by world events.
Murphy said she was somewhat surprised by the number of listings that came on the market and sold during early and mid-March. “People that had the momentum and were ready went ahead, especially with properties in that highly-sought Lexington price point of about $1.3m,” she said. “They might not have had 10 offers but, nevertheless, they sold right away. The number of new listings [during that timeframe] was lower than usual— but they all sold or are under agreement.”
Moore’s perspective matches this assessment. “We’re still getting multiple offers on Lexington properties. What I am telling buyers who are willing move forward is that this may be their opportunity to have less competition and they could take advantage of that. Once this [uncertain time] is over, we will have a lot of pent-up demand and there will be lots of competition. I anticipate a huge [upward] blip in inventory as well. There will be a buying frenzy.”
Murphy foresees the same quiet-to-busy trajectory. She speculated that having so much time uninterrupted time together as a family unit might kindle forestalled discussions about downsizing or upsizing. Additionally. city dwellers who have so far rejected the idea of moving to the suburbs might reconsidered after being cooped up in close quarters for so many weeks.
“People I’ve been talking to tell me how appreciative they are of the space they have in Lexington—how glad they are not to live in a congested city right now,” Murphy reported.
Moore counsels both buyers and sellers to remember their long-term goals and to embrace strategic thinking, rather than to make reactionary decisions. Murphy advises buyers to contact a good mortgage broker and to and work with him/her to understand the newly revised credit scoring system, which has an impact on how low their interest rate will be.
What’s Been Lost? What’s Been Gained?
Moore and Murphy both reported that they now meet several times a week with their colleagues and counterparts to stay aware of how the pandemic is affecting the real estate landscape. The industry is taking pains to adapt and adjust. Companies like Barrett-Sotheby’s and William Raveis are making use of technological enhancements and they have devised new safety protocols. Although transactions have slowed, mortgage interest rates are favorable and deals continue to go through.
As a marketing tool, on-premise, en masse open houses were eliminated by mid-March. Losing this tried and true option has forced the real estate industry to innovate and adapt, largely by making enhancements to technology. Things once done in person can now be done, out of necessity, from a distance. Visual platforms such as Matterport; virtual showings via Zoom or Facetime; and E-filings for Purchase and Sale and closings are all examples of industry alternatives that make it possible for business to continue.
Moore noted that even before Covid-19, most buyers were already “visiting” properties online before attending an open house or calling to book a showing. The difference now is that everyone must access properties this way.
“Matterport is a [rich, interactive] 3-D experience,” Moore explained. “You can literally walk through every room yourself. You can take the automatic tour, you can walk into each room, or you can look at the ‘dollhouse’ view. You can choose which floor you want to be on and walk through that floor. It’s a wonderful tool. You feel like you’re right there.”
William Raveis uses Matterport as well, although Murphy reported that the platform works best for larger homes. The process for capturing data to create a Matterport visual is time-consuming, Murphy said. For new listings, she is mostly uses it when the owners can be absent for an extended period.
If a house is unoccupied, an in-person house tour can still be possible, although strict guidelines require the realtor to be the only person to touch anything. If this option is available for a particular property, the realtor wears gloves and wipes down all surfaces afterward.
But Moore strongly encourages buyers to take advantage of the virtual tour enhancements to help winnow down the properties they are interested in. “If you’re stuck at home, you can do the whole thing virtually…[From our end,] we know there’s a lot of shopping and inquiring going on…If you find the property you really love, we’ll get you in to see it, if we can… If your long-term goal is to find a house in the neighborhood or the town where they want it to be, keep the goal in mind and act strategically. You’ll find your house.”
Although business continues, buyers and sellers should anticipate delays in the closing process. Legal work is slower to complete. Mortgages may take longer to approve— in part because of a brisk re-finance business due to lower interest rates. Coordinating visits to properties by assessors, repair personnel, surveyors, fire inspectors, etc. are apt to take longer than they traditionally have. Final walk-throughs can still be arranged, but only in a highly-choreographed manner so that not too many people are inside a house simultaneously.
“Lenders are still lending, although carefully, and they are also doing virtual appraisals,” Moore explained. “Documents can be signed electronically. Contingencies can be included in the Purchase and Sale agreement to allow for delays.”
Moore sees a potential upside in these changes of necessity. “If anything, I think some interesting new business models will come out of this. I’ve always believed in the power of virtual marketing. Whatever tool is out there, believe me, we’re taking advantage of it.”
“Not the Spring We Expected”
Statistics drawn from The Warren Group show that Covid-19 interrupted what had been a robust local and regional real estate market. A very active spring market was anticipated, based on the sales trends at the end of last year and the beginning of this year.
To illustrate, in Lexington the 2020 January/February timeframe saw 30 single-family residential closings with a median sales price of $1.1 million and 7 condominium closings with a median sales price of $969,900. MLSPIN, a real estate listing service, reports that although the for-sale inventory was about the same year-to-year, January/February 2019 saw only 18 single-family closings (median price $887,500) and 5 condo closings (median price $515,000). Both prices and number of sales increased significantly from 2019 to 2020.
Median prices vary, depending on the sale prices of homes in a particular time period. For-sale inventory remains low, as it has been over the past couple of years, meaning that it is still a seller’s market. Currently, there are 43 homes for sale in Lexington; 3-4 years ago, the number was closer to 100.
Moore reported that some sellers have decided to postpone putting their houses on the market, but they are poised to do so once the Covid-19 crisis has abated. To accommodate this group, she plans to add a “Coming Soon” page to the Barrett-Sotheby’s website that will include properties available in the future.
Murphy and Moore both emphasized that web traffic remains active and, while slower than usual, inquiries are still being fielded. Interest rates are low— and likely to rise— so buyers are motivated, although cautious.
Moore summarized, “We are able to function. It may be at a more creative level than we were before but it’s still effective and we’re still able to make things work. There’s no reason why a transaction by motivated parties can’t come together.”
Two More Perspectives
“The people part is the hardest”
In 1982, Doug and Kate Townsend moved to Perham Street in Lexington Park, just over the Bedford line. They made a life there, raised two daughters, and developed strong friendships with their neighbors. When the Townsends put their house on the market in February, they considered themselves lucky to be able to decamp to their new home near Buzzards Bay as the sale process unfolded. An open house during the first weekend in March yielded 5 offers and the Townsends accepted one of them. Then the process slowed down due to complications from Covid-19: the mortgage appraisal was delayed; the registry would not accept couriered documents; homeowners’ insurance became complicated; the non-profit in Acton they intended to donate their unwanted furnishings to closed its doors.
Kate Townsend expected her family home’s sale would have emotional ups and downs. They are always a part of the territory. She was even able to take the additional Covid-19-related challenges in stride.
But there was something else she did not anticipate.
“I can’t say a proper good-bye to my neighbors. I can wave from a distance—and I’m sure we can go back at some point—but to leave this way feels really unsettling. We saw one household of neighbors from a distance and when we told them we were leaving, they started to cry. I couldn’t give a hug to the eleven-year-old girl who lives on the other side of our back fence. I’ve played games and done puzzles with her ever since she was four.”
A good time to buy that ski house?
Holly Bancroft Brown, of The Bean Group’s western Maine office, reports that due to the governor’s decree on March 15, the ski season at Sunday River was abruptly over, four to six weeks earlier than usual. Inventory was already slim but houses that would have sold in that timeframe remain on the market, although she noted that some people are still making inquiries. In some cases, prospective buyers are even defying the spirit of the “stay home” recommendations to come up and see properties.
“For about 12 hours, real estate was considered non-essential in Maine,” Brown reported. “Now, I can show houses but I’ve decided to only show vacant ones. Usually, this isn’t a problem with second homes. I wear a mask and gloves. I meet people at door and I ask them to put their hands in their pockets because I’m the only who can touch anything. Then we go through the house doing what I call “the ballet”. I open the closets, then retreat 10 feet away. They look inside. When they’re done, they back away. I come back to close the closet door.”
Brown acknowledged that a good deal of paperwork processing for real estate transactions in Maine has changed as well. The state now encourages “mail away closings”. Brokers and lenders cannot attend closings. Buyers can’t be at home inspections. “It’s challenging to develop and adapt to the changes but business is still getting done.”
Brown speculated that current ski home owners might decide to liquidate this asset in the coming months, due to the vagaries of the stock market and income interruption.
“Because of our second home aspect, we may have gone, overnight, from a really strong sellers’ market to a buyers’ market,” Brown said. “But we don’t know yet.”