In January 2008 I started a new role as an Investment Partner in a Lynn Massachusetts-based real estate business with 200+ residential doors (generally apartments) and 140,000 square feet of commercial space. My partners were experienced operators and my operational background was my add to the team. Coming from financial services, I always had the financial market updates on a screen. As the economy faltered, we found we had to turn CNBC off and instead watch a live webcam of the sandbar Lake Winnisquam in New Hampshire.
It was a dire time. The pressures the economy and concerns we were going to lose it all weighed on my partners. Indeed, we got through those days, and the business did not fail (we did go on a severe diet.)
Are we in for the same outcome? What is different now? It is a different time, and we should see a different outcome:
- Getting a mortgage is much more involved. Now you essentially must prove everything you told the mortgage company. In 2008 if you were breathing you could get a mortgage. It is far more difficult for a marginal borrower to get a loan.
- We have a shortage of homes on the mark At this writing (3/27/2021) there are 7 single family homes on the market in Westborough where the Community Advocate is based. Heck, Tom Brady has won the Super Bowl seven times. Some people are afraid to sell their home because they do not Covid-dripping buyers in their home. Others are willing to sell and are concerned they will not have a place to live because of the inventory.
Suffice to say if you want to sell your home, now is an amazing time. You need to have a plan on where you will move next, be it a rental, second home or to a more available area.
And with the pandemic, some buyers are vacating the city for relative openness of the suburbs and looking for larger homes accommodating work from home necessities.
- New construction is not making up the difference. Materials costs/availability is slowing new construction. Have you checked out the price of lumber at a lumber yard? Lumber prices are up 188% since the pandemic began according to Fortune (March 20, 2021). Try to order new/replacement windows? It may take a couple of months to get them in.
- Houses are not becoming too expensive to buy. Prices are still high, in my opinion. Wages are up and those ~3% interest rates are very attractive.
That said, it is still a tough market for first time buyers. First time buyers are shaking the couch for down payment money, and often need help from family to get down payment together. Some are tapping into stimulus monies.
- Homeowners have equity. Home appreciation is building a nice nest egg for homeowners. While some have tapped their equity for home improvement projects (using a home equity line of credit), few have overextended.
- Mortgage Forbearance has helped. For those simply unable to pay their mortgage/rent, the forbearance and eviction protections have been a godsend. Getting these people back working is a key priority for many. The expectation is we will rebound strongly form the pandemic.
As always, the real estate business is full of surprises. A year ago, we effectively tapped the brakes as the pandemic took hold evolving to a strong real estate market continuing to this day. Reach out if we can help you in your real estate planning.
Here is free app for your phone/tablet tied directly to the MLS https://www.homesnap.com/Gary-Kelley
Gary is heard on WCRN AM 830 discussing “All Things Real Estate.”
If you need advice on selling your home or buying a new one, give us a call 508-733-6005.
Gary Kelley, Realtor®