Housing market shrugs off COVID-19 shutdown
The COVID-19 shutdown in Massachusetts started in the middle of March 2020 and extended through mid-May, when a phased resumption of economic activity got underway. Therefore, the shutdown was in effect for much of the spring of 2020, threatening to disrupt the most important annual home-selling season in the Bay State.
(Note that real estate brokerage was declared by Massachusetts’ Governor Baker to be an ‘essential business’, so home selling was allowed to continue in MA throughout the duration of the shutdown.)
Median sale price on the rise
The home sales statistics for April and May of 2020 show that the Massachusetts real estate market performed surprisingly well during the shutdown.
There was a 7% increase in the median sale price of single-family homes sold during the months of April and May on MLS-PIN, the multiple listing system serving most of the Commonwealth, compared to the same April-May time period the previous year.
Listings and pending sales volume cratered in April, rebounded in May
In terms of single-family homes listed for sale and single-family home listings with accepted offers (pending sales), April saw a tremendous decline in activity on both fronts. New listings on MLS-PIN fell 34% for the month of April, while pending sales were down 32%.
However, there was a an even larger rebound in both listing and pending activity in May. (May saw a 57% increase in new listing volume and a 65% increase in pending sales.)
The fact that May’s listing and pending sales volume were both the highest for any month so far in 2020 says a lot about the strength of the market in the face of all the economic turmoil and pandemic uncertainty.
Looking at the monthly listings and pending numbers January through May for the last several years, it is clear that the shutdown did have a significant dampening effect on market activity in both April and May.
But considering the extent of the ‘stay at home’ shutdown mandate in Massachusetts, May’s rebound is a very bullish indicator for the rest of the year.
Overwhelming demand for many listings
During the 2020 shutdown, demand was intense for new listings that were perceived by home buyers to be priced-to-market. For these listings, double-digit showing appointments and multiple offers were commonplace.
Follow the hotlink here or in the image below to see one example of a home that listed during the shutdown which found a buyer very quickly.
The 3D virtual tour used to market the home greatly helped the home to sell quickly; buyers could see the interior in great detail online. This helped reduce the number of unproductive in-person viewings. The home received multiple offers in less than one week on the MLS.
Buyer resistance for other offerings
On the other hand, for homes that entered the market during the shutdown with asking prices that were deemed too high by buyers, results were often disappointing. Listings that encountered resistance frequently had to adjust their prices downward to sell or had to endure weeks, if not months, on the market.
(The above homes are just a representative sampling of properties that listed during the shutdown and did not find a buyer quickly.)
The supply of homes remains tight
Prospective home buyers who were hoping that the shutdown would slow the market and produce a larger inventory of available homes will be sorely disappointed to see the following chart.
In the broadest readings of the Massachusetts real estate market shown above, the supply of homes for sale during the shutdown was a bit lower during the shutdown than it was for the same time period last year.
This is another very bullish signal for real estate sales for the rest of this year.
Takeaways from the market activity during the shutdown
Anyone casting about for clues to the future of the Massachusetts real estate market for the rest of 2020 need look no further than how the market powered through the shutdown. If ever there were grounds for a disruption in the housing market, the shutdown provided them.
For home sellers, the key to a successful sale remains presale property preparation and proper pricing. 3D virtual tours can be instrumental in helping purchasers zero-in on your home online, without relying on a lot of in-person visits.
For home buyers, absent a broad-based economic collapse along the lines of the Great Recession, the Massachusetts housing market seems to present a safe investment opportunity, so long as you are buying for the long term. In other words, as long as you plan to be holding your new home or investment property for at least the next five years, you would be wise to buy now to capitalize on the current low mortgage interest rates.
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