With nearly 700,000 residents in Boston, it’s safe to say that New England’s largest city has seen drastic changes in the past year.
We had the opportunity to meet with Michael Ahearn, a Boston native and real estate agent with Coldwell Banker in Boston’s South End. He shared his expertise as a resident and realtor and discussed future market insights.
How has the pandemic affected Boston real estate?
Despite the COVID-19 pandemic rocking dense cities across the United States, Boston has not been nearly as badly affected as others. During the pandemic, Boston real estate professionals declared key workers to be what kept the wheel going. Not to mention, the Fed’s introduction of extremely low interest rates last year helped spur the real estate market.
As of May 2021, the greater Boston area has a hot real estate market that is showing no signs of slowing.
“We have seen a dramatic increase in buyers looking for single-family homes in the suburbs with office space and courtyards,” says Ahearn. “The fact that buyers are looking for space, combined with low interest rates, results in a sought-after market.”
According to the Boston Globe, the average price for a single-family home in Boston has risen to $ 765,000. There are many bidding wars in the suburbs. At one point, COVID-19 was taking tourists away and the city was slowing down, much like the rest of the world. However, Boston’s appeal has helped bring it back to the thriving city it was in before the pandemic. Foreign buyers also recognize the city as a key investment.
Suburbs are hot but is the city overlooked?
There is no question that suburban living was coveted during the pandemic. But Ahearn believes things are starting to return to pre-pandemic norms.
“Bidding wars are back on the agenda in the city,” he says. “Traffic is back on the streets and people are realizing that buying this single-family suburb now that the end of the pandemic is in sight may not really suit their lifestyle.”
Working from home will continue, but the trend towards returning to the office is getting closer and closer. With this in mind, buyers want shorter distances and the convenience of public transport.
While we are likely to see a shift back to the city, there is still untapped potential in certain neighborhoods. See listed areas where luxury skyscrapers, new malls, restaurants, and other signs of development have emerged.
“However, there are still neighborhoods that investors should consider that have the potential to recover: neighborhoods like East Boston, Dorchester, Roslindale, and even Chelsea,” he says. “Quincy, our closest city to the southeast, is also a great place to invest as property prices have increased steadily there and are served by the Red Line train from Boston.”
Another positive indicator is that Boston continues to grow when many people leave the northeast. People worldwide visit the city for its rich history and move there to find work opportunities in growing industries.
“Our growing biotech industry, along with other large companies moving to and investing in Boston, also provides isolation from market volatility affecting other cities (even within that state),” says Ahearn. “Foreign investors also recognize Boston as a safer place to invest their capital. All of these things come together to make Boston real estate a smart investment. “
The rental market
Boston is best known as a popular rental area for students. Before the pandemic, Boston had a rate of around 1%. According to Boston Pads, the same rate rose to 5.44% in March 2021. Factors such as distance learning influenced whether students would continue to rent or live at home. While places continue to open, the guidelines are still unclear as to whether students will return to school or continue distance learning.
At the moment, Ahearn believes the Boston rental market is already recovering.
“Boston landlords got 25-30% less rents than previous rental cycles,” he says. “That is changing as we continue to see monthly rents that are closer to pre-pandemic prices.”
Even if the rents are still lower than they used to be, the scarce supply of living space is causing a new rent. Those who originally wanted to buy their own home today have no choice but to rent in many situations. There just aren’t enough houses to buy, which leads to people renting longer. As companies continue to bring employees and educational relocations back to classroom training, be on the lookout for a full recovery in the rental market.
The spring market and beyond
For the real estate market in general, the spring market started back in January. With no signs of slowing, the market is likely to hold up all summer.
There is much optimism that the end of the pandemic is near as the US opens up further, especially with the introduction of vaccinations in the United States. In Massachusetts, the Mayo Clinic reported that 69% of residents had received at least one dose by that time.
Even as restrictions are relaxed and people are more comfortable in the city, there are still not enough homes for sale. People looking to buy a home have to hold back and balance the market.
“Many buyers have said ‘enough is enough’ and temporarily stop searching for months of unsuccessful offers out of frustration. This, coupled with rising inventories and rising interest rates, should help improve the playing field for buyers in late summer or early fall, ”says Ahearn.
With the foreseeable end of the pandemic, the balance is shifting back towards city life – at least in Boston. The largest city in New England, like everyone else, had to shake off the effects of the pandemic. Boston is experiencing a rapid recovery despite changes. It remains an attractive place for college students, tourists, and foreign investors.