We’re into the middle of May and maybe, just maybe, the light at the end of the stay at home advisory tunnel is brightening. It’s been a long spring, to say the least! We hope you are hanging in there…
Turning our focus to Boston’s luxury real estate markets, we can tell you that it’s been a limited spring market thus far. “Limited,” however, should not be confused with “dead” or even “slow.” Believe it or not, buyer activity in most of April was steady though listing inventory was exceedingly quiet in our core downtown neighborhoods. The stand out neighborhood through April and early May has been South Boston where, shockingly, multiple bid offers remain the norm!
Interestingly, Zillow reports that their web traffic in the Boston area dropped by 20 percent in March versus the year prior. However, by mid April Zillow’s listing traffic had bounced back and was on par with the prior year. What makes this interesting is that Zillow calculates these statistics off the number of listings viewed. As it turns out, there were many fewer listings in April 2020 which suggests more consumers would have to be on the site to generate more views.
TOTAL LISTINGS: 70
By way of comparison, there were 189 condos listed during the same period in 2019, representing a 63 percent drop off in listing volume this year.
While the number of homes sold will inevitably be lower in the first and second quarters of 2020, we’re anxious to see what the summer will bring. Traditionally, the summer slowdown in the luxury property markets hits just before July 4 and runs through Labor Day. Will we see the same thing this year? Or, will buyers and sellers who sat on the sidelines during the stay at home advisory be eager to transact this summer? Only time will tell!
Our professional opinion is that things may get harder for sellers as we move through the summer months and toward the end of the year. Although listing inventory remains razor thin in May of 2020, we believe there will be more listings that come to the market in the summer months (call it “pent up supply”). However, we have concerns that the stock market will struggle to hold its head up during the summer and, as such, buyers may lose some of their conviction to pay prices that sellers want and expect. In the meantime, landlords may be willing to concede additional offerings to their tenants in the form of rent reductions, short term extensions or even free rent to avoid any vacancy. Extending our prediction, we believe that listed properties (particularly at the higher end of the spectrum) that are even slightly “blemished” may sit throughout the summer. At that point, sellers may be forced to reconcile their bullish expectations and offer discounts on their properties in order to move on.
The sky is not falling. We’ve got plans to list a sizable chunk of inventory at different price points and in varying neighborhoods over the coming two months. We’re continuing to work with active buyers in the market and don’t believe there will be any drastic sell off in Boston. However, if we had to bet, Boston real estate prices will be lower in May of 2021 than they are in May of 2020. Keep in mind the run that we’ve had.