For many, living in Boston means proximity to restaurants, shopping, nightlife and friends. In an ordinary year, the city is electric with people, entertainment, music and events.
But 2020 is no ordinary year. The coronavirus has changed everything about the city. From the quiet streets in the financial district to a Fenway Park so quiet, you can hear a bat crack. Even the Swan Boats aren’t operating for the first time in 145 years. The silence in the city is deafening, and it’s giving some of Boston’s largest segments of inhabitants a bit of a pause.
Earlier this week, the Boston Globe reported a softening condo market, with more people looking to move out of the city and into the suburbs. For that younger group of professionals still hanging on to city life, the return on investment just isn’t there. Another survey from the International Council of Shopping Centers reports that 43% of millennials are considering a move. Some cite reasons such as the groundswell shift in working from home; others claim that they want more space in times of a shut down; while another group faces a more serious consequence of unemployment as a reason for needing to move out. According to the Bureau of Labor Statistics, almost 15 percent of those ages 25 to 34 are unemployed, with more than a quarter in their early 20s out of work.
The good news is that according to MBS Highway, New Home Sales were actually up 13.8% in June, which is much stronger than the 4% expected. Sales are now up 7% year over year. The median new home price increased 5.8% year over year to $329,300. These are all strong numbers in the face of all else as this pandemic continues to unfold.
On top of that, last week, the Mortgage Bankers Association released their mortgage application data, showing that overall application volume was up 4.1% from the previous week. Purchases were up 1.8% and on a year over year basis, are now 19.4% higher.
Additionally, although mortgage rates in the US rose for the first time in six weeks, we are still hovering close to a record low. According to a recent MBS Highway update, the average for a 30-year fixed loan climbed to 3.01 percent, up from 2.98 percent last week, which was the lowest in Freddie Mac data going back to 1971.
So, what does it mean to have a sudden shift in subsets of the population opting to leave the city for the suburbs? We may end up with a few surprises over the next 12-18 months, but overall, the real estate market has always been push and pull. With some moving out, it’s no doubt that the market will adjust over time to help fill that void. The opportunity is there.