Home News ‘We walked into a buzzsaw’: This spring, Boston’s housing market is tougher than ever.

‘We walked into a buzzsaw’: This spring, Boston’s housing market is tougher than ever.

by admin
0 comment

And after moving last year, I found a shotgun from the 1940s. It was unnoticed by the owner decades ago.

“We came in and it was like,’OK, we love this house and it has to be uprooted, so we feel it’s possible,'” said Emily Luon. I did. “It was so crap that many didn’t want it.”

Emily Luon, her husband Tony, and her five-year-old daughter Olive at a recently purchased home. Matthew J Lee / Globe Staff

Pressure on the Massachusetts housing market is gaining tremendous momentum as inventories are low and prices continue to rise. Buyers pay a staggering amount of money for what is normally considered a refusal. Luongs has hit a high price in six other home attempts, resulting in an essentially complete rehab of $ 825,000.

For many buyers, previously unthinkable procedures such as abandonment of inspections and contingencies on mortgages are now commonplace. Prices have risen to record highs, with a typical Greater Boston home now exceeding $ 750,000, and the surge in demand following the initial COVID-19 blockade has not slowed.

“We’ve been talking about price increases and supply limits for decades, and Greater Boston is always facing it. Well … I’ll characterize it like a steroid.” Alicia Sasser Modestinoh, associate professor and research director at the Dukakis Urban and Regional Policy Center at Northeastern University, said. “I think it’s unprecedented. I don’t think we’ve ever seen a housing market like this.”

For many homebuyers, the biggest challenge today is interest rates, which have skyrocketed by more than 2 percentage points on average since the beginning of the year. This means that monthly payments will increase significantly, as in the case of her first home buyer, Ligia Alfonzo and her husband. Derek Flavel. After this year’s “horrible,” “extremely stressful,” and “anxiety-inducing” searches, the couple closed at their first home in Pembroke this month.

The seller accepted their offer but had to find a new home before Complete the sale. It took three weeks.And during that period, Alfonzo’s Interest rates have risen from 4.6% to 5.6%. She and her husband expected to pay about $ 3,000 in their monthly mortgage payments. Now their payment will be $ 3,500.

“These three weeks cost us an overall percentage point,” she said.

It was too late to cancel. Alfonzo and her husband lost their deposits and were probably sued. So they set a deadline and borrowed a mortgage just before they received a notification from the landlord of Quincy’s apartment that they were raising their rent by $ 200 a month instead of the hundreds they expected. I did.

“It was like,’OK, we did it all for free,'” Alfonzo said. Said.

Emily Earle and her husband were also not ready for interest rates to rise so rapidly. The couple are renting down payments in southern New Hampshire and have been pre-approved for a 3.1% interest rate mortgage. Now up to 5%, they are still hunting.

“It’s hundreds of dollars more than we would have paid, even in December,” Earl said.

Earl and her husband benefited from remote work last year and probably began to want to start a family. They didn’t expect the market to compete so cruelly.

“It’s like stepping into a buzz saw,” Earl said. “It wasn’t just our price range. There was nothing there.”

Recently, couples have exceeded the asking price by $ 52,000. They were one of 18 offers for a home in Newton, New Hampshire. It’s depressed, Earl said, and often feels impossible. She and her husband looked for rental housing, but “they aren’t possible either,” Earl said. They are now staying on Airbnb.

“We may be hopping Airbnb this summer, which is ironic because we feel that Airbnb is also contributing to the crisis we are facing now.” She said. “I feel like we’re sitting on this catch 22. It’s wild.”

A few years ago, Haley Cutter’s clients created a list of what they wanted at home. They would insist on checking all the boxes. Agents at Cutter Luxe Living by Compass advise you to create a list of strengths and weaknesses instead.

“So far, I haven’t seen anyone move to a house with all the checkboxes checked,” Cutter said.

Cutter is currently working with Wellesley buyers, and recently all homes listed for less than $ 1.5 million have reached an agreement within three to four days. Homes are sold well above the asking price, and there seems to be a pricing strategy below the market price to trigger a bid war among buyers, according to Cutter. She heard that buyers don’t want to wait for inspection, so they facetiming the contractor from the open house, or just bring the contractor.

“We didn’t see this even at the beginning of COVID,” she said. “If you put it on the market, you’re going to sell your home over the weekend …. You can make a lot, but where are you going?”

It’s not just Boston. Prices are skyrocketing across the country. However, there are signs and, in some places, the housing market may be full. The price increase is gradual. More properties are on the market. Real estate agent Redfin across the country reported that the number of tours taken by agents fell by 19% from mid-April to mid-May. This is the largest decline since April 2020.

But even as the market cools, few expect the crashes seen in the mid-2000s. According to Modestino in the northeast, this cycle is different due to a set of factors caused by both pandemic and demographic trends.

Weddings with delayed pandemics became a big boom, and millennials reached the peak of home purchases. Generation Z is also aiming to enter the housing market, and the household formation engine has revived. At the same time, the pandemic has led the empty nest baby boomers to consider retirement and downsizing to apartments and condominiums.

Sales are not an issue. It’s a big problem to find a place to go. And even though Empty Nest Syndrome is ready to pay a premium for miniaturization, the recent surge in inflation is digging into their savings. Stock market volatility, which has been hit hard by retirement savings, also doesn’t help.

According to Modestine, in a normal business cycle, these factors will probably be much slower in a decade. But now they are all gathering together.

“We made all this happen at the same time, and it puts too much pressure on the market,” said Modestino. “It does not suddenly decline in itself.”

And even those who “win” in this housing market have a lot to do. For Luon and her husband, at Arlington, the $ 825,000 they spent on the fixer upper was just the beginning. So far, they’ve invested about $ 65,000 in repairs, kitchen mods, plumbing and wiring updates, and fixing outdoor drainage issues.

Still, Luong believes the couple are lucky and even privileged to find a home.

“We really love it,” she said. “To date, our realtors and sellers’ agents don’t know why they chose our offer. If they waited another five days, they would probably get another $ 100,000. Let’s do it. “

Catherine lock can be reached at [email protected].. Follow her on her Twitter @bycathcarlock..

You may also like