Mass. housing boom about to encounter turbulence

  • Massachusetts Gov. Charlie Baker. AP PHOTO/STEVEN SENNE  

State House News Service
Published: 3/26/2020 6:43:49 AM

The long-soaring Massachusetts housing market is now on a collision course with a different type of dynamism.

The monthly median sale price of a single-family home here has been climbing since March 2016, but real estate market watchers said Wednesday the record-setting streak could soon come to an end due to the COVID-19 pandemic.

“With economic uncertainty perpetuated by COVID-19 and Massachusetts essentially at a standstill, we can expect the number of single-family home sales and the median sale price to take a hit in the coming months,” Warren Group CEO Tim Warren said Wednesday.

The Warren Group reported that the median sale prices for single-family homes and condominiums increased to all-time highs for the month of February — $380,000, up 4.1% from $365,000 in February 2019, for single-family homes and a 16.6% increase to $400,000 for condos.

Total single-family home sales dipped in February to 2,673, a 5.3% decrease from February 2019. The 1,402 condos sold in February represented a 13.6% increase and the greatest number of transactions recorded in the month of February since 2007, the Warren Group said.

On the group’s podcast, Warren said the data for March will likely show “fairly normal and consistent trends” because it will mostly reflect homes that went under contract before the pandemic really upended life. The real effects of the “economic chaos” will show up in second-quarter data.

“A slowdown is inevitable,” Warren said. “People who feel that their jobs are at risk, have been also seeing their investments and retirement accounts shrink, those people are not going to be home shopping aggressively in the second quarter.”

Hours after the group released the latest housing data, Gov. Charlie Baker, who has been making major news announcements daily in response to the pandemic, outlined a series of measures to protect low-income renters and homeowners and to prevent people from becoming homeless due to reduced or lost income.

The Department of Housing and Community Development (DHCD) is temporarily suspending terminations of federal and state rental vouchers under its purview, MassHousing is transferring $5 million to DHCD for a COVID-19 Rental Assistance for Families in Transition (RAFT) fund to assist families facing rent insecurity, and the Division of Banks has issued new guidance to financial institutions and lenders “urging them to provide relief for borrowers” and informing them that the division “will advocate for a 60-day stay on behalf of all homeowners facing imminent foreclosure on their homes,” according to the Baker administration.

In addition, DHCD is issuing guidance recommending that all owners of state aided low-income housing, including housing authorities and private owners, suspend both pending non-essential evictions and the filing of any new non-essential evictions. The guidance “urges operators to establish reasonable payment plans, notify Section 8 or public housing residents about interim income recertification to adjust rent payments, and to consider offering relief funding for residents ineligible for income reassessment.”

Stefanie Coxe, executive director of the Regional Housing Network of Massachusetts, applauded the new measures announced by the governor.

“But we need to think about what happens when a moratorium lifts,” Coxe said. “Thousands of Massachusetts individuals and families face reduced hours, lost wages, and unemployment and when the dust settles, may potentially owe thousands in back rent. To keep folks in their homes, we believe ultimately we will need additional resources and will be asking the Administration and Legislature for an additional appropriation for RAFT, while lifting certain income eligibility requirements, and an additional appropriation for Housing Consumer Education Centers, which administer RAFT and help residents navigate housing options in a crisis.”

Coxe said relief is also needed from regulatory requirements that “make it impossible to both meet clients’ needs and safely practice social distancing at the same time.”

Community development corporations on Wednesday called on the state to take immediate action, by using cash reserves and borrowing, to address “growing and urgent needs for small businesses, tenants, homeowners and nonprofit organizations” impacted by the public health crisis.

The Massachusetts Association of Community Development Corporations is requesting a $150 million investment in loans, grants, and technical assistance to help small businesses survive and recover; the creation of a Massachusetts COVID-19 Small Business Response Task Force to guide the ongoing response, and the expansion of unemployment insurance criteria to cover sole proprietors, independent contractors and micro businesses.

The group, which represents 88 community-based nonprofits across the state, is also seeking $25 million in emergency funding to help tenants impacted by the COVID-19 crisis pay their rent, and initiatives to help nonprofit organizations, including community-based cultural organizations, youth programs, and CDCs.

“The economic fallout from the COVID-19 public health emergency is likely to hurt just about everyone, but it will have a particularly significant impact on lower-income communities, communities of color, Gateway Cities, and distressed rural areas,” Joseph Kriesberg, president of MACDC, said. “We need the state to step up immediately with significant and equitable investments to help our small businesses survive and recover from this unprecedented crisis.”

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