‘Pandemic refugees’ fuel growth in local real estate market
By Patrick O’Grady, Granite State News Collaborative
Last year at this time, Realtor Ruth Blais Thompson was confident of another strong year in the residential real estate market for Cheshire County and the Monadnock Region, where she has sold property for nearly 40 years.
“I was feeling like, is this pandemic going to wipe us out? Everything was shutting down. But it was a better year than we could have imagined.” — Ruth Blais Thompson, Realtor, Blais & Associates Realty, Keene, New Hampshire.
“The prior year was very good, and we saw no signs of decline,” says Blais Thompson with Blais & Associates Realty of Keene. “We certainly felt like 2020 was going to be another great year.”
Chris Masiello of the Masiello Group notes his office in Keene was off to a strong start, and Joshua Greenwald of Greenwald Realty in Keene was similarly optimistic that 2020 would follow a solid 2019. Their office was expanding, and they had plans to add agents.
As 2020 came to a close, the Realtors’ expectations were realized, but in a way no one could have envisioned. The COVID-19 pandemic created a surge in buyer demand, most of it from out of the immediate area. Without a corresponding increase in available properties, selling prices jumped as buyers competed to be the winning bid.
COVID also ushered in a new way of doing business with virtual showings, Zoom discussions and a host of safety protocols that would have seemed unimaginable when the year began.
“All of a sudden, everything came to a screeching halt. We couldn’t even leave our house,” says Greenwald about the COVID-19 pandemic that struck in mid-March and cast an immediate cloud of uncertainty over all sectors of the economy with dire predictions about a deep and prolonged recession and skyrocketing unemployment; not the sort of environment that bodes well for homes sales.
AN ESSENTIAL BUSINESS
Strangely, those dire predictions never materialized in the real estate market and in fact, just the opposite occurred. As suddenly as the panic arrived, it just as quickly began to ease, helped in part by the real estate business being declared “essential” by New Hampshire Gov. Chris Sununu, allowing the Realtors to continue selling, albeit with several health safety precautions including masks, social distancing and the use of hand sanitizer.
“It has been a roller coaster of a ride,” notes Greenwald about real estate sales the past 10 months. “It started with a slowdown from the pandemic that had the potential to be devastating to the real estate market.”
Blais Thompson says the immediate shutdown in mid-March from the pandemic worried her at first.
“I was feeling like, ‘Is this pandemic going to wipe us out?’” Blais Thompson says. “It was the fear of the unknown. Everything was shutting down. But it was a better year than we could have imagined.”
Joshua Greenwald of Greenwald Realty in Keene was similarly optimistic that 2020 would follow a solid 2019.
Blais Thompson says that the sense of dread was gone by the end of March and buyer demand began to increase. She often would show a property several times in one day and quickly receive offers.
For example, her brother, Fred Blais, who works in the office started by their father, listed what was described as a “modest two-bedroom ranch with some acreage and a garage,” Blais Thompson wrote in an email. There were 12 showings on a Saturday in November and three the next day. Six offers were received, most from out of state and two of which were $30,000 over the asking price, Blais Thompson says.
Chris Masiello — whose Masiello Group is the largest real estate business north of the Boston area with 33 locations in New Hampshire, Vermont and Maine — says 2020 began at a brisk pace, slowed for about 60 days when the pandemic hit, then around mid-May began to “cycle back up again.”
“We got back to a normal sales cycle pretty quickly,” Masiello says. “2020 will look a lot like 2019 with prices up 7 to 10%.”
Masiello points to several factors that were in place before the pandemic that suggested a solid year in home sales ahead, including lower interest rates, an increasing “redistribution of the population” to this area because of lower home prices and preferred lifestyle and more people realizing they could work from home.
“COVID accelerated that movement,” Masiello says. “All these factors converged on the marketplace all at once. What we have found is this region [Northern New England] has become a resettlement area, particularly in certain pockets, especially southwestern New Hampshire and Vermont. Typically out of region buyers are maybe 10% of sales in any given year; this past year, it has been 35%.”
DEMAND UP, INVENTORY DOWN
Greenwald notes that buyers quickly came back into the market in late March, but not enough sellers did and that naturally drove up prices.
“It is like a game of musical chairs; when one chair opens up, all these buyers are waiting to jump on it, so it is creating frenzy,” Greenwald says.
Greenwald attributes the frenzy to FOMO or fear of missing out.
For Brattleboro-based Realtor Thom Dahlin, 2020 began slowly with not many listings or buyers. “Then in March, the whole world exploded, and my phone began ringing off the hook,” says Dahlin, who has sold properties in Windham County for seven years with Berkley and Veller Greenwood Country Realtors.
“When you want to get your hands on a house, and there are other buyers, you no longer have the luxury of saying ‘hey, I wonder if they will take this,’” says Greenwald. “It is more of, ‘what is it going to take from me to get my hands on this house?’ To make yourself more attractive as a buyer, you are going to have to offer above the asking price, and you need favorable closing terms.”
Dave Cummings, director of communications for the New Hampshire Association of Realtors, says the inventory of homes for sale in New Hampshire has been at historic lows for years, and the problem became more acute with a surge in demand brought about by the pandemic.
“Last year at this time [December 2019], we had the lowest inventory in the last 15 years,” Cummings says. “Since the pandemic, it has gone to 50 or 60% below that. It is remarkable.”
According to NHAR statistics, homes for sale in New Hampshire for November 2020 fell 60% from the previous year to about 1,700. Inventory of single-family homes dropped from three months in November 2019 to one month this November, meaning at the current sales pace, it would take just a month to exhaust the current homes for sale on the market. A balanced market has a six to seven-month inventory, Cumming notes.
In general, Cummings and others point to COVID as the reason for low inventory, with many reluctant to have strangers [potential buyers] in their home, despite health protocols. During the height of the pandemic last spring, some Realtors said they were told not to come to closings because of the virus.
“What we have found is this region (Northern New England) has become a resettlement area, particularly in certain pockets, especially southwestern New Hampshire and Vermont.” — Chris Masiello, The Masiello Group
“People tend to hunker down and wait to see what will happen in times of uncertainty,” Cummings says. “Those on the fence about selling will stay on the fence until everything is cleaned up.”
NHAR numbers for Cheshire County confirm the selling experiences of Blais Thompson, Masiello and Greenwald. Closed sales for November were up almost 15% for the same month in 2019 (though down 2.2% for the year); for the same period, the median sales price was up close to 20% to $257,000. Sales volume jumped 34% to $27.6 million and was up 15.7% for the year.
Finally, days on the market for single-family homes dropped 34% from 59 days to 39 for November compared to last November. Those numbers were mirrored in other counties across the state with only slight variations, with increases in closed sales, median sales prices, and sales volume. Statewide, the median sales price was up 11.3% for the 12 months ending November 30 versus a year earlier.
Nationally, there was also a surge in existing home sales: While sales dropped dramatically from January to April 2020, home sales increased sharply after that. The year began with about 5.8 million homes sold across the country in January 2020. But, similar to the trend in our region, the national home inventory has continued a downward trend for the past several years and was at an all-time low of just over 2 million homes available for sale in October after being around 4 million or more for most of the year.
Similar trends were seen in the Greater Brattleboro region: Windham County sales figures were strong with the median sale price and average sales price up 33 and 39% respectively for November 2020 compared to the same month in 2019, according to the Vermont Association of Realtors. Closed sales for the same period were up 97% while the active listing count dropped from 515 to 240, further evidence of a shrinking inventory of homes for sale in the county.
For Brattleboro-based Realtor Thom Dahlin, 2020 began slowly with not many listings or buyers. “Then in March, the whole world exploded, and my phone began ringing off the hook,” says Dahlin, who has sold properties in Windham County for seven years with Berkley and Veller Greenwood Country Realtors.
Greenwald points to several factors that he thinks will mean continued strength for residential housing sales in the coming year, including wide distribution of the COVID vaccine, improved job security, a continued strong economy and low-interest rates.
“I heard from buyers and sellers who wanted to list their house because they heard of the ‘COVID bump,’ in real estate,” Dahlin says. “Anecdotally, people were selling homes that normally sold for [$250,000] went for $275,000 or as much as $295,000.”
He heard from other Realtors that people were buying properties sight-unseen from just a video showing. Dahlin notes that this kind of bidding war was happening mostly with out-of-state buyers.
“I had a lot of people from Brooklyn and also had several clients with cash,” Dahlin says
Patrice Schneider, who also sells real estate in southern Vermont, says that things got crazy in late spring with out-of-state buyers who were referred to locally as “COVID refugees.”
Commercial Real Estate
By Patrick O’Grady
The commercial real estate market saw none of the ups and downs experienced in the residential market after the COVID pandemic swept through the country beginning in mid-March.
It appears COVID did not impact the commercial property listings in the Cheshire County and Brattleboro areas, nor did it bring on a buying binge with multiple offers that were seen on the residential side. But fears of a prolonged recession did “keep money on the sidelines,” notes one Realtor.
Chris Masiello, with The Masiello Group — the largest real estate company north of Boston with offices in New Hampshire, Vermont and Maine — says he sees a different economic dynamic emerging in the aftermath of COVID, assuming widespread vaccination finally brings the virus under control.
“I think with the commercial market, there has been a short-term slowdown,” Masiello says. “However, as we start to see an economic expansion (locally) because of the population growth, it is only natural that the commercial market will be drafting around the track with the residential market. I would say the commercial market is six to nine months behind the residential market.”
The economic landscape post-COVID will be unlike what happened with the Great Recession, which affected most sectors of the economy and the entire country, Masiello notes.
“I think it will be highly regional [recovery] instead of a recession across the entire country followed by an up cycle,” Masiello continues. “It will be an uneven recovery with a boom in some areas [where people are moving] and a corresponding bust [where they are leaving] in others.”
Masiello also highlighted the amount of cash pumped into the economy, not only by the U.S. government but also by governments worldwide, leading to a lot of liquidity, another important piece of economic expansion.
Brattleboro-based Realtor Thom Dahlin with Berkley & Veller Greenwood Country Realtors notes he recently had four bidders on a commercial property, and the likely buyer will be from Rhode Island, another indication of people moving to the area.
Overall, commercial and industrial property sales were little affected by COVID. Should the economy remain strong in 2021, Masiello, Dahlin and others expect activity to increase commercial property sales.
Masiello says buyers from southern New England and the New York area have a “price bias,” meaning a home valued at $750,000 where they live might be on the market for $250,000 in Cheshire County.
“Those look like pretty good deals, so people coming here are a little more aggressive in pricing,” Masiello says.
Blais Thompson heard of buyers asking agents what they needed to do to get the property and were told the best approach is to pay cash, without an inspection of the property and a closing in two weeks.
But, she notes, “I would never advise that, but some buyers were willing to do it. People were trying every tactic they could to get a house because there wasn’t anything to be had.”
The Realtors note that most buyers in 2020 were “transplants” from areas hit harder by COVID than New Hampshire.
“For me, it was retirees and middle-aged buyers from Connecticut, Massachusetts, New Jersey and Long Island,” Blais Thompson observes. “I honestly never had more buyers from out of state. These were not second home buyers. They planned to live here.”
COVID accelerated the work-from-home concept, and as more accepted that new reality, they began considering a move, Greenwald says.
“The increase in demand is certainly due to people from outside the area rolling in and buying property,’ Greenwald says. “People are saying, “I can work from home so I can live anywhere.’”
THE 2021 OUTLOOK
Greenwald points to several factors that he thinks will mean continued strength for residential housing sales in the coming year, including wide distribution of the COVID vaccine, improved job security, a continued strong economy and low-interest rates.
“I think it will be a little less frustrating for buyers because there will be more properties to choose from as sellers re-enter the market in the spring,” Greenwald notes. “I’m pretty optimistic about the whole thing.”
Cummings agrees that sellers’ fears about COVID will ease in 2021 and bring back more balance between buyers and inventory of homes on the market.
Like Masiello, Blais Thompson also believes strong demand will continue from out-of-state buyers who have “discovered” this area and are pleased with home prices that are a lot lower than in southern New England and the New York metropolitan area.
“I think it is going to be a great year,” she says of 2021.
On the other hand, Dahlin predicts the “COVID bump” will peter out, and there will be fewer inquiries from out of state.
Still, he echoes what other Realtors are saying about another strong year ahead. “I think Vermont will be pretty strong with younger professionals who can work from home. I think the market will be strong next year.”
This article is being shared by partners in The Granite State News Collaborative. For more information, visit collaborativenh.org.