NICK AND KATE COLVIN LOVED their home in Homeland Mews. In their three years of ownership, they replaced the roof, updated the floors, and remodeled the kitchen and baths. They enjoyed their neighbors. Their two preschool-age daughters played in the front yard with other local children. Still, things were getting a little tight in the house. With a new baby on the way, the couple started thinking of selling and looking for a larger home. Then the pandemic arrived shortly after the birth of their son.
“We had no backyard, just a small brick patio and no room for a swing set,” says Kate. “We were quarantined at home with three kids who will only get bigger and Nick working from home. Even though we were thinking about moving before the third baby, the longer we were in the pandemic, the more of a driver it became.”
The Colvin’s story isn’t unique. After a brief drop in home-sales activity during the worst of the pandemic lockdown last year (and that was in the spring, when there’s usually a brisk market), the residential real-estate market rebounded with such gusto that Realtors and inventory can barely keep up.
Stuck at home for weeks on end, some consumers realized that their home wasn’t working for them or they simply didn’t like it. Buyers also wanted to capitalize on all-time low rates to buy homes more suitable for social distancing. And free of commutes in the new remote-working world, they were not hemmed in by geography. Then, a new segment turned up the market heat: millennials. Once written off as a generation of renters, they realized they could buy a home and pay less per month than their rent.
For the first time ever, according to BrightMLS, the multiple list service for the Mid-Atlantic, low-interest rates and pent-up demand pushed the Baltimore region’s yearly median sales price over $300,000. That’s up 8.7 percent over 2019. And the average number of days on market dropped to single digits—BrightMLS reported that units came off the market faster in December 2020 than they had in that month for a decade.
“The hot market is being driven by interest rates. It’s absolutely free money,” says Cindy Ariosa, a BrightMLS board member and a senior vice president at Long & Foster. “Every single county, every single town, had price appreciation. Look at Maple Lawn in Howard County—sales doubled in just that one area. Otterbein in the city gained triple digits, 128 percent.”
Although real estate was deemed an essential business by the state, there were initial COVID-related challenges for Realtors. So they adapted. That meant socially distant, appointment-only showings, virtual tours, and Facebook Live “open houses,” while buyers, sellers, and Realtors all took precautions to ensure safety. Inspectors and photographers requested no one be present when they were working and wore masks, boots, and gloves, for example. Many appraisers moved to drive-by or desktop appraisals, never even setting foot inside a property.
Even so, the Colvins were anxious about the process of buying and selling in a pandemic.
“I was terrified of people coming in our house, especially with a newborn,” says Kate.
“Having kids and wanting to avoid too much stress from a lot of moving parts, we purchased a home in Hunt Valley first, then put Homeland Mews on the market,” says Nick. “We closed on Hunt Valley in August and had Homeland Mews queued up and ready to go. Our agent had 16 showings set up, so we decided to just get out of the house and went to the beach for four days.”
The Colvins had five offers within days, all above the asking price.
“We were fortunate that our home was in a desirable neighborhood and updated and the market activity was really heating up,” says Nick.
And the Colvins benefited from another plus that sellers are seeing: “All the offers had waived the appraisal contingency,” Nick says.
HOW WE GOT HERE
The low-interest rates, high demand, and low inventory may be driving residential real estate today, but the groundwork for this market frenzy pre-dates the pandemic.
“Prior to the pandemic, Realtors were complaining about a lack of inventory,” says Anibar Basu, CEO of Sage Policy Group. He says that the housing boom of the early 2000s resulted in a profusion of housing construction, but after the bubble burst in 2006 and the foreclosure crisis that ensued, homeownership and single-family construction both declined. Even as the economy healed, housing starts remained low, causing inventory to dwindle. At that point, millennials were still avoiding buying and pushed a boom in rental apartments.
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