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In Uncertain Times, Real Estate Professionals Scramble to Adapt

March 26th, 2020 Discussion

Many Boston-area workers are struggling to adapt to the changes brought by the fallout of COVID-19. Although some businesses are transitioning to a work from home platform, many industries do not have that luxury. Transportation, hospitality, retail, tourism, and the performing arts are just some industries hovering on the brink as Massachusetts begins to self-quarantine. The real estate market is somewhere in the middle.

Arthur Deych, a real estate broker for 16 years and co-owner of Red Tree Real Estate of Brookline, says his business has had to pivot away from open houses and in-person walkthroughs and tours. “Our agents are now adapting to video tours and Facetiming to manage the person-to-person contact.”

Deych says he’s gotten creative with marketing. “We’re providing financial incentive to tenants to provide our agents with their own videos of their apartments. We’ve all become accustomed to walkthroughs and in-person tours. Now, all business can be done through our online interactive applications,” he says. “We’re just trying to do our part until this virus slows down.”

Like many other Boston area businesses, Red Tree Real Estate has their office staff working from home while limiting office visits by appointment only. Although business will go on, the office doors will be locked.

Since talking with Deych, Mayor Walsh has issued a letter to landlords, real estate agents, and property managers, formally asking they adjust their practices regarding property showings. The adjustments being requested are intended to limit contact between unrelated parties to slow the transmission of COVID-19.

About a mile up the road in Brighton, Weathervane Real Estate veteran Ed Sellers says he’s worried   about what these measures could lead to.

“People coming from other states are used to newer properties,” Sellers says. “Boston is a lot like New York; we’re an old, historic city and most of our properties were built well over 100 years ago. We have lots of pictures and some video, but it’s not the same as being able to show them in person.”

Sellers says that in the past, demands has been such that he has rented places sight-unseen to out-of-state college students. “Then their parents get here they are often not happy with the wear and tear on these places,” says Sellers. “A lot of times you have people flying here months before move to see their prospective places, and they have time to see for themselves, which I can’t imagine that happening now. No one wants their deal to collapse.”

The student population has been a driving force behind the strong rental market for Boston. For years, there has been a seamless transition from tenant to tenant. Aside from the changes in day-to-day business practice, Deych voices concerns what the exodus of 152,000 college students could mean for the rental market moving forward.

“At this point, we’d don’t even know where the students are going be schooled from next year. So having the property on the market earlier or re-leasing (renewing) the apartment to your tenant earlier than yours used to would be a smart move.”

Sellers is 35 years deep in Boston real estate market, and is especially concerned when it comes to student rentals-

“All the students left and the sales market is in the toilet. This is usually my busy time of the year. My resources have dried up because they all went home. If it drags on, a lot of landlords will not be able to pay bills, especially if the students don’t come back.”

Sellers discusses what he, and agents like himself are up against.

“I’m not ready to retire. A lot of these shops, mine included, live off [student]rentals. We’re also wondering as property managers if we’re going to have to fight for rent. I’m worried people are going to try and skip out on their last few months since they’re already gone. Wealthy parents won’t have any issues paying over these last few months, but working people and students probably won’t be able to pay rent– and landlords will take it on the chin. Landlords still have to pay gas, electricity, water and insurance and we don’t even know what’s going to happen.”

Then there’s the uncertainty of the overall or long-term impact on local real estate market,

Deych shares the concerns of landlords, tenants and investors alike.

“Clearly people are worried about their finances changing and their job security. This week a lot of properties came on the market, but for the first time in a long time, I haven’t noticed the words “all offers due Monday by 5pm,” (which is has been the normal time cycle for new listings).  “People keep wondering when the real estate bubble going to pop. Up until three weeks ago, I thought we had a few more years, but now it all depends on how everyone, including the government, deals with this situation.”

In Massachusetts, the local government is jumping into action to prevent an all-out collapse of the housing and real estate market. Mayor Walsh, the Greater Boston Real Estate Board and its entity the Massachusetts Apartment Association, and the Massachusetts Association of Community Development   has initiated a moratorium on evictions in the city while we’re under state of emergency from COVID-19. If passed, the measure would halt of evictions for 90 days, with decisions being reviewed every 30 days and will apply to those who are directly impacted by economic loss due to the coronavirus outbreak

The city of Boston and Cambridge have also implemented a moratorium in construction, in the wake of the coronavirus, which could also threaten the already shaky real estate market here. Sellers elaborates on what that could mean.

“People need to a place to live. Construction is halted and places won’t be ready or renovated for people when they need to move in. People will likely have to drop the prices on units because they don’t want to see them go empty.”

By the hour, people’s lives are changing. With every tweet or press release of business closings or travel restriction, Bostonians watch their day to day turn to minute to minute. With no Celtics and Bruins at the Garden, no Paddies Day parade in Southie and even the Boston Marathon postponed, residents struggle to find silver linings. While the Real Estate market, like other industries, are hopeful for some kind of federal relief, for now at least, all bets are off and it seems that nothing is immune from the domino effect of COVID-19

When asked what advice he would give to his fellow business owners facing this uncertainty, Deych’s response is simple: “Take care of the ones that take care of you. As a business owner, I have to support my staff through this difficult time when production might not be as high. Aside from making a living, you also take on the responsibility to sustain others.”

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