Article Examines the 2005 Housing Boom Versus Market Dynamics That Have Emerged From the 2020 Pandemic
A Wall Street Journal report contrasting the 2005 housing boom with the record-breaking market that has emerged out of the 2020 coronavirus pandemic, made front-page news of its print publication this week, quoting industry broker Anthony Lamacchia, who talked about the vast differences between the market dynamics 15 years ago that led to the housing crisis and those of today, where buyers are in a much healthier place, financially.
In the WSJ article, Lamacchia, broker/owner of Boston-area-based Lamacchia Realty, recalls that not long after he entered the industry in 2004, homebuyers began trading up to bigger and more expensive homes, often with a low or no down payment. After the market collapsed, Lamacchia was helping those same buyers to dump their homes in 2009, according to the article.
Now, he says, the market is dynamically different. Housing demand in the Boston suburbs is stronger than he has ever seen, buyers have better credit scores and more money to put down on a home than in years past, he explained to the WSJ.
“On $1 million purchases, people are putting down $500,000,” he told the Journal. “You didn’t see that before.”
He expanded on that in a follow-up interview with RISMedia.
“We are seeing rapid price gains, particularly in single-family homes, and I expect to see them being even more substantial this year,” he says, adding, ” debt-to-income ratios are much lower and buyer demand is significant.”
The challenge of course is inventory. Lamacchia’s company, which reached $1 billion in sales last year for the first time, covers markets in Massachusetts, Connecticut, Rhode Island, New Hampshire and in Southern Florida, and, he says, he’s seeing these same trends in all these locations, especially with demand for single-family homes.
“We are seeing the lowest inventory that we have ever seen before,” he says. “Inventory of single-family homes is down 60% from where it was last winter prior to the pandemic, and it was low then.”
Condo sales across markets are starting to recover as well, he says. “Whereas last year, when the pandemic first started, in the first six months people were somewhat avoiding condos and running to single families. We do think this will help even out the market.”
As a result of the change for many to working from home because of the virus, he sees that trend of buyers wanting homes in suburban locations with access to more recreational activities continuing, at least for the next two years.
“I’m seeing a similarity with New Hampshire up in ski country in the Lakes Region and South Florida,” he says. “People either want the slopes or they want the shores, and we saw a race to those areas last year after the pandemic started. We saw it let up a bit after the holidays when COVID-19 had a second wave, and we are seeing that happen all over again right now, particularly in Florida.”
As for the long-term outlook, he added, “There is no way that buyer demand could go down enough, and supply go up enough to tip the market into any sort of housing slump, at least in the next 24 months,” he says. “It’s hard to see beyond that.”
To read the Wall Street Journal’s piece interviewing Lamacchia and other industry perspectives from Zillow, Redfin, NAR, The Urban Institute and more, click here. The article also examines the upswing in the lending and new home construction sectors as well. Note: To read the full article requires a subscription.
Beth McGuire is RISMedia’s online managing editor. Email her your real estate news ideas at email@example.com.