NEW BEDFORD — Darien Pereira and Casandra Caban are ready to take the next step in their lives. But it is proving to be quite a reach.
They want to buy a home together.
“It’s the right time for us,” Pereira said. “It is time to take the next step in our relationship. But it has been tough.”
“We’ve been looking for a few months,” Caban said. “There’s not enough inventory and the prices are really high.”
Pereira and Caban, both of Fall River, were on Sycamore Street on a chilly spring morning, taking a step into a very hot market.
As in many communities across the state and around the country, the market for homes is sizzling here. It is the most intense sellers’ market that real estate agents have seen for decades. It has been that way for months now.
“The majority of the properties are going for well over the asking price,” said Diana Henry, broker and owner at Diana Henry Realty. “If you are a buyer today, it is very competitive.”
Part of this trend is related to COVID-19. Realtors say many prospective sellers haven’t wanted to let strangers into their homes. Others are spending more time at home and see room for improvement. Builders are busy with renovation projects, so costs have jumped. Lumber prices have risen too. With lots of repair and renovation work on offer to builders, the inventory of newly built homes has dropped. And interest rates are at historic lows. A 10-year mortgage can be had at a 2.5 percent rate.
The promise of commuter rail reaching New Bedford, possibly by the end of 2023, or the potential that offshore wind industry will bring new high-paying jobs might be good reasons for buying a home in the city, but that’s not what is driving the demand, real estate agents say.
“COVID made the inventory go down,” Henry said. “The properties in New Bedford are very slim. You have buyers who want to buy because the interest rates are very low, so they offer over the asking price.”
Bradford Thelin, a real estate agent with Century 21 Signature, agreed.
“You have a lot of people coming in with cash,” he said. “It is hard to beat a cash buyer.
“I’m seeing a lot of people from Brockton and north. They are getting priced out of that area.”
In turn, the escalating real estate prices in New Bedford are making it harder for local home buyers to compete.
Thelin was the agent showing the house on Sycamore Street, a single-family home listed at $299,000. It sold in 2018 for $165,000. Thelin had one offer in hand on the day of the open house. He was accepting more that day.
His first appointment that day was with Karen Sanchez and her mother, Selo Sanchez. They drove down from Boston that morning with family members to see eight houses in New Bedford and Fall River. They started their search during the winter in Boston and migrated south through the spring, searching for something they can afford.
“We’ve been looking for a month-and-a-half,” Karen Sanchez said. “You put an offer in and someone puts an offer in for a lot more. There are few houses and a lot of buyers.”
In March of 2020, 59 single-family homes sold in New Bedford. The median price was $252,500. In March of 2021, 36 sales carried a median price of $299,000. With condominiums in the city, there were three sales in March of both years. In 2020, the media price was $94,500. In 2021, it was $135,000.
For Massachusetts, there were 3,755 single family homes sold in March of 2020 with a median price of $402,000. A year later, 3,849 homes sold with a median price of $460,000.
Commercial prices cooler, but still high
The frenzy has not extended to commercial real estate, according to broker Diana Henry and Mike Breed of The Warren Group, a real estate information service.
“I’m seeing a lot of commercial property stay on the market longer,” Henry said.
“People worked from home this past year. Managers of large companies realize they can survive with people working from home or coming in two or three days a week.
“They are trying to determine what they need.”
That doesn’t mean commercial real estate is cheap or the prices are falling, according to Brandon Roderick, owner of The Baker, 562 Pleasant St.
He was looking for production space in 2020 and backed off when COVID-19 hit, Roderick said. He has resumed the search and found little has changed in a year.
“Commercial real estate is always expensive,” he said.
Rising prices create an ‘affordability gap’
The jump in residential real estate prices has exacerbated a problem that already existed in the city, according to Patrick J. Sullivan, director of New Bedford’s Office of Housing and Community Development.
“We are seeing an affordability gap,” he said.“It is nothing new.”
Families are considered housing burdened if housing costs are 30 percent or more of their household income. Those falling into that category are said to face an affordability gap, Sullivan said. “People are facing quite a gap,” he said.
Sullivan’s office and several nonprofit organizations provide counseling, seminars and classes to help prospective buyers learn what is required to get and keep a home. More than 250 people took first-time home buyer classes in the last year, Sullivan said.
His office also works with prospective buyers to help them find grants and financial aid available to cover down payments or provide loans to rehabilitate property. Sullivan estimated that 75 percent of the homes purchased by their clients need repairs at the time of sale.
Many of those homes are two- and three-unit apartments, Sullivan said. His office also offers classes on the legal requirements faced by landlords.
“We try to keep folks optimistic and be on the lookout for properties that fall in their price range,” Sullivan said.
But it is tough to be optimistic, or even to know what the price really is, according to Nate Hall of Westport. He was one of the prospective buyers who went through the home on Sycamore Street at the open house.
“It has been insane,” he said. “Unless you are willing to pay $10,000 or $20,000 above the asking price, you don’t have a chance.
“It is tough.”
True to trend, the house on Sycamore Street that was priced at $299,000 eventually sold for $317,000 to a buyer from Brockton, Thelin said last week.
But the trend is not permanent, Henry promises. More houses are starting to come on the market now, and others will follow as COVID-19 eases its grip. Interest rates will undoubtedly rise once the economy heats up — as it is expected to do later this year.
When interest rates rise, house prices settle down, she said.
“As we all get the vaccine and we try to find the new normal, this will settle down,” Henry said.
“It will level out. It always levels out.”
“We’re seeing some folks really having challenging times being able to afford this rental market.”
As real estate prices increase, there is evidence that low-income residents are being forced out of homes in New Bedford.
“If the city has the political will, it can make any of this work,” said Robert Terrell, a lecturer at Tufts University.
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