“We’ve entered a buzzsaw”: This spring, the Greater Boston housing market is tougher than ever.

Then, after moving in last year, they found a 1940s shotgun that had gone unnoticed by previous owners for decades.

“We walked in and were like, ‘OK, we love this house and we think there’s potential because it needs to be gutted,'” Emily Luong said. “It was just shitty enough that a lot of people didn’t want it.”

Pressures on the Massachusetts housing market, long marked by tight inventory and steadily rising prices, have escalated to a frantic point. Buyers pay an exorbitant sum for what would be considered a rejection under normal circumstances. The Luongs, outbid in six attempts for other homes, ended up paying $825,000 for what is essentially a full rehabilitation.

For many buyers, measures that were once unthinkable, such as waiving inspections or mortgage contingencies, are now commonplace. Prices have hit record highs — the typical Greater Boston single-family home now routinely topping $750,000 — and the intense demand that erupted after the early COVID-19 lockdowns hasn’t slowed.

“We’ve talked for decades about price increases and limited supply, and Greater Boston is still dealing with that. Now … I would call him on steroids,” said Alicia Sasser Modestino, associate professor and research director at Northeastern University’s Dukakis Center for Urban and Regional Policy. “I think it’s unprecedented. I don’t think I’ve seen a housing market like this before, ever.

For many potential buyers, the biggest challenge right now is interest rates, which have jumped an average of more than two percentage points since the start of the year. This can mean big increases in monthly payments, as was the case for first-time home buyers Ligia Alfonzo and her husband, Derek Fravel. After a “horrible”, “super stressful” and “anxious” search this year, the couple closed their first home, in Pembroke, this month.

The sellers accepted their offer, but had to find a new home before close the sale. It took three weeks. And during this period, Alfonzo the interest rate went from 4.6% to 5.6%. She and her husband expected to pay about $3,000 in monthly mortgage payments; now their payment will be $3,500.

“Those three weeks cost us a whole percentage point,” she said.

It was too late to back down: Alfonzo and her husband would have lost their bond, and might have been prosecuted. So they set a closing date and locked in a mortgage, just before they received notice from the landlord of their apartment in Quincy that their rent was going up by $200 a month, not the hundreds they expected.

“It was like, ‘OK, we did all this for nothing'”, Alfonzo mentioned.

Emily Earle and her husband were also unprepared for interest rates to rise so quickly. The couple had rented in southern New Hampshire, saving for a down payment, and they had been pre-approved for a mortgage with an interest rate of 3.1%. Now it’s up to 5%, and they’re still hunting.

“That’s hundreds and hundreds of dollars more than we would have paid, even in December,” Earle said.

Earle and her husband started looking last year, wanting to reap the benefits of remote work and maybe start a family. They didn’t expect the market to be so brutally competitive.

“It’s like we walked into a jigsaw,” Earle said. “It wasn’t just our price range. There was simply nothing there.

Recently, the couple were outbid $52,000 on the asking price for a home in Newton, NH They were one of 18 offers. It’s demoralizing, Earle said, and it often seems impossible. She and her husband looked for rental homes, but “those are also impossible,” Earle said. They are now staying in an Airbnb.

“We could be Airbnb-hopping this summer, which is ironic because I feel like Airbnb is also contributing to the crisis we’re in right now,” she said. “I feel like we’re sitting in this Catch-22. It’s wild.

A few years ago, Haley Cutter’s clients made a list of what they wanted in homes. They would insist that every box be checked. Agent Cutter Luxe Living by Compass now advises making a list of pros and cons instead.

“So far, I haven’t seen anyone move into a house where every box is checked,” Cutter said.

Cutter is currently working with buyers in Wellesley, where lately every home listed for less than $1.5 million has been cleared in three to four days. Homes are selling well above asking price, Cutter said, and there appears to be a strategy of below-market prices to spark a bidding war among buyers. She’s heard stories of buyers facing their contractors at open houses, or simply bringing in the contractor because they don’t want to wait for an inspection.

“Even at the start of COVID, we didn’t see that,” she said. “You will sell your house in a weekend if you put it on the market. … You could win a lot, but where are you going?

It’s not just Boston; prices are skyrocketing across the country. But there are signs in some places that the housing market may be peaking. Price increases are moderating. Other properties are coming on the market. National property brokerage Redfin said the number of visits by its agents fell 19% between mid-April and mid-May, its biggest drop since April 2020.

But even if the market cools, few expect the kind of crash seen in the late 2000s. A combination of factors, driven by both the pandemic and demographic trends, make this cycle different, Modestino said, from Northeastern.

With a huge boom in weddings delayed by the pandemic, millennials are hitting their peak in home buying, and with Gen Z also looking to enter the housing market, the household formation engine has come alive. At the same time, the pandemic has prompted empty-nest baby boomers to consider retirement and downsizing to an apartment or condo.

The sale is not the problem. It’s finding a place to go that’s the big problem. And even though empty nesters are willing to pay a premium to downsize, a recent spike in inflation has bitten into their savings. Stock market volatility, which has cut into retirement savings, isn’t helping either.

In a normal business cycle, these factors would play much more slowly, perhaps over the course of a decade, Modestino said. But now they all come together at the same time.

“We made all of these things happen simultaneously, and that puts way too much pressure on the market,” Modestino said. “It’s not going to suddenly subside on its own.”

And even those who “win” in this housing market often have a lot of work to do. For Luong and her husband in Arlington, the $825,000 they spent on their repairman was just the start. So far, they’ve invested about $65,000 in repairs, renovating the kitchen, updating the plumbing and wiring, and fixing exterior drainage issues.

Still, Luong considers the couple lucky, even privileged, to have found a home.

“We really like it,” she said. “To date, our real estate agent and the seller’s agent have no idea why they chose our offer. If they had waited five more days, they probably would have gotten $100,000 more. »

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Catherine Carlock can be reached at [email protected]. Follow her on Twitter @bycathcarlock.