Worcester Housing Stock Shrinks as Prices Flatline

Tuesday, November 27, 2012

Adam Joseph Drici, GoLocalWorcester Contributor

While asking prices have risen around 3 percent nationally, prices have remained stable in the Worcester housing market and the stock of single-family homes is down by nearly 50 percent over the past four years.

According to data compiled by Trulia, September asking prices on for-sale homes–which lead sales prices by approximately two or more months–increased nationally by 2.9 percent year-over-year. The largest increases were found in the Phoenix metro area, where asking prices were up nearly 25 percent from 2011. Fort Myers, Florida saw a jump of 15.7 percent, and asking prices in San Jose, California were up 12.7 percent year-over-year.

In the Worcester metro area, however, asking prices were virtually flat, down 0.1 percent year-over-year. Boston and Middlesex County were the only areas in New England to post positive numbers on Trulia's list, with increases in asking prices of 2.6 percent and 2.2 percent respectively. Springfield's asking prices were up 0.1 percent year-over-year.

“Continued widespread price increases are good for homeowners but not for home-seekers,” said Jed Kolko, Trulia’s Chief Economist.

“For homeowners, rising prices add to their wealth and help bring underwater borrowers closer to positive equity. For home-seekers, however, rising prices could put homeownership out of reach. In markets like Denver, San Francisco, and Oakland, where prices and rents are both rising, higher prices mean higher down payments, but rising rents make it harder to save enough.”

With prices flat in the Worcester area, home-seekers are running into no such problems.

"Right now the marketplace is Worcester is good, it's stable," said City Councilor and Realtor Tony Economou.

According to Economou, the stock of single-family homes in the area peaked at just over 900 units in 2008 and 2009. Now, that number is around 500 units, a substantial decrease consider the struggles housing markets elsewhere in the country continue to face.

"The marketplace is busy, it's active," said Economou. "Inventory is down as compared to two years ago, which all bodes well for the area."

As interest rates on 30-year mortgages remain at record lows, buying is cheaper than it's been in years, and markedly more reasonable than renting as well, according to Trulia.

Earlier this year, Trulia's economists examined all the homes for sale and for rent in the country's 100 largest metro areas listed in its database during the months of June, July and August. The monthly cost of renting in Worcester, including renters' insurance and security deposits, was estimated at $1,898.

The monthly cost of homeownership came in at just $908 after taking into account related costs such as insurance, maintenance and taxes, as well as tax deductions for mortgage interest and predicted proceeds from selling the home after a period of seven years.

While the real estate outlook is getting more positive month by month, Economou said there are steps the City may be able to take to improve the housing situation for a greater portion of the population and help them transition from renting to owning their own home.

"If we can put more resources toward educating first-time buyers on what it takes to own a home, I think that's good, I think it'll bring even more buyers to the marketplace," he said.

"If we could funnel more funds toward down payment assistance for first-time buyers it would help the entire cty as a whole."