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Worcester Named a Hot Spot for Real Estate

Tuesday, June 19, 2012

 

Despite a foreclosure crisis, local housing sales figures are up nearly 50 percent from this time last year, a figure that earned Worcester a top ten spot as a real estate “hot spot” in Massachusetts. Real estate agents say is due to a combination of factors including low property values and high rent, giving Worcester a unique situation.

“In Worcester, this is a unique situation that probably only affects a few other cities across the nation. It wouldn’t hold true in Boston,” said CEO of Worcester Apartment Rental Agency, Ed Murphy. “In Boston if you were going to purchase an equal property that you were renting, you would need $40,000 more to put down.”

The Study

The list of great housing markets in the state, which was compiled by McGeough Lamacchia Realty Inc., ranked Worcester 9th in the state. 

According to the study, 46% more homes were sold in Worcester in April 2012 compared to last April. Single family homes accounted for a 73% increase. Condo sales saw a 31% increase, and there was a 9.68% increase in multi-family properties. The average price for a single family is $170,064.

McGeough Lamacchia Realty Inc. looked at the number of homes sold and the average selling prices.

The study pointed to the city’s colleges and employers, like UMass Memorial Health Care and Polar Beverages that make it a desirable place to buy a home, as well as access to local family activities at the EcoTarium and parks.

“We started off the year with some really mild winter weather so our winter market saw a lot of business,” said Dave Stead a realtor who does the majority of his work in Worcester. “Buyers are getting more confident. All in all I think the market’s picked up a lot this year. We expect that trend to continue.”

An Easy Transition for First-timers

If you’re looking into buying a home, local agents say that Worcester is a prime location for first-timers.

“I would say that it’s been very steady for the last eight months. I attribute it to finally the comments I’ve been hearing from buyers,” said City Councilor and local real estate agent, Tony Economou. “They’re starting to see that we’re at the bottom of the market. Pricing combined with interest rates below 4%... it’s been driving the market. Right now, you can get some incredible buys. It’s tough to go wrong.”

For those who are renting in the city, monthly rates are on the increase. But this high turn in rental costs combined with low property rates is making for an easy transition for someone looking to buy a home.

“The interest rates, for one, along with the combination of low sales prices in Worcester and high rental prices make it very attractive for people to buy,” Murphy said. “Right now, you can save $400-800 a month to buy. If you’re a first time homeowner, it’s a very attractive market. For someone who’s been sitting on the sidelines, waiting, the market is getting stronger.”

Thanks to this increased stability in the market, buying a home is also beginning to show its value as an investment again.

“Certainly a single family home is always going to be first in line for price appreciation. If you’re buying a single family home now at an affordable price, going forward, that’s going to be the first to appreciate value as the market picks up,” Economou said. “We all want a piece of the American Dream. That’ll allow people to move up, sell their homes, and have some equity.”

“Even in the three decker market, we’re seeing price appreciation because rent is going up. It’s really had a big impact across the board,” he added.

The Impact of Foreclosures

Joel J. Fontaine, Jr. the Director of the city's Planning & Regulatory Services, says that these numbers may be misleading, due to the high number of houses that are off the market.

“We’re going to be releasing a housing market study soon. There are a lot of ebbs and flows, and it depends on a lot of things. A sale isn’t a sale, isn’t a sale,” Fontaine said. “You can’t just look at sales numbers and jump to conclusions.” He cited banks’ involvement with foreclosures as something that might skew these figures. “You don’t really know. It’s hard to get a clear picture.”

“The lows were quite low, although the numbers sound good,” he said, adding that the low volume of homes on the market may be making it look good. “These things are going to bounce around quite a bit.”

Murphy of Worcester Apartment Rental Agency, disagrees with this statement, however.

“Obviously you need to look at supply and demand. There’s more demand this time this year than last year,” he said. “I don’t think it has anything to do with foreclosures off the market, but people wanting to invest.”

Long-term Benefits for the City

Regardless of what has been driving up the figures, more homeowners means more benefits for the city as a whole.

“This is a huge step. A momentum has swung to the positive direction. Besides any horrific national news, I think people are also feeling secure in their jobs, and that also contributes,” Economou said. “I think we’re in line for another good year. As gas continues to drop, that adds a psychological factor that will also make people more likely to purchase a new home.”

Homeowners are more likely to contribute to an area than renters, and rising numbers will benefit everyone.

“There are lots of single-family homes being sold. The consumer, especially first time homeowners, are in good condition,” Stead said. “It’s going to help to stabilize neighborhoods. People will be more invested in schools and creating a community and keeping services going. Often these buyers are better for the community than those living in the area on a temporary basis.”

Murphy also said that these numbers mean great things for the city’s future.

“It means the market has turned for the better. I’m fairly confident the market will continue to go up,” he said. “I don’t think it will continue to go up at this rate, but will go up as a whole and slowly continue to progress.”

 

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