Worcester Multi-Family Real Estate Blog

This is a big document but well worth the read. https://www.wrrb.org/news... Key Takeaway The big takeaway here is that RENTERS are COST BURDENED. Basically, that means they spend too much on rent so they don't have money left over for other essential expenses such as: Food Utilities Car payments Insurance Discussion Points Should we be raising our rents to keep up with costs? What will that do to the makeup of the city? Low rents allow for a thriving city, but they also hurt

I always like to read an article, then let it sit a bit and see if I still agree with it. How about this one from 11/26/22? Original Article Basically, these economists are saying that prices are really going to fall in housing. Do we agree? YES, but only in some markets and only in some types of housing. Current Market Observations in Worcester In Worcester, what are we seeing? Single Family (SF): Increase in the number of houses for sale and a drop in prices. Condos: Invent

https://www.realtor.com/research... Can you believe that Worcester is ranked the 4th best Housing Market in the US positioned for Growth in 2023? They are predicting 2.5% Sales Growth and 10.6% Price Growth. What we are seeing in the multi-market is that prices are holding strong since most buyers do not need to sell. There is also low inventory, so those who need to buy to live or 1031 are simply buying what is available. Keep in mind this includes the Quiet Corner of CT. Or

https://www.newsbreak.com/news... Read this one! How about this concept? For example, you don't have a big down payment available; now a Hedge Fund will "give it to you in exchange for Equity." This has worked in business for years, but now they are looking to do it with residential housing. How It Works These companies will offer up to 15% of the purchase price of the home in exchange for a percentage of the equity of the home. Who Does This Work For? Buyers who will never b

https://drive.google.com/file... Who is shocked with this revelation? That was quick wasn't it? Investment Strategy The key here is to buy places you plan to hold for a period of time. If you don't plan to hold a property for 5 years, you probably shouldn't be buying it. Market Outlook The good news is the MA market is better than other markets due to strong jobs and educational institutions that are poised to weather any predicted economic downturn. Current Homeowners Hopefu

This is a fun chart, comes from Mortgage Monitor's October 2022 report. This is people who financed a loan in the last 2 years: 7 million people have 2.5% loans Of those, only 3 million have good enough credit (OVER 720) and 80% Equity The higher you go up the Y axis, you see there are very few people who can refi (or simply buy another house at a better rate). This essentially means that anyone in the Green is not going to be selling their house. If you think there will be a

The attached article here spends a lot of time on the cities which will lose value. But Worcester is the top of cities poised to gain value. Read more here The elevated prices will be more dramatic in some cities than others, Realtor.com predicted. Metro areas that could see the sharpest increases are: Worcester, Massachusetts: 10.6% Portland, Maine: 10.3% Grand Rapids, Michigan: 10% Providence, Rhode Island: 9.8% Spokane, Washington: 9.6% Springfield, Massachusetts: 8.9% Boi

Take a look at this article about the Ballpark from August 22, 2018. Read the article here I agreed with Professor Matheson then, and I do now. Main Benefits of the Ballpark The main benefit from the ballpark has been that Worcester is happier with itself. Is that an economic driver? Perhaps. Impact on Worcester It has put Worcester on the map as a city, and drawn outside investment which has been good. Considerations Regarding Investments However, most of those investments h

Who wants office space in Worcester? Apparently not the investors. Here is an interesting article about vacant office space in Philly. Read here. Basically here is the scenario. No one wants office space. This causes the value of office buildings to drop. Here is case and point with the 2 tallest buildings in the City: Case Study: Tallest Buildings in Worcester 600 Main St - White Residential Building Sold for $28.8 million in September 2019. City Assessed Value: 2018: $17.9

Back in the news. Please see this article by Sam Turken of WGBH. There is a link to an audio file as well: Audio File I may have mentioned in a prior blog that there are times after seeing Multis that I cry for Worcester. This article makes you want to cry. People who have lived in Worcester for their entire lives are being displaced. Who is to Blame? The article seems to think that it is landlords (greedy?) who are pushing the envelope on rents. I say it is the FEDERAL RESER

Though I am not sure if I can use the term "Mexican Standoff." But there is a definition available: Definition of Mexican Standoff A Mexican standoff is a confrontation in which no strategy exists that allows any party to achieve victory. Any party initiating aggression might trigger its own demise. At the same time, the parties are unable to extricate themselves from the situation without suffering a loss. Current Situation in the Worcester Real Estate Market Basically, this

One of the things that bothers me most about Worcester is the slow march to elitism of the City. What do I mean here? The City Council always talks about how they want to save neighborhoods and make this a great livable city. For this reason, many councilors continue to support the lowest residential tax rate and support the Dual tax rate that the city lives by, which was adopted in 1984. The UNINTENDED CONSEQUENCES of this has been to create an ELITIST CITY. What do I mean b

Just saw this statistic. 32% of Workers are running out of money between paychecks. This includes workers making over $100k. This seems crazy, but the recession is coming. The FED and Congress flooded the economy with "Helicopter Money" and this temporarily made people comfortable. Now those same people have lost their buying power due to the anticipated inflation, and have used up their savings. The answer is NOT MORE GOVERNMENT HANDOUTS, but allowing the market to sort thin

Just saw this statistic. 32% of Workers are running out of money between paychecks. This includes workers making over $100k. This seems crazy, but the recession is coming. The FED and Congress flooded the economy with "Helicopter Money" and this temporarily made people comfortable. Now those same people have lost their buying power due to the anticipated inflation, and have used up their savings. The answer is NOT MORE GOVERNMENT HANDOUTS, but allowing the market to sort thin

In my last blog I spoke about "Down Renting" and how it has the unintended consequence (takes away) of raising rents. The same is true in home purchases. Typically they say you can purchase a house worth 2.5-3 X your annual income. When you make $200k a year as a household, you have the opportunity to buy a $500-600k house. If you make $300k a year, you can buy $750-900k. But what if you make $200k and simply want a $400k house because you don't have any kids, or you want to

This is a wonderful article shared with me by a colleague yesterday. Link to the article: Google Document Key Takeaways Here are two big takeaways from the article: 1. Maximizing Rental Income with AI Artificial Intelligence and huge amounts of data can help landlords maximize rental income. The software in question, "Real Page," analyzes vast amounts of data to assist property owners in determining the optimal rents they can charge tenants. The key is to "Trust the Data." Pe

Here is a great commentary/editorial by Hans G. Despain of Nichols College 9/16/22 from the T&G Read the full commentary here Some Scary Statistics 60% of American Workers make $37,499 or less per year 47% of American Workers make less than $27k 16% of American businesses are "Zombie" firms, meaning they are unable to service their current debt. What Does This Mean for Buying MultiFamily in Worcester? Keep in mind who your tenant will be, and how they will pay their rent! If

You can see and feel the multifamily market falling in Worcester (except for outlier properties that are in Single Family neighborhoods). But when you look on the MLS the prices look the same. Part of this has to do with the still low inventory. There are only 62 multis for sale as of the writing of this blog. This might be a normal inventory, but most of these 62 properties are not a value at that price (essentially many will never sell at these prices). So the true inventor

This author believes the slide in home prices has started. We are WorcesterMulti agree. Source They believe a 20% decline in prices will occur due to increases in interest rates. Since a 1% increase in interest rates is supposed to drop prices by 10%, this seems reasonable to expect. Market Trends What they do say is that there is rising supply which will reduce prices. This appears to be the case for single-family homes, but prices are still high. Seller Expectations Sellers

I have gotten a ton of calls in the last 2 weeks from owner occupant buyers and from investors as to the state of the Market for Multifamily. Rates are going up. Current Rates Residential rates are at 7% Commercial rates are at 6% This takes a bite out of your buying power. A 1% rise in mortgage rates decreases your buying power by 11%. Why Are Sellers Holding On? But sellers are hanging on to their properties and most are not reducing prices. They need to buy something else