Central Mass. housing has yet to feel recovery

 Kenneth Wilson of K W Construction in Spencer installs siding on a home under construction in Millbury last week. (T&G Staff/RICK CINCLAIR)

By Lisa Eckelbecker TELEGRAM & GAZETTE STAFF
leckelbecker@telegram.com 

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Amid the cities and towns of Central Massachusetts, the housing recovery is a spotty affair.

Home prices are appreciating in some communities and stagnating in others. Distressed properties are still piled up in some places and dwindling elsewhere.

Together, the communities make up a region that is climbing out of the nation's housing recession at a rate slower than that of Massachusetts in general. In April, the Worcester metropolitan area's median home price fell compared to the same month last year, a dubious distinction shared by only four other large metro areas in the nation.

A concentration of distressed properties, high unemployment in certain communities, homeowners reluctant to sell at current prices and even a relative lack of new construction for buyers willing to trade up are among the factors weighing on parts of the Worcester area, real estate experts said.

"Real estate's a cycle," said Realtor Jayne Diliberto of A.J. Homes in Worcester. "We're on the up, but we're not jumping high. It's taking a little bit of time."

Housing debt led the nation into recession in 2007, and housing activity remains a critical measure of economic recovery in the United States.

In the sprawling Worcester metropolitan area, a region of 48 cities and towns that stretches into northeastern Connecticut, April home prices were down 2 percent compared to the same month a year earlier, according to the property information company CoreLogic Inc.

Only four other metro areas of the nation's 100-largest metro areas took such a tumble, according to CoreLogic, and home prices nationally increased 10.5 percent.

The Worcester metro findings reflect the impact distressed properties are having on the overall housing market five years after the nation's recession ended.

When CoreLogic removed distressed properties from the equation — bank-owned home sales and short sales in which owners sold homes for less than they owed — April house prices were up 5.5 percent over the year.

One factor is that while some housing markets in Massachusetts began recovering in 2009, others only started to turn around in 2011 and 2012, according to Tim H. Davis, research consultant and author of Foreclosure Monitor, a regular publication of the quasi-public Massachusetts Housing Partnership.

The partnership, a quasi-public agency that defines distressed properties as those owned by banks for up to two years or those that have been a recent target of foreclosure or auction, counted 430 distressed housing units in Worcester in April, or 5.8 of every 1,000 Worcester homes.

Ten Worcester metro communities also ranked among the state's 30 most distressed municipalities in April, according to the partnership: North Brookfield, Warren, Princeton, Lancaster, Oxford, Southbridge, Leicester, Clinton, Holland and Sterling. All had higher rates of property distress than Worcester.

The concentration of distressed properties in Central Massachusetts resulted from factors such as a higher rate of subprime lending in the area and higher unemployment rates, according to Mr. Davis.

Worcester recorded a jobless rate of 6.8 percent in April, according to the state Executive Office of Labor and Workforce Development. Southbridge's jobless rate was 8.3 percent. Clinton's was 7 percent. The statewide rate, not counting seasonal employment forces, was 5.6 percent.

"It's clear to me that Boston and some of its suburbs are leading the charge in terms of new jobs in the region," Mr. Davis said. "Every time look at the data, the towns along (Interstate) 495 are doing fine. It's when you get away from 495 that's the problem."

Slow price appreciation is also having its own perverse impact on the housing market, according to Realtors and other observers. Some owners who might want to sell their homes would lose money if they did so at current market values. Rather than sell, they decide to do nothing, said Timothy M. Warren Jr., chief executive of the Boston-based publisher The Warren Group.

"Why sell now?" Mr. Warren said of their attitude. Prices "are going to be higher. They're going to hold on."

With few higher quality homes hitting the market, buyers unwilling to purchase distressed properties must wait or search farther afield.

In Worcester, the Massachusetts Association of Realtors estimated there were enough homes on the market in April to satisfy demand for 4.1 months, down from 5.7 months at the same time last year.

"I had a buyer, a young buyer, the person who's in their first house with a growing family needing to move," said Brad Roberts, a real estate attorney and Realtor with RE/MAX Acclaim in Oxford. "They moved from metropolitan Worcester, to Barre, to get what they needed."

Waiting for prices to appreciate, however, keeps homes off the market that might generate excitement and drive prices up.

Home owners think they can wait another year or two to sell, said David W. Stead, a Realtor with RE/MAX Advantage in Worcester and president of the Worcester Regional Association of Realtors.

Trouble is, he said, "The appreciation is so slow, if we're in a stagnant market, that logic just doesn't work."

New construction might soak up some demand, but growth has been slow there, too.

Regulators issued 220 permits for new single-family home in the Worcester metro area during April, up from 210 permits a year earlier, according to the National Association of Home Builders.

New construction didn't make financial sense when lot and building prices remained high but nearby home values were depressed, according to Ms. Diliberto. That problem has eased and a lack of buildable lots in Worcester now makes new construction difficult in the city, she said.

Some new construction is taking place in nearby communities, notably Millbury and Holden, where lots exist, schools are good and access exists to commuter rail and the Massachusetts Turnpike, she said.

"Everything is definitely positive," she said. "It's just at a very slow pace."

Contact Lisa Eckelbecker at leckelbecker@telegram.com. Follow her on Twitter @LisaEckelbecker.