A healthy economy and a shortage of housing inventory have helped drive single-family home sales for the month of March in Massachusetts to the highest it has been since before the recession a decade ago.
There were 3,615 closed sales on single-family homes statewide in March, compared with 3,577 in March 2007, according to the Massachusetts Association of Realtors.
Eric D. Berman, spokesman for the Waltham-based MAR, said this year the spring buying season began on Jan. 1 and it hasn't slowed down.
"I think it's reasonable to expect that as long as the inventory continues to be down, the economy continues to be strong, interest rates stay competitive and people want to be here, the market is going to be very active," Mr. Berman said.
In Worcester County, there were 496 closed sales on single-family properties, and 876 pending sales in March.
Sarah Gustafson, president of the Realtor Association of Central Massachusetts, said there aren't enough homes for sale right now. Some people who want to sell are reluctant to put their homes on the market. And not enough new homes are being constructed. When inventory dips below three months, it is considered a housing crisis, she said. Worcester County had 2.2 months of inventory of homes for sale at the end of March, according to the Realtor association.
The shortage of inventory is leading to bidding wars in some cases, and driving prices above the list price. According to the Association of Realtors, some homes in several Central Massachusetts, including Bolton, Leicester, Hudson, Berlin, Bolton, Harvard and Westboro, sold above the list price.
Ms. Gustafson said in the Boston area some homes are selling for as much as $100,000 over the list price, which is driving some prospective buyers further west. She received multiple offers after 50 people attended a recent open house at a Sturbridge home, which sold that day.
"What's happening is people in Boston can't find what they want. The inventory there is smaller and the prices are higher than in Central Massachusetts. Now, Boston agents are actually bringing their clients to Central Massachusetts to find homes. They have higher budgets so they're outbidding people who live in the area."
Brian McGurl, a Worcester firefighter, and his wife, Cindy, an educational consultant, sold their home in Leicester within a week. Then they and their three daughters lived with her parents for almost a year. They found a home in Holden, but they pulled out of a bidding war after another buyer went higher than their offer of $12,000 over the list price. In a bidding war on a second home in Holden, they offered $15,000 over, but they ended up having to pay only $3,000 over the list due to some wetland issues in the backyard.
"Because the inventory is so limited, I know it's a seller's market," Mr. McGurl said. "When I was selling my house 18 months ago, that's when the market took off and it was crazy."
Busy market
In the first three months this year, more than 1,400 single-family homes have been sold in Worcester County.
Tracey Fiorelli, with Holden-based Janice Mitchell Real Estate Inc., last week received the Realtor Association of Central Massachusetts' Top Producer Diamond Award. She sold 89 properties valued at $24.5 million in 2016.
"It's a pretty fast-paced market right now. There are a lot more buyers than there are houses for sale in Worcester County," she said. "There are at least three buyers for almost every listing under $300,000, which makes it pretty competitive."
She said the low inventory of homes on the market has sparked some developers to pick up the pace of new constructions.
Guy A. Webb, executive director of the Builders Association of Central Massachusetts, said it's very difficult for developers to find buildable land in Eastern and Central Massachusetts where people want to live. He said Massachusetts is an older state with a lot of built-up communities.
"If you look at anywhere people want to live where there are jobs and good schools, the demand is there, but the supply is very low," he said. "The availability of land is a factor. The cost of what is available is a factor. We're the third most expensive housing state which means a lot of people can't afford to buy a home here."
But new single- and multi-family home constructions are picking up throughout the region.
John R. Kelly, Worcester's commissioner of inspectional services, said the number of new single-family detached and attached (duplexes) dropped from 140 in 2007 to 54 in 2015. The number increased to 99 last year and there have been 24 so far this year. The new homes are being built all over the city, he said. In the downtown area, there are a lot of apartments going up and old factories being converted to housing, he said.
"There are a lot of projects going on now and in the past five years," he said. "I would say that in 2009 and 2010 there was an economic downturn. From 2011 to today, it's been picking up and almost steady with an average of almost 75 (new single-family homes) a year."
Leominster only saw 12 new single-family homes built in 2007. Last year, 41 building permits were issued for single-family dwellings. There have been seven so far this year. Peter Niall, the Leominster building commissioner, said in the past five years, some developers have taken over some subdivisions that were abandoned during the last recession.
But he expects construction to slow down because of a lack of lots to build on.
"It's tougher to find reasonably priced land to build on. And, we have a huge portion of the city that is in our drinking water protected district that can't be built on," he said. "Part of the problem is going to come when that's all that's left."
West of Worcester
Difficulty to find reasonably-priced buildable land led veteran developer Chuck Black, owner of Northboro-based Kendall Homes, to look further west. During the past four decades, Mr. Black, who lives in Southboro, has built about 400 homes in towns along Interstate 495, including Northboro, Westboro, Southboro, Marlboro, Shrewsbury, Hopedale, Mendon and Bolton.
Two years ago, he bought his first lot in Holden: 85 acres off Salisbury Street to build the 55-lot Oak Hill Subdivision. He said the cost of the land was two-thirds what he would have paid in Shrewsbury or Northboro. The homes, which sell for about $500,000, would cost between $650,000 to $700,000 in Shrewsbury and Northboro, he said.
Mr. Black said the majority of the buyers have been professionals from Worcester who want to live in a town with a better school system.
"Holden is a good steady strong market. It's much less expensive than the towns to the east like the Shrewsburys and Northboros," he said. "Another thing about Holden is that it has town water and sewer. A lot of Northboro is septic and in some cases well water."
Emily Cohen, an attorney with Connecticut's Labor Department, and her husband, Daniel, chief medicine resident at UMass Memorial Medical Center in Worcester, had hoped to buy a home in Shrewsbury where they rented for three years, but it was too expensive. They ended up closing on a home in West Boylston at the end of March. The good school system was a main attraction for both towns.
"We had wanted to end up in Shrewsbury, but any of the places we were looking at were out of our price range," she said. "West Boylston is a great town with a great school system so it was not a compromise to move there."
The Cohens took a very creative and personal approach when they tried to get the Lee Street home, which had a second offer.
"We included a picture of our 10 month old son with a letter they wrote to the seller.
"We told the seller how much we like the house and how much we would enjoy for our son to grow up in the house. We were told that the letter helped sway them," Mrs. Cohen said.
Shrewsbury Town Manager Daniel J. Morgado said the town has always been a favorable place to live because of the excellent services provided, including the schools, and the tax rate, which is the lowest in the region.
"Any property that becomes available in Shrewsbury becomes a hot commodity," he said.
New constructions is mainly multi-family apartments. The town has taken some measures to greatly moderate the level of growth since developers flooded the town with 2,100 single-family homes in the 1990s, increasing the population by 47 percent. There have been a number of zoning bylaw changes. And the sewer capacity at the shared Westboro Wastewater Treatment facility is primarily reserved for commercial development along Routes 9 and 20. Any new subdivisions have to use their own septic systems.
While building has been somewhat overwhelming in some areas, new home constructions in the state as a whole has been below the national average for decades, pushing the price of homes up and preventing those who can't afford them from living in the state, according to the author of a 2014 study commissioned by the Home Builders and Remodelers Association of Massachusetts.
Elliot Eisenberg, the Maryland-based housing economist who did the study, said planners have to think of how to use land in a different way.
"Over the next 50-60 years the population in the county is going to increase by 100 million people. If we're running out of land now, where are we going to put them all?" said Mr. Eisenberg, whose parents once lived in Worcester. "We have to build up, increase the density and build smaller units. This is how we're all going to solve the problem."
Mr. Webb, executive director of the Central Massachusetts branch of the Home Builders and Remodelers Association, said the state group worked with Gov. Charlie Baker to implement the Starter Home Initiative. The measure would provide incentives for communities to create districts on land areas greater than three acres, that among other things, would allow a minimum of four units on each acre. Regulations for the initiative are currently being worked out.
"We have no idea if this is ever going to work out. But, we have to try something because we have a housing problem in Massachusetts. Our housing is too expensive," Mr. Webb said.
