The residential real estate markets in Worcester and Massachusetts’ 25 other Gateway Cities are booming as state down payment assistance programs help working- and middle-class homebuyers put down roots in these islands of affordability.

After lagging the rest of the state for years, the real estate market is smoking in Massachusetts’ Gateway Cities from Everett to Springfield. 

Sales of homes and condominiums in these mid-sized, older industrial hubs are rising as buyers, many of them first-timers, search for more affordable alternatives after being priced out of Boston and its ever more expensive suburbs. 

The gains vary from city to city, with some posting outsized increases, while others see more modest growth. But home sales in almost all the Gateway Cities are up over the past two years, in some cases dramatically, compared to a decade ago, when many communities were still struggling to dig out from the aftermath of the Great Recession and its devastating wave of subprime mortgage foreclosures. 

It’s a welcome shift, with multiple governors and a myriad of nonprofit organizations – not to mention countless mayors and local officials – having spent decades working to reinvent and reinvigorate old mill and factory towns that were the pioneers of the Industrial Revolution. 

Yet there is also reason for caution here as well, for prices in many cases have risen sharply alongside sales, potentially dinging the affordability that has been such a draw for buyers. 

Gateways to Homeownership 

There are 26 Gateway Cities across the Bay State, ranging in size from 35,000 to 250,000, with the name paying homage to their ongoing role as the “gateway” to life in America for generations of immigrants. 

Increasingly, these cities are also serving as a gateway to homeownership for middle- and working-class families in a state where median sale price hit $520,000 in July, up more than 27 percent from July 2019, according to The Warren Group, publisher of Banker & Tradesman. 

“For many families at the entry level, that’s very hard to achieve – it puts you at disadvantage,” said Mounzer Aylouche, vice president homeownership programs at MassHousing. 

Nor is it all just about affordability anymore, with quality of life starting to become a draw as well. 

Development Brought Amenities 

Sweetening the offer, more than a few Gateway Cities are benefiting from years of investments by the public agencies and nonprofits, and extensive redevelopment efforts aimed at reviving their once-vibrant downtowns. 

The new $160 million Polar Park recently opened in Worcester, bringing the WooSox and Minor League Baseball to town, while commuter rail service to Boston, added more than a decade ago, has also been a big boost as well. 

There have been 752 single-family home sales so far this year in Worcester, up from 598 this time last year and 694 the year before, Warren Group stats show. 

That’s compared to 434 homes sold during the first seven months of 2011. 

The $2.6 billion Encore Boston Harbor has provided a big boost to Everett, while the $1 billion MGM Springfield had remade the city’s South End, battered by a tornado roughly a decade ago. 

Everett notched 77 home sales last year, up from 45 last year, while Springfield has racked up 800 single-family sales so far this year. 

That compares with 697 and 784 homes sold during the same period the last two years in the Western Massachusetts city, and the 474 homes during the first seven months of 2011.  

Quincy, which has has undertaken a sweeping revamp of its downtown that added new restaurants and new apartments, has welcomed to town 307 new homebuyers this year. That’s compared to 247 and 282 during the same period the past two years, and 218 this time a decade ago. 

Too Much of a Good Thing? 

A new initiative by MassHousing has also helped boost the numbers, with the quasi-public state in finance authority offering up to $25,000 in down payment assistance to buyers looking to land a home in Boston or one of the Gateway Cities. 

For the buyers of more modest means who go through one of MassHousing’s mortgage programs, the assistance is needed to give them a fighting chance in this hypercompetitive market, where big cash down payments have become a weapon of choice in bidding wars. 

“It’s a very tough market for this type of borrower and this level of income,” Aylouche said. 

Scott Van Voorhis

Still, could the flood of buyers seeking out homes in Gateway Cities be too much of a good thing? 

Prices are rising alongside sales. Everett’s median sale price just hit $535,000, up by over $100,000 in just two years. A decade ago, you could buy a home in Everett for less than half that, or $215,900. 

Worcester, at $330,000, is up roughly $80,000 over the last two years, while Springfield’s median has jumped $55,000, to $220,000. 

MassHousing’s Aylouche said he is encouraged by the increase in the number of borrowers who have been able to buy in Quincy with help from his organization.  

To Aylouche, that indicates that lower-income borrowers that go through MassHousing are still able to compete, even in what’s become the state’s most expensive Gateway City, with a median sale price of $600,000. 

I’d say the jury’s still out on that. However, what’s clear is that buyers scrambling to keep up with runaway home prices have discovered a window of affordability in Gateway Cities across the state.  

And let’s hope that window doesn’t come crashing down now that the word is out. 

Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.