A total of 112 two- and three-family homes were sold last year in Boston’s Brighton neighborhood, up from 73 such properties in 2003. The median price for two-family homes sold in Brighton reached $580,500 in 2004, while the median price for a three-family home rose to $716,000. This two-family home on Antwerp Street in Brighton is being offered for sale with an asking price of $619,500.

Driven by investors and first-time homebuyers, two- and three-family homes in Massachusetts have appreciated in value even more than single-family home and condos over the last five years.

The median price for a three-family home in Massachusetts was $162,500 five years ago. By last year, the median price escalated to $350,000, a 115 percent increase. Similarly, the median selling price for a two-family home rose to $319,900, 100 percent higher than 2000 when the median price for a two-family property was just $160,000, according to The Warren Group, parent company of Banker & Tradesman. In comparison, median selling prices for single-family homes and condos during the same period have risen by 63.5 percent and 72 percent, respectively.

“Owning a multifamily [property] is like owning a diamond. Everybody wants to own it,” said Bob Imperato, broker-owner of Boston Realty Assoc.

Whether the multifamily housing market will take a dip is up for debate. Some local Realtors say the sluggish rental market will cut into sales and price increases, arguing that buyers who rely on a steady rental income stream from multifamily properties will be unwilling and unable to pay ever-increasing prices. Others say the higher vacancy rates and softer rents may push more multifamily homeowners to convert their properties into condos.

Still, some real estate brokers contend that the rental market has already started to show signs of improvement, and there are plenty of first-time homebuyers and investors with the capital to own a two- or three-family residence without the fear of negative cash flow.

“People are not buying on a rent formula anymore. They’re buying on location and quality,” says Imperato, who noted that many buyers in the Boston area are investors who are converting properties into condos. “I see no signs of a slowdown in that area. As long as interest rates remain attractive, 2005 will be another strong year for the real estate industry.”

Over the last few years, rents have been strong, particularly in the Boston area, which is flush with students who often share apartments with several roommates and can afford elevated rents. However, demand in the rental market started to ease as the economy crumbled, companies cut jobs and the supply of apartments and college dorms increased.

Norman O’Grady, a real estate broker in Allston/Brighton, said rents have softened over the last year and prices for multifamily homes have already begun to level off. “We actually have more multifamily homes on the market than I can remember in my 12 years in business,” said O’Grady, owner of Prime Realty Group in Brighton.

Last week, there were 19 two- and three-family residences on the market in Boston’s Allston/Brighton area, and another 14 were under agreement, according to O’Grady.

What Is ‘Too High’

But some Boston real estate brokers say the supply of available two- and three-family homes is not huge. While two-family homes are taking a bit longer to sell, three-families are “a hotter commodity,” said Hyde Park real estate broker Robin B. Portman. There were 28 two-family homes and 14 three-family homes on the market last week in Boston’s Dorchester, Hyde Park, Mattapan and Roslindale neighborhoods, according to Portman, owner of Century 21 Portman Properties.

Unlike O’Grady, Portman said she doesn’t believe that the rental market will have an effect on the multifamily home sales. In fact, Portman, whose company also handles rentals in the Boston neighborhoods she serves, says the rental market has started to pick up again and vacancies are down.

The market for two- and three-family homes was brisk last year. Some 10,263 two-family homes were sold in Massachusetts last year, up 22 percent from 2003 when 8,433 two-family properties were sold. Sales of three-family properties also rose an impressive 21 percent last year, with 4,664 three-family homes exchanging hands in 2004 compared to 3,852 the prior year, according to The Warren Group, which monitors real estate sales recorded at the state’s registries of deeds. Last year’s median selling price for a two-family home in Massachusetts was 16 percent higher than in 2003, while the median price for a three-family home rose 14.7 percent during the same period.

Two- and three-family homes sold much faster last year than single-family homes and condos. It took an average of 44 days to successfully market three-family homes and an average of 45 days for two-family homes to sell in 2004. In comparison, it took an average of 57 days to sell single-family homes and 51 days to find a buyer for condo units, according to information provided by the MLS Property Information Network.

In Suffolk County, which includes Boston’s neighborhoods, the median selling prices for two-family and three-family homes last year were much higher than the statewide medians. The median price for the 1,329 two-family homes sold in Suffolk County last year was $435,000, 13 percent higher than 2003. Meanwhile, the median price for the 1,157 three-family homes sold climbed 14 percent to $500,000 last year.

Middlesex County also experienced a significant jump in two- and three-family home sales volume, with a total of 3,449 two- and three-family homes selling last year, up 40 percent from the 2,456 units sold the prior year. But price appreciation for those properties was less impressive than what occurred in Suffolk County. In fact, the median selling price for a three-family home in Middlesex County actually slipped about 4 percent from $447,500 in 2003 to $430,500 last year, while the median price for two-family properties sold increased 7.5 percent to $430,000.

John Veneziano, a real estate broker who serves communities in Middlesex County like Malden, Medford and Everett, believes a drop in rents and the production of new apartments and condos in some communities is affecting the multifamily home-buying market.

Thousands of new units are permitted to be built in Malden, Medford and Everett, giving buyers more options than they had before, said Veneziano, broker-owner of ERA Andrew Realty. In addition, Veneziano said because rents have declined, some buyers who are depending on the rental income from a multifamily home to make mortgage payments may not qualify to buy properties at certain prices.

That’s a switch from two to three years ago, when homes were selling quickly and often at above the asking price, said Veneziano.

In Everett, Veneziano’s firm listed a two-family home for sale last May with an asking price of $524,900. The price was reduced to $499,900 and a buyer placed an offer lower than the asking price but later withdrew his offer. The home is still on the market for less than the initial asking price and the owner has still been unable to sell it.

“We’ve got a pretty good idea of what too high is. Two years ago, we had no clue. We had no idea what the real price was that people were not willing to pay,” he said.

Some investors are heading west to snap up multifamily properties that are priced much lower than those in eastern Massachusetts. Mary Tavolieri, manager of the Worcester office of ERA Key Realty Services, said investor interest has helped fuel sales and price increases in the Greater Worcester area.

“That has helped to really strengthen sales in this area,” said Tavolieri.

Five years ago, a buyer could purchase a three-family home for $120,000, but today the same home will probably cost around $300,000, she said.

Price appreciation for two-family and three-family units in Worcester County was even greater than the eastern part of the Bay State. The median price for two-family homes sold in Worcester County rose 17.5 percent to $219,900 last year from $187,100 in 2003, while the median three-family home price increased to $271,200 in 2004, up 13 percent from $240,000 the prior year. A total of 2,100 two- and three-family homes were sold in Worcester County last year, up 17 percent from 1,789 units the prior year.