Old factory and mill towns like Everett, Brockton and Lowell have emerged as a last bastion of affordability as home and condominium prices go bonkers across large parts of the state.
But now even these older industrial cities, with neighborhoods packed with homes, condos and apartments built a century or so ago, are starting to feel the heat from the hot market.
Real estate prices in many of these old factory hubs and fishing ports are still a notch or two below their subprime lending-fueled peaks set during the bubble years of the mid-2000s.
But more than a few of the state’s officially designated “Gateway Cities” are catching up fast, with Leominster, Lynn and Brockton, among others, posting double-digit price growth that in some cases is fast-outpacing the state average, according to The Warren Group, publisher of Banker & Tradesman.
And that’s potentially a concern given the important role the state’s roughly two dozen Gateway Cities play as a reliable source of less expensive housing within reach of low- and moderate-income buyers.
“High-density housing at one point in time was not very trendy,” said Peter Milewski, director of homeownership lending at MassHousing. “Now that people realize that proximity to work and proximity to public transportation is desirable, a lot of these cities are becoming desirable.”
Scott Van Voorhis
“Nobody wants to drive two hours to work if you can hop on the commuter rail,” he added.
MassHousing backed more than $730 million in affordable mortgages in the fiscal year ending in June, with more than a third going to buyers in Gateway Cities, where median income is below the state average, among other measures.
Former mill and factory towns, Gateway Cities have long been a first stop for immigrants since the 19th century, and continue to play that role today, even as the countries where the newcomers hail from have changed.
As prices have risen across the state, especially in the Greater Boston area, the state’s Gateway Cities have provided a badly needed safety valve for an increasingly overstressed market.
Buyers are increasingly priced out of Boston, where many neighborhoods have seen prices blow past their 2005 highs; not just places like Back Bay, but also Dorchester, Roxbury, Mattapan and East Boston, traditional founts of affordability, noted Thomas Callahan, executive director of the Massachusetts Affordable Housing Alliance.
Many suburbs aren’t very affordable either, with soaring prices now the norm in places like Natick, Watertown and Medford.
By contrast, you can still buy a home for under $250,000 – and sometimes under $200,000 – in a number of the state’s older Gateway Cities.
“When Boston gets out of reach for a certain percentage of the population, some people say ‘I am willing to look at Randolph, or Brockton, or Taunton,’” Callahan said.
Double-Digit Growth
But the growing interest in the state’s Gateway Cities by buyers looking for affordability is starting to push up prices.
While statewide home prices rose a modest 3 percent in August compared to the same month in 2014, several Gateway Cities have seen prices jump double, triple and even quadruple that amount, according to The Warren Group’s stats.
To the south of Boston, Brockton saw its median price in August hit $220,000, a 10 percent increase, with sales up more than 23 percent, while Taunton’s is now past the $282,000 mark after an 8 percent jump.
Quincy is closing in on the $390,000 mark after an 8 percent increase in home sales.
On the city’s northern fringes, Everett’s median home price has risen 8 percent to $305,000, while sales are up 9 percent; nearby Lynn saw an 11 percent price surge, pushing its median to $265,000, while sales are up more than 20 percent.
Up in the Merrimack Valley, a similar story can be found in the old mill cities of Lawrence and Lowell. Lowell’s median is up nearly 7 percent, to $239,000, while Lawrence has seen an 9 percent jump to $205,750, on top of a 23 percent surge in sales.
Out on Route 2 in Northern Massachusetts, Leominster and Fitchburg posted some of the strongest results of any of the Gateway Cities. In Leominster, prices rose 11 percent, to $222,000, while sales are up a whopping 44 percent; Fitchburg saw a 15 percent increase, to $173,450, with sales up 37 percent.
And out in Western Massachusetts, even Springfield, the state’s poorest city, has seen a nearly 5 percent rise, to $128,500, while sales have gone up 24 percent.
All that said, unlike Cambridge, Somerville or downtown Boston, none of the state’s Gateway Cities have reached the price peaks set during the frothy years of the mid-2000s.
Brockton is still $55,000 from its 2005 peak of $275,000 and Everett is $48,000 from reaching $353,500, while Lowell is more than $30,000 from its $270,000 high in 2005.
Yet this may provide false comfort for those worried about rising prices in these cities.
Those lofty 2005 prices were driven by an epidemic in subprime, often fraudulent, lending, which enabled buyers to “afford” ever crazier prices at the cost of a potential foreclosure down the line. The current market is certainly not perfect, but the subprime shenanigans, at least for now, appear to have been driven underground.
What we are seeing right now is simply the laws of supply and demand in action. Rising sales sooner or later lead to rising prices, Callahan points out.
“If you have more people looking at homes, that is going to start increasing prices,” he said.
And the potential loss of one the last preserves of affordability is a concern.
MassHousing is cognizant of this dynamic, helping finance affordable rental projects in a number of Gateway Cities, Milewski said.
“There is always the reality that the more attractive you make a place to live, the more expensive it becomes,” Milewski said. “It’s a tough balancing act.”
In some ways, cities like Lowell and Quincy are becoming victims of their own success as they earn a reputation as up-and-coming alternatives to pricier locales, thereby attracting even more buyers.
So cheers to all the Gateway Cities out there: Success is great, but here’s hoping it doesn’t come at the loss of increasingly precious housing affordability.
