The real estate industry in Massachusetts has taken us all for a wild ride these past few years. It’s now been a decade since the economy collapsed and five years since the recovery really took hold.
We’ve learned a lot in those years. It turns out home values will not rise always and forever, and that due diligence in lending is more important than one might have assumed. And we’re still learning from and reacting to those few terrible years, and nowhere it is more evident than in the foreclosure numbers.
Foreclosures were up statewide in January for the 23rd consecutive month, according to data from The Warren Group, publisher of Banker & Tradesman. As part of that wild ride to recovery, lenders put a hard halt on their foreclosure operations in 2013, awaiting resolution from a variety of sources on how to proceed.
Activity picked up again in March of 2014; for most of 2015 we saw monthly figures for petitions that, while in terms of percentages were alarmingly high, in actual terms were still lower than average and much, much lower than the number of monthly starts we saw in the teeth of the recession. Industry experts and analysts agree that these starts are a paperwork problem; they would have occurred months or years ago if not for the industry’s unease around regulations and compliance.
The Warren Group considers 2005 to be the peak year for home sales in our fair state and uses it as a bellwether for our analysis. As we reported in February, there are towns that last year surpassed their median home sale prices for 2005 (mostly in Middlesex County, surprise, surprise). And there are others – many of them Gateway Cities – that have not come within 80 percent of those peak prices.
Unsurprisingly, there is significant overlap between the towns and cities with the highest rates of new foreclosure petitions and those that have not attained peak prices. And thus, unfortunately, is one of the truisms of real estate proven once again: location is everything.
Though for many in Greater Boston the recession is in the rearview and things are looking rosy, the Gateway Cities continue to struggle. Home values there started lower and fell harder than those in popular Middlesex County; job loss, wage stagnation and a credit crunch took its toll on our smaller city brethren, as the foreclosure rates illustrate.
A recent report from ULI and PwC found that the “18-hour” city is becoming a desirable location for that most sought-after demographic, the Millennials. The Gateway Cities are ripe with opportunities to develop and reposition to capture that market. Location may be everything, but so is timing; now is the time for forward-thinking men and women to take a hard look outside 128.
Our housing problems are not going to disappear. It’s time to change how we look at housing – what it looks like and where it’s located – for the benefit of the cities, their residents and the state as a whole.
