The Worcester area’s home-price trends can’t be categorized as “hot,” but they have consistently outperformed other parts of the state so far this year. iStock illustration.
The COVID-era rush to buy more spacious homes with big yards in the Worcester area may be over, but Worcester County’s real estate market continues to outperform much of the state due its relative affordability and growing popularity among investors and first-time homebuyers.
According to Central Massachusetts real estate officials, the Worcester area is suffering from the same critical problem facing other regions of the state – historically low supply of homes for sale despite strong demand.
“Worcester is pretty similar to the rest of the state in regards to the anaemic growth in inventory,” said Anthony Lamacchia, founder and CEO of the Lamacchia Cos. “It’s hitting everyone.”
But the inventory decline has been offset a bit by recent economic uncertainties and the rise of mortgages rates that have tempered demand just enough to lead to lower median home prices across the state in April – with Worcester County being an exception.
Not Hot, but Better than Most
According to data from The Warren Group, publisher of Banker & Tradesman, the April statewide median single-family sale price declined on a year-over-year basis for the first time since 2018, falling 1.2 percent to $553,500, down from $560,000 in April 2022. Year-over-year statewide sales were down 25.3 percent in April.
In Worcester County, however, the median single-family sale price increased to $416,000 in April, or by 2.9 percent, from $407,000 in April 2022. Year-over-year sales in Worcester County were down 31 percent in April.
For the entire state, the year-to-date median single-family price was a bit more encouraging, rising by 2.9 percent over the first four months of 2023 to $525,000.
But Worcester County’s year-to-date median price increased by 5 percent to $400,000 during the same time period.
The Worcester area’s home-price trends certainly can’t be categorized as “hot,” but they have consistently outperformed other parts of the state so far this year, data shows.
No More WFH Factor
Lee Joseph, a broker at Coldwell Banker and president of the Realtor Association of Central Massachusetts, said she’s certain about one thing: The Worcester market is no longer benefiting from a rush of work-from-home families flocking from the Boston area to Central Massachusetts in hopes of finding bigger homes and yards at more affordable prices.
“I do think the COVID rush is over,” she said. “It’s kind of back to some of the old factors that drove the market before the pandemic, a back to the basics.”
The pre-pandemic basics for the Worcester region included a steadily more attractive and vibrant real estate market, as the city of Worcester underwent a mini-renaissance driven by a variety of new developments and employers expanding in the region.
“They’ve dramatically improved the city,” said Lamacchia, noting the construction, among other things, of the new Polar Park baseball stadium and ongoing redevelopment of Worcester’s Kelley Square. “Over the last five to eight years, a lot of people have been priced out of [Greater Boston] and forced to move out here.”
Christine Najem, owner of Cedar Wood Realty Group, agreed that the westward work-from-home rush is largely over and that the Central Massachusetts market seems to be reverting back to some of its old strengths.
But there have been changes.
Investors a Growing Factor
Investors today seem more interested in the Worcester market than they were before the pandemic, Najem said, particularly when it comes to snapping up small multifamily properties.
Real estate agents, doctors, lawyers, businesspeople and others with the cash to spare are all on the hunt.
“Everyone wants to invest,” she said. “We have investors coming from Worcester and Boston. They’re doctors, lawyers and others who’ve seen their 401(k)s drop and want to invest their money elsewhere. People are nervous about the stock market.”
In mid-May, Cedar Wood Realty Group handled the sales of a two-family home and a three-family home in Worcester County – with the former selling for about $30,000 over asking price and the latter selling for $80,000 over asking price, Najem said.
Buyers aren’t just active in the city of Worcester. The cities of Fitchburg and Leominster are also seeing home values go up, she said, noting that a three-family home in Fitchburg was recently sold for a regionally solid $515,000.
Lamacchia said there may not be as many bidding wars in the Worcester area as there were in in past years. But bidding wars are still common due to the supply-and-demand imbalance, he said.
As for the east-to-west migration, Lamacchia said it’s still occurring, though perhaps at a slower pace these days.
“People still want to live in Boston, because Boston is Boston,” said Lamacchia, noting all the amenities in the state’s largest city. “But Worcester is more of an option than it used to be for many.”
In addition to Worcester’s unique strengths that are helping to keep prices up, Joseph of Coldwell Banker said April’s comparatively strong median sale price figures in Worcester County are a sign that many people are resigned to higher mortgage rates.
“My opinion is that buyers have gotten used to higher interest rates. The shock of higher rates is over. So, they’re jumping back into the market.”
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