Have we hit a peak in the Multi Family Market in Worcester? 7/19/21
This is a repost of an email I sent to my Clients on 7/19/2021 and additional 11/3/2021 comments at the bottom
On Mon, Jul 19, 2021 at 9:07 AM Brian Allen <[email protected]> wrote:
I believe Worcester has hit a high water point for CERTAIN TYPES OF MULTIFAMILY
Let's look at the numbers.
About 6 weeks ago, everything was flying high, there were about 40 multis on the market at a time and a bunch were coming on and clearing each week.
Almost overnight that number has jumped to 60 multis on the market, that is a 50% increase in inventory.
And almost simultaneously the buyers went away. I have been going to open houses on Saturdays for 3 years and it is now like a ghost town. People used to line up to see and buy anything. Now people only make the trip if there is a deal to be had, or a very particular property or location.
The places that ARE SELLING are because of:
The stuff that is NOT SELLING
- VACANCY- FHA AND OWNER OCC BUYERS ARE STILL THERE
- BIGGER BUILDINGS
Keep in mind that everything was selling 2 months ago like it was going out of style. THE ABILITY TO SELL JUNK IS GONE.
- HIGH PRICE
- LOW RENTS
- NO VACANCY
- POOR LOCATION, SIDE OF A HILL
- NO PARKING
I am not getting on the Redfin bandwagon calling the drop, see article below, but the selling of bad multis is past
WHY IS THIS HAPPENING?
It looks like the appraisers are getting scared and they don't want to be the ones blamed for increases in values. If they don't have direct comparable properties they will not give a high appraisal. If the quality or the rents are low, they are reducing values. They don't want to be the ones left holding the bag.
- There are still people looking for housing
- Prices in Boston keep going up and pushing people west
- There is a structural problem in housing, due to the ability to work remote, or hybrid work
- huge frustration of buyers who are now willing to wait it out
- LOW APPRAISALS
That being said, if you are looking to buy or to sell let me know and we can have an honest conversation about particular properties.
And I believe, even with the inflation we are seeing, that the Market is pulling back even further even though inventory is down ot 54 Multis for sale.
There are a lot of owners marketing their properties off market at prices that would have been good in May, but are too high for today's market.
Keep in mind that good properties can sell at any time because they have the fundamentals for a solid long term investment. But poor properties, or properties with low rents will languish on the MLS if they are not priced appropriately.