Over the last few decades, waiting for housing prices to rise any more than the low single digits in Worcester was like waiting for Godot. But that’s not true anymore.
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Housing prices throughout Massachusetts have been on a tear over the last few years, and those increases have been particularly acute in Worcester. Rather than dampen demand, the coronavirus pandemic has put even more pressure on a hot housing market. In the city of Worcester, single-family home prices rose 12% in 2020, and another 18% through the first 11 months of 2021, according to Peabody real estate data firm The Warren Group.
Over the last few decades, waiting for housing prices to rise any more than the low single digits in Worcester was like waiting for Godot. But that’s not true anymore. The recent rise in prices has both winners and losers. On the plus side, more wealth is coming into the city, and a growing population with a healthy percentage of young adults in their 20’s and 30’s is a metric spelling success in any economic development plan. Rising prices help attract more developers who are investing in new housing stock and fixing up older homes. The acceleration in development has brought significant investment to the city while shoring up its tax base.
On the down side, rising prices means higher costs for just about everybody, whether it is rising rents or increased property taxes on homes with increased valuations. Worcester has been attractive in part due to its affordability. But steep rises in rental rates and the cost of housing make it less affordable, which hurts those with below-average incomes. As Realtor Brian Allen points out in the “Luxury” story on page 8, Worcester is already seeing an exodus of its low-income residents to communities like Southbridge, Webster, and Spencer, which impedes Worcester from having a well-rounded workforce.
While Greater Boston’s high residential and commercial costs have in no small part contributed to the momentum here, the price of new construction in both areas is about the same. And that is reflected in the cost of new projects. So what does a city do when so much of its momentum stems from its relative affordability? A great balancing act will be required in Worcester when it comes to supporting a mix of affordable, market rate, and luxury housing. The most vibrant neighborhoods will be a combination of all three. Worcester isn’t yet a market for new condominium development, but when it is, that will add another pressure to the scale.
Back in the day, finding a large-scale outside developer to invest in Worcester was a rare occurrence. Today, Worcester is a hot market with a lot of outside interest and few signs of slowing down. Having a long-term strategy and vision for the city and its neighborhoods is critical to assuring the Worcester of tomorrow continues to progress, but still maintains its unique character and soul. This puts a heavy burden on city leaders and planners to influence and prod projects to assure they make a positive contribution to their neighborhood and the city, as well as ensuring they contribute their fair share of taxes to support that growth. There will be winners and losers regardless, but the more the city can retain its unique character while protecting the most vulnerable and encouraging new blood to come into the community, the better off Worcester will be.
