Worcester Business Journal

12 Worcester Business Journal | June 8, 2020 | wbjournal.com Pent-up demand New housing starts reached their post-recession peak in 2019, and the Central Mass. need for more may shield the industry from the next recession BY GRANT WELKER Worcester Business Journal News Editor I t's a challenge not unique to the Worcester area: not nearly enough houses are being built to accom- modate demand and keep prices from rising out of the range of affordability. Approvals for new homes in the Worcester metropolitan area in 2019 reached the highest level since 2005, new federal data shows. e number of housing starts, as they're called, has helped the area better meet demands of a growing population and workforce. Now, with the coronavirus pandemic expected to cause an economic down- turn, the area's progress in slowly getting back to its pre-Great Recession peak in new housing is at risk. Off Main Street in Shrewsbury, work is continuing on Wyman Farms, a 26-unit townhouse development for residents 55 and older. Barbara Venincasa, a Realtor with Casa Realty Service, a sibling company to the builder of Wyman Farms, Casa Builders & Developers, has found de- mand has so far continued through the pandemic aer site marketing began last September, she said. Venincasa pointed to the different causes of the current expected reces- sion – a pandemic – compared to those spurring the Great Recession, which were housing and financial crises. "I'm hoping the comeback [this time] will be a little different, and quicker," she said. Mass. still needs more housing Even before the outbreak, Massachu- setts communities weren't building near- ly enough homes to meet the demand for a growing population and workforce, said Chrystal Kornegay, the executive director of MassHousing, a state agency financing affordable housing. "I don't think anyone disputes wheth- er we need more housing growth to accommodate our population growth," she said. "I'm not sure it's going to get any bet- ter as a result of the global pandemic be- cause it's going to take people – citizens, municipal officials, different groups – to get settled with everything else going on," Kornegay added. e Gov. Charlie Baker Administra- tion has called for 135,000 new hous- ing units statewide by 2025, and has given financial incentives and technical assistance to cities and towns that are friendlier to housing growth. Despite that push – and a demand that comes with some of the country's most expensive residential real estate – new-home growth across Massachusetts hasn't come close to its peak before the Great Recession. For three straight years, more than 20,000 new units were approved state- wide. at rate fell to less than 10,000 annually for four straight years coming out of the recession. ose higher num- bers haven't been hit again. Anticipating trends e Worcester area has slowly crept back up in new housing growth during the long economic expansion from 2009 to 2019. In 2008, the number of housing units approved in the Worcester area fell to roughly 12% of the number approved three years prior. A similar drop now could undo progress in more recent years and make it more difficult to keep living affordable for many in the region. Whether a major drop in new homes will take place in Central Massachusetts, it's already underway nationally. New-home construction fell in April by 30.2%, according to the U.S. Depart- ment of Commerce, reaching its lowest level in more than five years. e rate was highest in the Northeast at 43.6%. Completion of homes already under construction fell by 8.1%, indicating that some builders are leaving home sites before work is finished. Whether Central Massachusetts is avoiding a similar trend, some fac- tors are working in the favor of more suburban areas, according to a report by Aaron Jodka, the managing director for research and client services for the Boston offices of the real estate services firm Colliers International. Most Millennials – the largest seg- ment of the population – are now in their 30s, and approaching or moving into the years when they'll start a family and look for more space. At the same time, a price premium for building offices in a neighborhood in Boston or Cambridge has never been higher. e pandemic may force another trend going directly against what had been popular, Jodka said: a move toward less-dense office buildings more spread out and having parking allowing people to drive in and park. at could draw more people to want to live closer to those offices instead of those in Boston. Municipal planning officials, who regularly hold informal discussions with builders before they seek permitting, have said those early-stage talks are still taking place. "So far, there's still great demand out there for housing," said Jim Brooks, a housing development director for the City of Worcester. So far, builders have tended to find demand will continue on at some level despite economic conditions, said Tom Skwierawski, Fitchburg's executive direc- tor of community development. "ere could be a lag time before this PHOTO/EDD COTE Alex Richov, a foreman for Casa Builders, and Barbara Venincasa, a Realtor with Casa Realty Service, at Wyman Farms, a 26-unit townhome complex being built in Shrewsbury

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