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Worcester Business Journal www.wbjournal.com 2015 Economic Forecast 21 r e a l e s tat e 5 Things To WaTch continued recovery for housing; a push for better office space HERE ARE FIVE THINGS TO WATCH IN 2015: Residential real estate continues slow rise Following a successful 2013, the recovery of the residential market stumbled slightly in 2014, according to Tim Warren, chief executive officer at The Warren Group, of Boston. In the spring of 2014, hopes for a quicker housing recovery were muted as the spring market "fizzled," he said, and sales fell 10 percent during the first quarter while prices rose. "We've seen some of the expectations for a rapid recovery (turn) disappointing," he said. "I expect mod- est gains in sales and median prices next year." But there's still plenty of room for growth, with only 30 communities in Massachusetts — less than 10 per- cent — having reached the peak pricing that the mar- ket soared to in 2005. "That leaves another 300 communities or more where there is room for growth to get back to the peak pricing," Warren said. Foreclosure activity will remain high As banks continue to work through a prop- erty backlog left over from abnormally low foreclosure rates in 2013, foreclosure activity will remain high for the first half of the year, according to Warren. Through October 2014, there were 6,384 initi- ated foreclosures in Massachusetts, according to the Warren Group, a 36.5-percent increase over 2013. "I think it was artificially low (in 2013) because lenders were leaving stuff in the pipeline because they were unsure about some of the regulations that forced them to give people another chance," Warren said. "It is old distress that is coming home to roost." A rush to commercial ownership While many companies and investors have put off major real estate purchases since the recession, they will take advantage of low interest rates in 2015 to make themselves owners, said Dan Mancini, By SAM BONACCI Worcester Business Journal Staff Writer W hile residential real estate in the Bay State continues to recover, 2014 saw commercial organizations grabbing office space in and around Boston, which led to increasing focus on the Interstate 495 corridor. In 2015, there will be more of the same slow recovery in housing as prices and sales claw their way upward. On the commercial side, there are signs that more businesses will seek higher-quality office space while many companies look to own rather than rent. >> Continued on Page 22 2 1 3