Worcester Business Journal

32 2016 Central Mass By The Numbers • Worcester Business Journal • www.wbjournal.com Real Estate I n the last year, foreclosures in Massachusetts have risen 51.4 percent while increasing in Central Massachusetts by 22.9 percent. This is in com- parison to just a 5.2-percent growth in foreclosures nationally during the same time period. These figures comparing foreclo- sures through August tell a con- cerning tale of ongoing fore- c l o s u r e increases even in a tight, sell- ers market. Boston real estate data f irm The W a r r e n Group has been tracking foreclosure activities and found that foreclosure starts, which begin the foreclosure process, had been grow- ing at an alarming rate. Up until August, these starts had been up every month for the past year. Great Recession fallout For some homeowners, this might have been old birds coming home to roost. Dave Stead, a Worcester real estate agent and regional vice presi- dent for the Massachusetts Association of Realtors, does not work with many foreclosed properties himself, but explained that some of the mortgages that got people into trouble during the Great Recession were the type that could be interest-only for as long as seven years. With the average foreclosure taking as long as 550 days to work through the system when payments stop, the latest foreclosures working their way through the system could link back to mortgages that were started even before the housing crisis hit in 2008. "The people that you are seeing get- ting foreclosed on today tried to make things work and didn't, but they stopped paying a couple of years ago," said Stead, who explained that people also continue to deal with a slowly recovering economy and circumstanc- es that might not have allowed them to refinance. "Someone could have had an interest-only payment for five years and then it balloons to $1,900 a month." The end of the backlog Tim Warren, CEO of The Warren Group, had been saying that these increased foreclosures and foreclosure starts were from a backlog of foreclosures that banks were just getting through their pipeline. According to Warren, there are limits on the amount of foreclosures that banks can process, and for some time, banks were postponing foreclosures as new government regulations surrounding foreclo- sures solidified. However, if this all was true, then it would mean eventually the foreclosures would slow down. And, finally, they have. In August, The Warren Group reported that the state had a 0.7-percent year-over-year increase in foreclosure petitions. Worcester County fared even better than the state as a whole, with foreclosure petitions falling 13.3 percent to 176 compared to 203 in August of 2015. "The leveling off is just that the backlog has reached its peak in terms of foreclosure starts," said Warren, who explained the years of increasing foreclosures should have taken care of the backlog. And if that backlog is taken care of, the strong housing market will be able to ensure people are able to get money out of their houses if they have to sell. This combined with more stringent lending practices that make it more dif- ficult to get a loan with no equity in the home means that we may be out of the foreclosure woods, said Warren. Great Recession foreclosure fallout nearing an end BY SAM BONACCI Worcester Business Journal Digital Editor Massachusetts Central Mass. Foreclosures: Mass. and Central Mass. 0 2,000 4,000 6,000 8,000 10,000 300,000 400,000 500,000 600,000 700,000 800,000 2011- 2012 2011- 2012 2015- 2016 2012- 2013 2013- 2014 2014- 2015 2015- 2016 2012- 2013 2013- 2014 2014- 2015 Foreclosures: U.S. U.S. 4,058 1,100 413,396 Foreclosures The rise of foreclosures in central Massachusetts and the Commonwealth has far outpaced nationwide foreclosures over the past three years Source: ATTOM Data Solutions, www.attomdata.com Note: Foreclosure numbers listed are limited to those properties that are REO (Real Estate Owned by the Lender). Dave Stead, Mass. Association of Realtors Office vacancy rates (2nd quarter 2016) Route 128 Inner Suburbs of Boston I-495 Suburban Boston Worcester 0 5% 10% 15% 20% 15.2% 12.1% 19.6% 13.7% 17.1% Framingham Hudson Worcester Clinton Ayer Maynard Milford Littleton Hopedale Fitchburg Marlborough Sudbury Auburn Berlin Ashburnham $37.98 $35.37 $33.98 $31.45 $30.92 $29.57 $29.57 $28.04 $27.06 $26.44 $25.69 $25.11 $24.40 $23.47 $22.75 0 10% 20% 30% 40% 50% 60% 70% '10 '11 '12 '13 '14 '15 '16 65.5% 54% Commercial/industrial property tax rates in Central Mass. Per $1,000 property valuation; rates are for fiscal year 2016 (July 1, 2015 to June 30, 2016): Occupancy rates for Worcester County hotels Due to an increase in supply hotel occupancy rates leveled off in 2016 after rising for the past five years. Source: STR, Inc. Source: Mass. Department of Revenue Source: Colliers International W

• Cover