Sales of multifamily homes fell across Massachusetts for the first time in five years in 2005, declining 15.1 percent from a record 9,401 sales in 2004 to 7,980 last year, according to data compiled by the Massachusetts Association of Realtors.

The slowdown is due to escalating property values, rising energy prices and higher vacancy rates brought on by a steady increase in condo conversions and multifamily housing construction in recent years that has softened demand among investors and made the market less attractive to first-time home buyers, MAR reported.

“The multifamily housing market has experienced record demand over the past three years and that’s led to strong price appreciation, but also priced others out of the market,” said MAR President David Wluka of Wluka Real Estate in Sharon. “Entry-level buyers have come to find that duplexes and triple-deckers are no longer the affordable starter-home option they once were, while investors have started to look to other less costly markets, outside the region, to buy,” he said.

Regionally, every area of the state saw a decrease in two- to four-family home sales in 2005, with modest declines of 2 percent-4 percent reported in Southeastern and Western Massachusetts, 7 percent-10 percent declines observed in Barnstable County (Cape Cod) and greater Boston, and declines in excess of the 15 percent drop in statewide sales volume occurring elsewhere.

“In some sectors, the market has become overvalued, and with rents down and vacancy rates up due to a surge in condo conversions in recent years, it’s not surprising to see that demand has softened over the past year,” said Wluka.

Nonetheless, despite the slower sales pace last year, the number of two- to four-family homes sold in 2005 was the third highest in state history, exceeded only by the 9,401 multifamily homes sold in 2004 and the 8,086 homes sold in 2003.

Further evidence that demand for multifamily properties remains historically strong is visible in the median selling price data found in the MAR report. During the past year, the statewide median selling price for two- to four-family homes rose sharply by nearly 17.5 percent, increasing from a median price of $315,000 in 2004 to $369,900 in 2005. Regionally, median selling prices increased 14 percent-15 percent in greater Boston and the Northeast region, 18 percent-19 percent on the South Shore and Southeastern Mass., 21 percent in Worcester County, 37 percent in Barnstable County, and 43 percent in Western Mass.  

The rate of price appreciation in the multifamily market outpaced the annual price gains in the detached single-family and condominium markets last year, where prices rose 5.9 percent and 6.6 percent, respectively, on a statewide basis.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription