Downtown Worcester MA

Worcester, Mass. was just named one of the most undervalued housing markets in the US. So how does Worcester stack up for real estate investment on the national stage? What other factors might be working in favor of multifamily investors?

According to a new report from Trulia, Worcester, Massachusetts is one of the 5 most undervalued housing markets in America. So how cheap is Worcester real estate? How much more attractive is it for multifamily investors than other parts of the nation?

Trulia’s Top 10 US Metros for Undervalued Housing Prices:

  1. Akron
  2. Cleveland
  3. Detroit
  4. Dayton
  5. Worcester
  6. Memphis
  7. Toledo
  8. Chicago
  9. Lakeland-Winter Haven
  10. Providence

According to the data Worcester housing prices are trading15% undervalue. This compares with sizzling, frothy markets like LA which were already considered 17% overvalued as of the second quarter 2014.

Boston, New York, DC, and other northeastern property markets have also rebounded rapidly, both in home sales prices, and rental rates. Poor credit and lunar leaps in asking rents are literally pricing many boomers, middle-aged families with kids, and Millennials out of the markets they have lived and worked in. As seen in the recent Google fiasco in California; lawyers and tech entrepreneurs rich with new money are hiking up real estate prices, with little care about their own workers having to endure more than an hour in commuting each way. Some online comments suggest a systematic approach to driving out lower income individuals from top cities, in order to attract wealthier residents, and higher tax revenues.

For Massachusetts real estate investors this could mean seeing substantial migration towards areas like Worcester which offer more affordable housing.

With attractive, low borrowing and acquisition costs and rising rents and values, Worcester could be one of the most profitable housing markets in the country for buy and hold multifamily apartment investors. Higher rents and sales prices next year will add increased yields and capital gains to solid equity positions, proving high ROIs and security.

Worcester’s sustainable rate of growth, with house prices up just over 4% during the first half of 2014 suggest an extended growth period for local investors. However, it is crucial for property investors to recognize that maximizing opportunities and multifamily performance will be directly linked to execution, and specifically the quality of daily property management.