Worcester County's market withers

Few Bay State towns illustrate the housing bubble's bursting as vividly as Southborough and its neighbors

Despite a soft market, Phillips International is building 44 condos at Bay State Commons in Westborough's town center. Prices range from $535,000 to $740,000.

The selling points are still there for the 140-year-old Colonial in Southborough that Rachid Mansour bought seven years ago: great schools, easy access to major highways, and proximity to major employers such as EMC Corp. Yet a year after the house went on the market, Mansour hasn't closed a deal.

That's because one thing has changed: The once-hot Worcester County housing market has cooled.

"Most buyers are waiting for prices to drop, and sellers are waiting for prices to come up," said Mansour, who is asking $410,000 for the three-bedroom house - about $30,000 less than his initial price.

"If I didn't have an immediate reason to leave, I might not want to sell," he said.

An engineer who develops semiconductors for Intersil Corp. in Framingham, Mansour needs to move because his children have outgrown the family's current home. He is willing to spend as much as $650,000 on a new, larger house in Southborough, but can't buy until he unloads his current mortgage.

Mansour's predicament is one reason there were only 79 sales of single-family homes in Southborough through the first nine months of this year, a third fewer than in the same period in 2005,according to the Warren Group, a Boston real estate and financial information firm.

Few Massachusetts towns illustrate the housing bubble's bursting as vividly as Southborough and its neighbors in Worcester County. It was long the western frontier of Boston's expanding metropolitan area, where inexpensive houses, plentiful undeveloped land, and good road and rail links made it one of the fastest-growing parts of the state in the past decade. But the real estate market in the exurbs between Framingham and Worcester is now in the doldrums.

"We were overinflated," said Randy DeVries, vice president of Prudential Prime Properties in Westborough. "The market just went wild, and now we've got a correction."

Home sales through the end of September were down 11 percent from the same period in 2006, compared with a 6 percent decline statewide, according to the Warren Group.

Price drops, however, are more in line with the rest of Massachusetts - down 4.5 percent in both the county and statewide so far this year. The median single-family home price in the county was $243,000 as of Sept. 30, compared with $315,000 statewide.

Realtors and others say sky-high prices in the suburbs closer to Boston during the mid-1990s and early 2000s sparked a building frenzy in Worcester County as first-time home buyers looked for cheaper options, especially in towns straddling Route 9, including Shrewsbury, Northborough, Southborough, and Westborough.

Now, conditions have changed.

With prices closer to Boston also down, Worcester County is less attractive to buyers who want to live closer to the big city, either for work or play.

"A lot of buyers who might have gone to Westborough will now go to Natick," said Leif Rosseland, sales manager at Coldwell Banker in Shrewsbury. "It's just like a wave at the ocean. It's starting to pull back out to the Boston market."

As those would-be buyers head east, they leave behind a glutted housing market. The eastern end of Worcester County is close to being built out, with homes that are now worth less just a few years after they were first purchased. Meanwhile, the nationwide mortgage crisis has made it more difficult for some buyers to obtain credit, even as they wait for prices to fall further.

"When people hear that prices are going down or there is a tendency to go down, people wait," DeVries said.

The strengths of the Worcester County market are still valid, realtors said. With good roads and a rail system, and less congestion, commutes east from, say, Southborough, can be as short as those from towns closer to the urban core. The region is also home to major corporations and other large employers, such as UMass Medical Center in Worcester.

Steve Levine, a realtor for Re/Max First Choice in Northborough, predicted that interest in Worcester County will pick up again once the housing market stabilizes. Its central location makes it attractive to a wide range of buyers, he said, from suburban families to single urbanites seeking roomier digs.

"Nobody ever went bankrupt selling vanilla ice cream," Levine said. "When you have a product that appeals to the widest possible variety of people, you'll always do better."

But in the meantime, say homeowners looking to sell, it's a buyers' market - and buyers are being picky.

Mickey Skarr recently sold her Shrewsbury house for $515,000, after four months on the market. She originally asked for $600,000 but felt comfortable dropping the price because she and her husband are moving to Florida, where houses are significantly cheaper than in the Northeast. "It seemed like forever, primarily because of all the bad news about the housing market every day," she said. "Five years ago people would have been standing on the doorstep fighting each other over it."

Some builders are moving forward with projects that they hope will attract the next generation of buyers: empty-nesters - couples looking to downsize after their grown children have moved on - and well-paid young professionals who don't want the responsibilities associated with owning an older home.

In Westborough, New York-based Phillips International is building 44 condos at Bay State Commons, a 350,000-square foot development in the town center that features residences above shops and restaurants. Broker Claire Murphy said prices range from $535,000 to $740,000.

Those are steep prices for the area, but Murphy said prospective buyers have already reserved five condos, which would be ready for occupancy by March.

"We know the market is a little softer," Murphy said. "We are at the higher part of the market, the price point, and we recognize that, as well. There's nothing like our condos in the area. It's a lifestyle choice. We're set in a quaint New England village."

And if the condos aren't snapped up?

The developers have deep pockets and can afford to wait out the slowdown, Murphy said.