Home of the housing bust
Central Mass. towns reel; no recovery in sight
ATHOL - How far have home values dropped in this Central Massachusetts town? The answer sounds like the punch line to a joke, but no one is laughing: They’ve eroded so much that you can buy a house for about the cost of a Toyota Camry.
“If [prices] go much lower, they will be giving them away,’’ said Matt Tarlin, an investor from Needham who has bought three homes in Athol and nearby Orange, where values are similarly depressed, and houses sell for as low as $20,000.
Athol’s real estate decline has been fueled by a glut of foreclosed properties and high unemployment. The median price of a single-family home in Athol has fallen by more than 50 percent since Massachusetts values peaked in 2005, to just above $78,000 - the lowest in the state.
That compares with about a 19 percent decline in values statewide during the same period and a median price of $286,000, according to Warren Group, a real estate tracking firm.
The small town’s predicament illustrates how the housing market’s collapse hit less affluent communities harder than Massachusetts as a whole. Now, even as prices in wealthier parts of the state - including Brookline and Cambridge - move above the market’s ceiling of seven years ago, Athol, Orange, and places like them remain in a malaise.
Many here, including Stephanie Pandiscio, president of the North Central Massachusetts Association of Realtors and a longtime Athol resident, are girding for a lengthy recovery period in a community they value for its close-knit feel, natural beauty, and safe streets. Even then, Pandiscio doesn’t believe prices will ever “come back to what they were in 2005.’’
No doubt, Athol - with a population of 8,265 - faces major economic obstacles. The median household income is $43,071, compared with a $64,509 state median, and the December unemployment rate was 9.5 percent, more than a third higher than the 6.5 percent statewide figure, according to state and federal data.
As the state’s housing boom accelerated in 2004 and 2005, the town attracted a wave of first-time buyers, many of whom borrowed too much money. In a hot market, Athol was still comparatively cheap and loans were easy to come by. And as happened elsewhere, demand quickly drove up values.
“It was crazy. The prices were so high,’’ said Pandiscio.
But when the economy faltered, many newer residents of Athol and Orange had little or no financial cushion. Some were forced to sell at a loss, others couldn’t manage their hefty mortgages and went into foreclosure.
“Less qualified buyers were driving the prices up. They were the ones that ended up in foreclosure,’’ said Rick Healey, owner of Foster-Healey Real Estate Inc. in Athol.
“It’s disproportionately low- and moderate-income families who saw these massive asset losses on their home,’’ said Barry Bluestone, founding dean of the School of Public Policy & Urban Affairs at Northeastern University. “The communities with good schools and good services are going to be able to continually attract upper-income families.’’
In October, 106 Athol homes were in the foreclosure process or bank-owned, placing it at number 11 on the nonprofit Massachusetts Housing Partnership’s list of communities with the highest concentrations of distressed properties.
Bank-owned properties weigh down values of better kept homes in low-priced communities such as Athol and Orange. Some of those homes are neglected and in serious disrepair, while others are on the market for less than $40,000, but require only new carpeting and fresh paint.
According to housing researcher Tim Davis, nearly half of all home sales in Athol last year were bank-owned homes or short sales - meaning a homeowner sells a property for less than the mortgage balance, with the bank’s permission. Like Tarlin, many buyers plan to renovate the houses and offer them as rentals until the market improves.
Real estate agent Anthony Paoletti said most of his Saturday showings require a flashlight and boots to maneuver through darkened homes that were long ago shuttered by lenders.
“There was a day where we used to wear shirts and ties; now we use insulated long johns and boots and hats,’’ Paoletti said. “The homes are vacant and there’s no heat.’’
Prospective investor-buyers understand the region won’t be experiencing a new housing boom anytime soon, according to Paoletti.
“If they fix them up, they are not going to be flipping them’’ at a huge profit, he said.
Pandiscio, who bought a house in Athol in 1976, said it was heartbreaking to see some of her neighbors walk away from their homes when mortgage balances outstripped property values.
“These all were beautiful homes. All of a sudden nobody was there,’’ she said. The bargain hunters at least give her some reason for optimism.
“Thank God there are some people out there getting the lower-end deals,’’ Pandiscio said.
One of them is Scott Parker, 47, who recently bought a three-bedroom house on a placid street in Orange after waiting until the asking price dropped tens of thousands of dollars. Parker paid $36,500 for a property he believes can eventually be resold for about $100,000, after about $15,000 in renovations.
“I don’t think I can lose with what I’m buying,’’ he said. “I’ve done pretty well in a depressed area.’’
Jenifer B. McKim can be reached at firstname.lastname@example.org.