Real Estate

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Unemployment and Housing Concerns Dominate Massachusetts News

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Unemployment figures continue to be the measure of progress in fighting economic damage caused by the coronavirus pandemic in Massachusetts. According to a report by CBS News, the number of new unemployment and Pandemic Unemployment Assistance claims fell once again last week in Massachusetts. 

The state reported just over 15,200 new claims, or about 4,400 fewer than the previous week. Further, the number of independent contractors and “gig economy” workers seeking Pandemic Unemployment Assistance dropped by 5,000 to just under 10,000.] Learn more about applying for unemployment benefits in Massachusetts here.

Census Bureau Report Suggests One In Five Mass Renters Fear Eviction 

Although the state continues to inch in a positive direction nearly a half-year into the coronavirus pandemic, many challenges still remain. For example, a recent report by the U.S. Census Bureau suggests that more than 315,000 Mass. renters fear they are on the verge of eviction — or about one in five renters. The Census Bureau’s Household Pulse survey estimates state-by-state impacts from the pandemic on a weekly basis.

According to the data, as of mid-July, little more than half of the renters in the state are fully confident that they would be able to pay their rent in August. A rash of evictions would ultimately have a ripple effect on the state’s economy as landlords struggle to pay mortgages and banks foreclose on properties.

Recent executive action by Gov. Baker has initiated a moratorium on evictions and foreclosures until Oct. 17. Although the moratorium does not exempt renters or property owners from paying rent or mortgages, it does prevent removal for failure to pay if COVID-19 created a financial hardship.

Here are some statistics gleaned from the Census Bureau report:

  • Nearly one in five renters in the state have no confidence or only slight confidence they could pay August rent. 

  • 368,000 are moderately confident they can cover their rent.

  • 751,000 have high confidence they can pay rent.

  • 78 percent of eviction filings in Boston occur in Census tracts where a majority of the population is nonwhite.

  • White tenants were about 2.8 times as likely to have high confidence as black tenants and about 1.7 times as likely as Hispanic or Latino renters.

  • About 42 percent of Black renters and 30 percent of Hispanic or Latino renters have no or only slight confidence in covering housing costs for another month, or more than 30 percent higher than white renters.

You can read more on this story in this report by CBS Boston.

Mass. Clean Peak Energy Standard Promotes the Use of Clean Energy During High Demand Periods

A new clean energy program — the first of its kind in the nation — is aimed at giving a leg up to clean energy sources by promoting the use of clean and renewable energy sources during times when demand is the highest. 

Gov. Baker says the Clean Peak Energy Standard (CPS) will also reduce greenhouse gas emissions, lower electricity costs, and generate revenue for resources such as energy storage systems needed to provide electricity when demand is typically highest.

Under the program, utilities that generate energy during specified times of the day will generate Clean Peak Energy Certificates (CPEC). Then electricity suppliers will be required to purchase a minimum amount of CPECs each year based on a percentage of electricity sold. 

The governor had this to say during his announcement:

“To combat climate change, we need to change the way we consume our energy, the resources we use, and when we use them. This first-in-the-nation program is an innovative approach to create a cleaner and more affordable energy future for residents and businesses across the Commonwealth, while serving as a national role model for making meaningful reductions in greenhouse gas emissions.”

Energy and Environmental Affairs Secretary Kathleen Theoharides also said CPS will enable the state to further reduce emissions. 

“By ensuring the use of clean energy resources at the historically dirtiest and most expensive times of the day, we will be able to build on our progress in meeting our net-zero emissions goal and building a clean energy future for Massachusetts.”

U.S. Energy Storage Association (ESA) Chief Executive Officer Kelly Speakes-Backman called the program innovative:

“The U.S. Energy Storage Association (ESA) commends the Baker-Polito Administration as it launches the first-in-the-nation Clean Peak Energy Standard (CPS). The administration pioneered this innovative, new regulatory tool to reduce the costs and environmental impacts of periods when electricity demand is the highest and generation tends to be the most polluting. During these peak periods, CPS drives the use of energy storage resources to deliver clean energy where it’s needed, when it’s needed. CPS is an important step toward making the grid more resilient, efficient, sustainable and affordable. ESA looks forward to working with Massachusetts officials and stakeholders to ensure its success and to provide a replicable model for other states.”

The Clean Peak Energy Standard application process is scheduled to begin on August 17, 2020. And MassCEC and DOER plan to hold a stakeholder informational session on August 10, 2020. 

The CPES program which was first proposed in Governor Baker’s 2018 Environmental Bond Bill will be managed by the Massachusetts Clean Energy Center (MassCEC).

Go here more information on the  Clean Peak Energy Standard program.

More of the Latest Massachusetts News

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Eviction Moratorium, Housing and Transportation Dominate News

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This is the first week since it took hold in Massachusetts that the majority of the headlines are not about the pandemic. Hopefully, that’s a good sign. Check out last week’s news for a plethora of encouraging facts and figures related to Mass. COVID-19 infections and unemployment.

The big story this week is the extension of the moratorium on evictions and foreclosures until October and a lawsuit against the state to overturn the measures.

Gov. Baker Extends Moratorium On Evictions and Foreclosures Until Mid-October

The moratorium on evictions and foreclosures put in place in Massachusetts has been extended through at least Oct. 17. The proclamation by Gov. Baker comes weeks before the original expiration date of Aug. 18. Obviously the move has caused mixed emotions. 

While affordable housing advocates breathed a sigh of relief, landlords and lenders are furious and suing the state.

The sigh of relief by recently unemployed renters and homeowners may be short-lived. City Life/Vida Urbana Executive Director Lisa Owens told the Herald:

“This does give an additional two months of security and protection and that’s important for people, but unfortunately what that means is the moratorium will be lifted … right in the middle of an expected second surge and when people are likely facing higher levels of unemployment than they are facing now.”

Housing advocates are working to pass a “no brainer” bill that would halt evictions and freeze rents as far into the future as one year from the time that the governor lifts the public health emergency.

Renters are still obligated to pay rent under the moratorium. However, some renters who have no emergency savings and might be using the moratorium as a reason to not pay rent.  

Read more about the moratorium extension at The Boston Herald.

Landlords and Lenders Fight Back Against Eviction Moratorium

The moratorium on evictions is obviously upsetting to landlords and lenders some of whom are struggling financially as a result. Many property owners are already considering abandoning properties.

In response, attorney Richard Vetstein, representing a coalition of Mass. landlords has filed a lawsuit seeking to overturn the moratorium. The complaint, filed in a federal court, lists the defendants as the state of Massachusetts and the Executive Office of Housing and Economic Development. 

Another possible solution to the dilemma would be a bailout of property owners, renters, and/or homeowners. A $20 million relief fund has already been established to help renters and homeowners. However, that figure falls far short of being a cure for the problem. Gov. Baker says his administration is looking into increasing that fund. 

Real Estate Boston has more on this story.

Mass Eviction Moratorium at Least Partly Responsible for Drop In Home Sales and Condo Prices

For the third straight month, home sales and prices have dropped in Massachusetts. Many attribute the slowdown to a combination of factors including uncertainty about the economy, high unemployment, increased red tape, and the impact of the eviction moratorium. 

According to The Warren Group, publisher of Banker & Tradesman:

  • Sales of single-family homes and condos dropped by 25 and 30 percent respectively. 

  • The median price for a single-family home rose by 2.6 percent year over year to $440,000.

  • Condo sellers reported a 5.7 percent year-over-year drop in the median sales price to $396,000.

  • The median condo price in Greater Boston fell 4.4 percent year over year in June to $592,500.

One thing's for sure. The declines are not due to a lack of inventory which has been falling for some time. Tim Warren, CEO of The Warren Group had this to say about that:

“Even though single-family home sales saw a significant decline in June, it’s not due to a lack of demand. The statewide inventory has steadily declined for years on end, and COVID-19 has given homeowners new reasons to stay put for now. There seem to be plenty of buyers looking for homes, and the median price has climbed every month for 51 straight months.

“The median condo price took its first year-over-year dip in 14 months. Prior to this development, the median sale price exceeded $400,000 for four consecutive months and was actually on track to outpace the median single-family home price during the course of 2020. It seems like potential condo buyers are waiting to see how the pandemic progresses before they commit to urban living and elevator rides.”

And Jason Gell, association president and an agent with RE/Max Unlimited in Brookline believes the slowdown can be pinned on increased red tape and should ease up soon. He states:

“Our challenge these past few months has not been a lack of buyers; it’s the fact that the process of showing property and obtaining the necessary inspections and documentation requires more time and effort to perform the work and ensure the proper safety protocols are met. Although we lost much of the spring market, we think the summer months will be much busier than normal due to pent-up demand and a steady influx of new listings since May, especially in the condo market.” 

Another factor that is expected to help the market recover is the current low mortgage rates.

The Greater Boston Association of Realtors’ breakdown for 64 communities can be found here.

Could a Luxury Real Estate Tax Fund Affordable Housing?

By adding a surcharge for the sales of luxury properties, the city of Boston could generate millions of dollars that could be used to boost affordable housing projects. Nearly 40  U.S. states have such a surcharge. That is according to the Institute for Policy Studies (IPS). 

A petition drafted by City Councilor Lydia Edwards and Council President Kim Janey would give Boston the authority to collect a 2 percent surcharge on real estate sales of $2 million or greater. However, the proposal has sat in the Massachusetts House Committee on Ways and Means since December 2019.

Under the proposed plan, revenue from the surcharge would go into the Neighborhood Housing Trust fund for low-income housing projects.

Last year the group loaned out $16 million. That amount could have been generated by surcharges on the sale of just two buildings, according to IPS.

A study co-authored by Chuck Collins and Omar Ocampo states:

“As of July 14, 2020, 100 out of the 171 units at One Dalton Place — located in Boston’s Back Bay neighborhood — have been sold, ranging in sale price from studio units under $1 million (thus exempt from the transfer fee) to a penthouse unit that sold for $34 million.”

Several other cities in Massachusetts are considering similar measures.

Read all about it at the Bay State Banner. 

Mass. Senate Approves Transportation Bond Bill

Massachusetts senators have passed a $17 billion bond bill aimed at funding major transportation projects throughout the state. 

Among the allotments designated in the Senate bond bill are:

  • $5.6 billion for federally aided highways

  • $2 billion for highways with no federal aid

  • $574 million for local and regional transportation projects.

The bill would also establish a special commission to investigate roadway congestion and recommend options for equitable roadway pricing mechanisms.

The bond bill now heads to a committee that includes lawmakers from both chambers of the state legislature in order to reconcile differences between the House and Senate versions of the bill.

Read all about it at LandLine.

Is Massachusetts Planning To Phase Out Natural Gas?

Massachusetts officials have begun considering a managed decline of the state’s natural gas industry. The move would be part of a larger effort to meet the state’s clean energy goals.

Gas-fired appliances account for two-thirds of the space and water heating energy which is the second-largest category of greenhouse gas emissions in the sate. 

The plan currently calls for a two-phase investigation. 

  • Phase One - Gas companies would be required to prepare “detailed economic analyses and business plans depicting future gas demand in a carbon-constrained economy.”

  • Phase Two - Focuses on the development and implementation of policies aligned with the 2050 net-zero target.

A comprehensive report by Green Tech Media covers this topic in detail.

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Mass Leads in Unemployment but Potential for Recovery Strong

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Over the past few months, Boston, Massachusetts, and the rest of the nation have endured bad news of historical proportions. However, some good news is starting to emerge. Let’s get right into it. 

Mass. Unemployment Rate Tied for 4th-Highest in US 

Bad news first. We realize that we’ve discussed the unemployment issue quite a bit in recent weeks, however, it continues to plague - if you’ll excuse the expression - the state of Massachusetts, in particular. 

According to federal data, Massachusetts has the 4th highest unemployment rate in the country. Employers added 58,000 jobs in May, doubling any previous month-over-month record dating back to 1990, and setting new records the second month in a row at 16.3 percent unemployment. However, the state is still just one-tenth of the way from gaining back the staggering 646,700 positions lost in April.

According to a report by NBC Boston, April's original estimate of 15.1 percent was the highest in the state since 1976. However, that number was revised up to 16.2 percent. 

According to the report, thirty-eight states saw lower unemployment rates in May than in April. Only three states reported higher unemployment rates than Massachusetts in May. Rhode Island and California are tied with Mass. with 16.3 percent unemployment. 

As we reported last week, the national unemployment rate dropped from 14.7 percent in April to 13.3 percent in May. According to federal data, Job gains last month were led by the construction industry as well as, hospitality and leisure, and health and education.

Boston & Worcester Near Top of List of U.S. Cities with Fastest Rebounds 

And now for some good news. According to analysis from Bloomberg, Worcester and Boston are on course for strong economic rebounds along with Washington D.C., Seattle, and San Francisco. 

Massachusetts’ two largest cities made the top 10 list with San Jose and San Francisco in the number one and number two spots. Boston ranked third and Worcester eighth — higher than New York City, Miami, and Denver.

Bloomberg attributed the good news to the state’s “foundation of education and a strong health care center,” with about 40 colleges and universities and more than 20 hospitals, “along with many of the world’s leading biotech companies.”

Norfolk County Reports Real Estate Market Remains Viable

Norfolk County Register of Deeds William P. O’Donnell says the county’s real estate market remains viable during the crisis. Other counties in Eastern Mass. are likely in similar condition.

From March 10 through June 12, the Norfolk County Registry of Deeds recorded a 13 percent increase in land documents year-over-year. Residential and commercial sales increased 12 percent to $819,725. 

Although real estate sales dropped by 15 percent, mortgages increased 69 percent. 

“The decrease in the number of real estate sales is not surprising considering the ongoing pandemic and its economic impact. Also, real estate brokers and agents have been unable to hold open houses. The spike in mortgage activity is explained by consumers taking advantage of low interest rates to refinance existing mortgages. Based on the words of Federal Reserve Chairman Jerome Powell, interest rates will not be rising anytime soon.”

Only 29 foreclosure deeds were recorded from March 10 through June 12. 

Read more at Wicked Local

STAG Announces Groundbreaking on Four New Solar Rooftop Systems

STAG Industrial, Inc. has broken ground on four new solar rooftop projects in Massachusetts. Black Bear Energy is facilitating the project and Nautilus Solar Energy, LLC is developing the systems as part of the Solar Massachusetts Renewable Program (SMART).

The four systems in Mass. and one in New Jersey are expected to produce over 10 million kWh of electricity annually — enough to power nearly 1,000 homes.

Nationwide solar projects by STAG now produce over 10 MW of solar. As of March 31, 2020, STAG’s portfolio consisted of 456 buildings in 38 states.

Read all about it in the Boston Real Estate Times.

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