The city's overall housing vacancy rate jumped by more than 50 percent during the past decade, rising to 8.1 percent in 2010 compared to 5.2 percent in 2000, according to a housing market study done for the city.The study, prepared by RKG Consultants, also found that the city still exceeds the statewide mandate requiring that at least 10 percent of its housing supply be comprised of “affordable” units.
Of Worcester's nearly 75,000 housing units, 9,486 are so-called “income-based housing,” which accounts for 12.8 percent of the housing supply. Based on projected needs, the consultant has suggested that the city should consider maintaining a supply of 9,000 to 9,600 income-based housing units over the next five years. Between 2000 and 2010, the number of vacant housing units in the city increased by 2,340 units, to a total of about 6,000 units, according to the study. The dramatic jump in the vacancy rate was fueled in part by a growing number of bank-foreclosed properties that have yet to be made available for sale or rent.
Also, there are indications that a large number of units, especially those in older multifamily homes, are being kept off the market by owners to avoid factors such as strong tenancy laws, the decline of desirable renters, capital costs to bring units up to code, or general disinterest in being landlords. In addition, housing production in the city since 2000 averaged nearly 430 units per year, but household growth was unable to keep pace with that — it was sufficient to occupy only 40 percent of the housing that was created, with the remaining 60 percent representing “excess market supply.”
“Future housing production is likely to slow down over the near term in order for household growth to catch up, which is similar to what occurred during the 1980s,” the report said. “Alternatively, vacant units can be reduced through strategic demolition and consolidation.” The last time the city's vacancy rate came close to 8 percent was back in the1980s — an overproduction of housing that occurred back then led to a 7.9 percent vacancy rate by decade's end, according to the report.
Worcester's housing vacancy rate is also nearly double what it is in the region (4.4 percent) and more than double what is typically considered a “balanced” vacancy rate in the 3 percent to 4 percent range. The vacancy rate in the city ranged from 5 percent to as high as 16 percent, with the highest rates occurring in urban neighborhoods such as Green Island, Main South, the downtown and the East Side. Lower vacancy rates existed in the West Side, the Greendale/Burncoat area, Green Hill and Beaver Brook areas, all of which had rates of 6 percent or less.
The study pointed out that older, physically and economically distressed housing units had the highest vacancy rate, a factor it considers important to Worcester's future housing needs since 52 percent of its housing stock was built before 1940 and 78 percent was built before 1980. “The concentration of (higher) vacancy in the urban core indicates a relative lack of demand for this area which may be a reflection of housing quality,” the report said.
City Manager Michael V. O'Brien said the study makes it clear that physically and economically distressed properties, including vacant buildings, bank- or tax-title properties, are eroding the quality of some neighborhoods. He said the city finds itself at a critical crossroads in which it must strengthen and adapt its housing resources at a time when the economy is at a near standstill. “These great neighborhoods have been in a delicate balance of stability for some time and many have held their own, in large measure due to those who are and work hard to do so,” Mr. O'Brien said. “The challenge is far too great now, with far too much to lose. Great work has been done and hundreds of millions of dollars have been poured into many of these distressed neighborhoods and still ground is being lost every day.
“Our revitalization efforts must be undertaken in a much bolder, strategic way through unprecedented public-private partnerships — in a block-by-bock, street-by-street and house-by-house manner,” he said. “We must use this opportunity to revisit our existing policies and funding priorities.”
In conjunction with the housing study report, the city manager has come out with a strategy intended to ensure that Worcester remains an attractive place for people to live. His strategy focuses on the need to eliminate blighted housing units, renovating vacant or underutilized properties in poor quality into high-quality residential properties, incorporating private and public housing development initiatives into a broader economic development plan, and promoting home ownership opportunities. “The work ahead will be complex and will be most challenging,” Mr. O'Brien said.
Other key findings in the study were:
•It is estimated that about $120 million in capital investment is needed to upgrade the condition of the 5,676 housing units that are considered to be in “below average” condition, or worse. The three-decker housing stock is in most need of capital investment, as 16 percent are considered to be in below average condition. Those houses in poor or very poor condition should be considered for demolition or replacement, given the city's excess supply of available housing.
•The city remains predominately a rental market, with homeownership increasing only marginally between 2000 and 2010 — 44.5 percent of the homes are owner-occupied.
•Over the last four years, petitions to foreclose averaged about 520 single-family homes and 150 condominiums per year. That represented 2.1 percent and 3percent of the single-family and condominium supply, respectively. In comparison, the number of petitions to foreclose in the region represented about 1percentof the respective housing supply there.
•It is estimated that about 33,600 households would qualify for income-based housing in Worcester which represents 49 percent of all households in the city.
