What is bringing Boston investors into secondary markets north of the city? Value-add opportunities in the Merrimack Valley are attracting investors who have been priced out of the Boston area. Situated along the northeastern Massachusetts and southern New Hampshire borders, this region is experiencing economic growth and improving demographics in submarkets including Lowell, Lawrence and Haverhill.
Bridgeport, Conn. represents one of the best multifamily investment opportunities in the state.
Low supply and high demand continue to define Boston’s multifamily housing market. With a finite amount of available land, adaptive reuse is becoming an increasingly popular way to bring new multifamily inventory to market at a time where the appetite for apartment housing – be it workforce level or luxury – seems nearly insatiable.
Multifamily units in close proximity to mass transit, jobs and lifestyle amenities remain at peak demand. Data shows that these walkable communities are attracting not just young professionals and the millennial generation, but also empty nesters who are selling their large suburban homes and migrating to cities. RENTCafe’s analysis of Census Data found that senior renters are actually the fastest growing renter segment in the U.S. and that the number of renters over age 55 has increased by 28 percent. Meanwhile, the National Association of Realtors found that 62 percent of millennials prefer living in walkable communities.
Throughout 2018, Rhode Island’s single family home market was characterized by demand outpacing supply. In May 2018, the Rhode Island Association of Realtors reported the state’s median single family home price reached $275,000, a 10% increase over the previous May. And, late 2018 reports showed home values were still rising, particularly on the East Side of Providence. With residents left to explore other housing options – and with a continued statewide focus on economic development and business expansions on the horizon – 2019 looks to be another strong year for multifamily investment real estate in Rhode Island.
Between the launch of the Hartford Line and welcoming new businesses to downtown, 2018 has been a strong year for the Hartford submarket. Appealing to both young professionals and empty nesters who crave walkable communities with easy access to public transit, highways and retail, Hartford has become an increasingly popular area to live, thanks in part to a wide array of cultural amenities and a citywide focus on improved walkability.
Did you know that 22 million people in the U.S. live in manufactured homes? Manufactured housing ranks among the country’s largest sources of unsubsidized affordable housing. Boasting lower costs per unit, less tenant turnover and decreased competition among investors, manufactured housing can offer investors viable investment opportunities. As multifamily investors seek avenues for diversifying their portfolios, manufactured housing (otherwise referred to as trailer parks) is one often overlooked opportunity for achieving this objective.
Connecticut, Massachusetts, New York and Rhode Island are all home to Qualified Opportunity Zones (QOZ) where investors can benefit from tax incentives on qualifying investments. QOZs, which are designated by a state’s governor for a 10-year term and determined based upon low-income census tracts, are often home to land prime for development and existing assets prime for adaptive reuse.
Boston’s newly passed city ordinance, which prohibits property owners from hosting short-term rentals in homes they don’t live in and aims to make data on short-term rental properties more widely accessible, is one of many efforts across the northeast to regulate the short-term rental industry. As the short-term rental industry has grown – Airbnb alone now boasts more than 5 million listings – the number of affordable multifamily housing units available has dwindled. Consequently, as supply has diminished, the ability to secure units in already competitive metro markets has become increasingly difficult.
Gentrification is breathing new life into neighborhoods across Greater Boston. A recent report by Governing Magazine shows that since 2000, more than 20 percent of the Census tracts in Boston that were eligible for gentrification have done so, resulting in a 50 percent increase in home prices in some neighborhoods. Most recently, East Boston, South Boston and Dorchester have begun to reap the benefits of gentrification, spawning new development which is, in turn, driving up asking rents. As these neighborhoods come into their own, offering improved access to transportation and jobs, investors can benefit from buying undervalued Class-B and Class-C assets and making capital improvements that will lay the foundation for increased occupancy, sustained rent growth and higher returns.