Springfield is a city in Western New England that, in many ways, mirrors most other cities across the country. The Springfield real estate market was hit hard by the recession, but over the past five years has pulled itself up and turned the corner. Growth in the Springfield real estate market has been slow going, but gains have been made. It is not without concerns regarding unemployment, job growth and foreclosures. However, the city is trending in the right direction. How well the market can turn around meek unemployment figures will go a long way in determining just how quickly the market can recover.
The current median home price in the Springfield housing market is $183,900. This represents a 2.7 percent gain in appreciation from the same time last year. While the gains are welcome, they sit well below a national average of 6.7 percent. National home values are now $203,867. Over the last 36 months, the Springfield real estate market has seen gains of 12.3 percent, which – while still good – is well below the national average of 28.8 percent. The Springfield housing market was hit hard by the mortgage collapse, and lost an average of $18,000 in equity just seven years ago. It had much farther to recover than most national markets. While price gains will not jump off the page, it appears that the market has hit a bottom and is continuing its ascent upwards.
Springfield real estate investing and homeowners gained an average of $7,507 in equity over the last twelve months. This is the first reduction in equity gained over the last five years. This could be due to increased inventory and a rough winter that pulled the number down. The following highlights how much equity has been gained relative to the year of purchase:
- Homes purchased in the Springfield housing market one year ago have appreciated by an average of $7,507; whereas the national average was $15,753 over the same period.
- Homes purchased in the Springfield housing market three years ago have appreciated by an average of $28.504; whereas the national average was $53,565 over the same period.
- Homes purchased in the Springfield housing market five years ago have appreciated by an average of $15,252; whereas the national average was $47,444 over the same period.
- Homes purchased in the Springfield housing market seven years ago have appreciated by an average of $5,053; whereas the national average was $17,200 over the same period.
- Homes purchased in the Springfield housing market nine years ago have appreciated by an average of $8,530; whereas the national average depreciated by as much as $100 over the same period.
Price appreciation has been slow going, but positive gains are a sign that future growth should be expected. This is a great sign for the Springfield real estate investing community.
The local unemployment rate in Springfield is 6 percent, which is higher than the national average of 5.5 percent. Springfield unemployment is down from 7.4 percent this time last year, but is still well over the national average. Unemployment is also affecting local job growth. Springfield’s job growth rate of 1.4 percent is lower than the national average of 2.1 percent. Statewide, the Massachusetts economy is headed in the right direction, but progression has not reached Springfield. Local employment and job growth are directly impacting demand which is impacting home sales.
All the news for the Springfield market is not negative, however. For as much as foreclosures hurt the market back in 2008, Springfield has stayed ahead of the curve. Springfield real estate is well below the national foreclosure rate in each of the past seven years. They also show historically strong figures in terms of affordability. The Springfield monthly mortgage payment to income ratio sits at 8.6 percent for the last quarter. This is far below the national average of 14.3 percent. This level of affordability is important when homebuyers consider where they want to live. The more affordable a market is, the more likely buyers will find it appealing. This is also great news for the Springfield real estate investing community.
There are currently 645 properties in the Springfield real estate market currently in some stage of foreclosure. This represents a 10 percent increase int he last year. The median sales price of a non-distressed home was $118,000. The median sales price of a foreclosure home was $98,526, or 17 percent lower than non-distressed home sales. Springfield real estate investors should find these spreads very attractive.
The number of sold properties in the Springfield market has been on the decline in each of the past five years. In the second quarter of 2010, there were roughly 300 transactions compared to just under 50 last quarter. This reduction of inventory explains the slow growth of equity and median sales price numbers. On the bright side, the current average list price is up 9 percent from last month, so things may be changing. The Springfield real estate market was hit hard by a rough weather and could have needed longer than expected to get the traditional spring sales push.
For all the concerns regarding unemployment and job growth, the Springfield housing market has a lot going for it. They appear to have reigned in foreclosures and remain an affordable place to live. With the rough winter behind them, Springfield may be poised to take off for the remainder of 2015 and beyond.
Springfield Housing Market Summary:
- Current Median Home Price: $183,900
- 1-Year Appreciation Rate: 2.7%
- Unemployment Rate: 6%
- 1-Year Job Growth Rate: 1.4%
- Population: 153,703
- Median Household Income: $52,397