Covering Boston, Worcester, Springfield

Daly Appraisal Newsletter - Vol 5

Appraisal Insights

Welcome to the fifth issue of Appraisal Insights! We've launched this newsletter to share customer stories and illustrate the power of real estate appraisals to provide valuable property and market insights.Recent appraisals that we’ve written or are working on include:

• A racquetball club in Worcester County converted to an office building.
• A refurbished Brimfield farmhouse on 77 acres used as a single family dwelling and working animal farm with horses, pigs, chickens, and goats.
• A six house subdivision in Worcester.
• A dilapidated retail strip in Dorchester that will be redeveloped for retail and apartments, or just apartments.
• An industrial complex in Boston's Hyde Park neighborhood.
• The old Jordan Marsh building in downtown Lowell.

The picture above is of the old Jordan Marsh department store in downtown Lowell. The property is known as the Bon Marche' (translated as “bargain price”) building because that was the name of the department store that occupied the property from 1887 until the Jordan Marsh company took it over in the 1970s. Jordan Marsh went out of business in the mid 1990s. The property was refashioned into office and retail space and now houses, among other tenants, the Lowell Public School administrative offices.

Featured Article

Greater Boston's Housing Crisis:A 21st Century Village ApproachPart IIBy Jim Daly

Two recent stories in the news show how the housing crisis affects the old and young. The first is about how cruel the effects of gentrification can be, the second about how landlord mismanagement continues to plague students seeking livable dormitories and off-campus housing.Story 1: A Princeton University study estimates that 43 tenants per day are evicted in Massachusetts. It's almost double what the rate was in 2005. Boston Globe Magazine profiled one tenant facing eviction. Jerome Stanley, 64, a Boston school bus driver, was evicted from his Roxbury apartment after living there for 27 years. New landlords were seeking to raise his rent by 70%. He couldn't afford it and became one of an estimated 20,000 people in the state who are homeless. "Close your eyes and imagine the joy you have with your work, look at your home and imagine the time you have with your children," he wrote the Globe, ". . . then tomorrow suddenly after 30 years it's gone." A link to the story detailing how he represented himself in housing court is below.The second story is about the calamities that befell students occupying the first-ever dorms at UMass Boston. The two new dorms, which opened in Fall 2018, have 1,077 beds. In the first weeks of school, elevators with students inside abruptly fell several floors. According to the Boston Globe, "water shot out of one toilet when you flushed another . . . the rooms are often stifling hot, but the showers are frigid . . . and the hamburgers in the dining hall are sometimes raw." A link to the story, in which the development company tries to explain what happened, is below.These two stories are linked because they illustrate the need for a coordinated approach to dramatically increase not just housing, but housing that fits the needs of the region's changing population.Suffolk County's population has increased by 9% since 2010. Boston's population of 675,000 is expected to increase to 725,000 by 2030. Mayor Marty Walsh has pledged to increase housing by 53,000 units during the interim. His initiatives have gained momentum, according to the Greater Boston Housing Report Card 2017 from Northeastern University.One sign of progress is that there were 12,900 permits issued for new structures in Greater Boston in 2017. Two-thirds of those were for multi-families. Also in Boston, the wait time for new building permits has decreased from 425 to 120 days.There are few other signs of progress. Home prices continue to soar. Rents, the fourth highest in the country, show some signs of the leveling off and decreased slightly (<3%) in 2017 after increasing 6.9% per year from 2009-2016. Inventory of both single family houses and apartments are at record lows.Barry Bluestone and James Huessy, the authors of the Greater Boston Housing Report Card 2017 study, are calling for a more coordinated approach. Their 21st Century Village concept calls for housing that fits the needs of Boston, which increasingly is becoming younger ~ students and Millennials ~ and an aging population ~ people like Jerome Stanley, many of whom live by themselves.Bluestone and Huessy think the units need to be built quickly but worry that cities and towns will fail to take a coordinated approach. I have seen little in the news that suggests that leaders, with the exception of Mayor Walsh, are endorsing the plan. The study's main points are that:

1. A consortium approach is needed from political and business leaders such as the governor, regional mayors, hospital CEOs, and local university presidents.
2. The authors propose villages comprised of multi-story buildings that range in height from five to 35 stories.
3. Each "village" could contain a range of units from "micro" apartments to studios and multi-bedroom units.
4. Each village would have a community space with lounges, laundry facilities, seminar rooms, study areas, gyms, and roof gardens.
5. Construction would incorporate modular design and panelized construction using new materials and high productivity building techniques.
6. Leaders should investigate the feasibility of opening a state-of-the-art manufacturing facility in Greater Boston, where modular units and panels could be fabricated.

Further reading suggestions:1) Greater Boston Housing Report Card 2017.2) “As rents soar in Boston, low income tenants try to stave off eviction," by Jenifer McKim and Alejandro Serrano. Globe Magazine, February 19, 2019. 3) “Falling elevators, raw hamburger, lax security at UMass Boston dorms," by Laura Krantz. Boston Globe, November 11, 2018. 

Daly Appraisal Newsletter - Vol 4

Appraisal Insights

Welcome to the fourth issue of Appraisal Insights! We've launched this newsletter to share customer stories and illustrate the power of real estate appraisals to provide valuable property and market insights.Recent appraisals that we’ve written or are working on include:

• A office building in Hopkinton on a parcel that could be converted to a parking lot

• A commercial building in Dorchester's Adams Village that once housed multiple retail and office tenants

• Vacant land in Burlington that belongs to a church and is slated to be redeveloped for single family use

• A former farm property in Uxbridge converted to retail, restaurant, and industrial use

The picture above is of William Callahan, the man responsible for the construction of the 123 mile Massachusetts Turnpike. Before the elevated roadway opened in May 1957, Boston was suffering from economic malaise due to deteriorating railroads and a decaying seaport in a state where it was difficult to transport goods and services. Many credit the toll road for reviving the region's economy so that Boston could become a world class city. Here Commissioner Callahan points to Worcester, the city that was bypassed by the turnpike to much consternation. Because he hired 33 contracting companies to work simultaneously, it took only two years for the roadway from Exit 1 in the Berkshires to Exit 14 at Route 128 to be built. It wasn't until February 1965 that the 12 mile Boston extension from Exit 14 to the downtown was completed.

Featured Article

The Housing Crisis:A 21st Century Village ApproachBy Jim Daly

In our dramatically appreciating housing market, we often fixate on the increases. It fascinates us that the median sale price of a 4BR home in Canton is $675,000 and the average monthly rent of an apartment in Greater Boston is $2,874. The numbers alone seem like signs of progress. After all, why shouldn’t someone who took care of a home for 25 years benefit handsomely and enrich their retirement? But as a whole, such numbers are signs of an unrelenting housing crisis.Those are the conclusions of the Greater Boston Housing Report Card 2017, a Northeastern University undertaking that Barry Bluestone, the founding dean of the School of Public Policy and Urban Affairs there, arrived at after careful study. (The other author of the study is James Huessy). The good news is that Greater Boston has reached nearly full employment, with 284,000 jobs added since 2009. About 350,000 jobs were added during that time period to the state as whole. But with housing costs increasing by 5% per year and family income going up by only 1%, the percentage of income spent on housing has become astronomically high. The report estimates that the average annual rent in Greater Boston is now $35,000 and the average household income is $62,000.The report explains that the housing being obtained for such high rent wasn’t built to fit the needs of its tenants. Bluestone focuses on the triple decker, the miracle structure that saved Boston from the housing crisis of 1870 to 1920. With immigration, the population had tripled from 250,000 to 750,000. The three families were cheap to build and had the attraction of additional income. They allowed the working class to establish a foothold here.In Boston, Somerville, and Cambridge, 40% of the combined housing stock are triple deckers. What Bluestone calls Boston’s Inner Core (those three cities) has almost 74,000 students who live off campus, more than half of them graduate students. “Millennials are doubling, tripling, and quadrupling up triple deckers, outbidding working families for what was traditionally working family housing,” the report states. But for how long do people in the 25-34 age range want to live with multiple roommates? Prices have been driven up so high that there’s nowhere for them to go. Housing inventory is so low that the market sometimes seems to be standing still.Across the country, home ownership has decreased. According to the U.S. Census Bureau, in 2000, 40.7% of those in the 25-34 age range owned homes. In 2015, that number decreased to 30%. In the 35-44 age category, home ownership in 2000 was 67.2%. In 2015, it decreased to 58%. Some of that decline is due to student loan debt and the fact that many couples are getting married later. But a lot is due to the housing crisis.Only new construction can help moderate housing costs and provide a better fit for the 725,000 who are expected to inhabit Boston in 2030. The city has about 675,000 inhabitants now. Bluestone and Huessey suggest a long-term collaboration between leaders in the political, banking, construction, medical, and academic fields. Their idea - 21st Century Villages that include micro apartments, common shared spaces, and ground floor retail – are detailed in a YouTube clip entitled Greater Boston Housing Report Card 2017. Stay tuned for Part II of this article in an upcoming issue, in which I'll focus on Mayor Walsh's ambitious housing plans for the city and how Bluestone and Huessey hope leaders in surrounding communities will emulate him.Further reading suggestions:1) Greater Boston Housing Report Card 2017.2) “How Did Renting in Boston Become Such a Nightmare?” by Thomas Stackpole. Boston Magazine, May 30, 2018. 3) “Anwar Faisal: Lord of the Sties." by David Bates. Boston Magazine, December 31, 2013. The Keystone Mill in Easthampton in Hampshire County houses INSA, one of the first stores in the state to sell recreational marijuana legally. This brick building was repurposed from an old factory and now has multiple tenants. Next door, a similar building, The Brickyard, houses a brewery tenant that recently expanded its bar and function room space. The upper stories of both buildings may one day include apartments.

Daly Appraisal Newsletter - Vol 2

Appraisal Insights

Welcome to the second issue of Appraisal Insights! We've launched this newsletter to share customer stories and illustrate the power of real estate appraisals to provide valuable property and market insights.Recent appraisals that we’ve written include:

• A repurposed old mill building in Easthampton that now houses a brewery and other tenants

• A vacant Friendly's in East Windsor, CT

• A half acre of land in Worcester that was once part of a condo complex

• An industrial parcel in Agawam improved with a single family

• A mixed use building in Holyoke

• A manufacturing building in Chicopee

This is the site of what could become the new Polar Park in Worcester's Kelley Square, where the PawSox plan to relocate and become the WooSox. The underdeveloped neighborhood is industrial in nature and part of the Canal District, even though there is no canal. The six acre ballpark would open for the 2021 season. It would serve as the centerpiece of what is planned to be an 18-acre, 650,000 square foot mixed use development. While nearby bar and restaurant owners are celebrating, a few surrounding property owners haven't come to terms with the developer yet. They anticipate if they don't come to terms, their properties will be taken by eminent domain. Downtown Worcester is across train tracks in the background.

Featured Article

Taking on the Taxman:The Perils of Filing for an AbatementBy Jim Daly

Experienced property owners tend to have an idea of what their property is worth. So when they receive an assessment that overinflates the assessed value of their property ~ thus substantially increasing property taxes ~ they know their only option is to file for an abatement. One commercial client of mine who recently filed for an abatement said she was “suing the town.” The phrase struck me as odd at first but was completely accurate. Filing for an abatement is a contentious act.A tax assessment is the job of determining a property’s value to calculate property tax. In Massachusetts, an annual tax on a property is equal to the assessment divided by $1,000, which is then multiplied by a set tax rate. A townhouse I once owned in Boston is currently assessed at $685,000. The 2018 residential tax rate for the city is $10.48. The annual taxes are calculated by dividing $685,000 by $1,000 ($685), then multiplying by $10.48, which equals $7,178.80. In some communities ~ Boston is one ~ homeowners can file for a residential exemption, granted if the owner lives at the property. This can result in a substantial tax reduction.An abatement is a reduction of or exemption from taxes granted by a government for a specified period. If an assessor grants an abatement, the department decreases the assessed amount by a certain number, which then lowers the property tax. Abatements typically are only good for a 12 month period.The due date for filing for an abatement in Massachusetts is February 1, the day that 3rd quarter taxes are due. Cities and towns are strict about the due date requirement. Also, quarterly taxes must have been paid regularly for an abatement filing to proceed.The wisest property owners file for an abatement only if the assessment is glaringly inaccurate. It takes time and money to file. Magistrates who hold court proceedings will only consider an appraisal report, or sometimes just an appraiser’s live testimony, as evidence to dispute the assessment. So a property owner must first decide if appraisal fees paid out are less than the amount that the taxes would be reduced if an abatement is granted.Sometimes the appraisal fees are less. I recently appraised a commercial property in which the assessment was $1.5 to $2 million more than what the property was worth. The situation will likely result in an abatement.An abatement, once granted, is good for only a year. Sometimes the best thing a property owner can do is establish a working relationship with the head assessor. That way, the assessed value can be negotiated instead of being decided by a magistrate. One homeowner I know lacks such a relationship. He fights with the assessor every year over the value of his property. He thinks he’s being overtaxed. But is it worth the fight?

Over the summer, I appraised the Myrtle Baptist Church in West Newton. Martin Luther King, Jr. used to preach there. When King was assassinated in April 1968, church elders held a series of services to honor his memory and help the community heal.

Daly Appraisal Newsletter - Vol 1

Appraisal InsightsWelcome to the first issue of Appraisal Insights! We've launched this newsletter to share customer stories and illustrate the power of real estate appraisals to provide valuable property and market insights.Recent appraisals that we’ve written include:

• A 30 unit apartment building in Somerville, MA
• A shopping plaza in East Windsor, CT
• A large church in Newton, MA
• An old wharf building overlooking Boston Harbor with street level commercial and apartments above
• A 42 acre potential subdivision parcel in Hanover, MA

Many Massachusetts residents are wondering how a new casino will affect property values. On August 24th, MGM Springfield Casino opened its doors with a parade down Main Street. The $960 million casino has already changed the face of the downtown. Its buildings include a hotel, restaurants, sports bar, and movie theater. Here is a photo of one building. The building to the left is Red Rose Pizzeria, the iconic restaurant that has long served downtown Springfield.Featured ArticleThe Vacant Colonialby Jim DalyFeatured ArticleThe Vacant ColonialThe inspection of the bank-owned house was going well until I almost took a swim in the basement. I had already measured the rectangular Colonial style home and made a sketch. I took all my pictures. Now to the basement. I bounded down and stopped at the last step. A foot of water stretched across the finished basement. It was completely flooded.As most appraisers and realtors know, it doesn’t take long for a recently vacated home to go downhill. Cabinet doors come off their hinges. Utility companies disconnect their services. Boilers shut down. Sideways rain finds its way through old roofs. The weather fluctuates from autumnal warmth to extreme cold. Pipes freeze. Disintegration begins.Appraising an REO, or Real Estate Owned, property is challenging because you’re looking at a neglected property. You have to gauge how far the neglect has gone. Is there mold? Does the heating system work? Has copper piping been stolen? Have critters invaded the attic? In one home, I was warned by a fleeing tenant not to turn on the whole house fan so mouse droppings wouldn’t be scattered through the vents into the bedrooms.REO means a property is owned or controlled by the bank that holds the mortgage on it. Banks usually hire a realtor or management company to secure the home, empty its contents, and get it ready to sell. The most likely buyers are investors who plan to fix up the home and flip it for a profit. The appraiser’s job is to estimate the market value so that the bank doesn’t give away any equity or value a property might have acquired.According to World Property Journal, an online publication, there were 676,535 U.S. foreclosure filings in 2017, which represents 0.51 percent of all housing units. This represents less than a quarter of the foreclosures that occurred in 2010, when the country was in the throes of the economic downtown known as the Great Recession.In most Massachusetts markets, there is an overall scarcity in housing inventory, which means that once a home is foreclosed upon and restored, it can be sold as a functioning property within months. The problem is that wheels of foreclosure turn slowly. Right now in the U.S., it takes a bank an average of 1,027 days to foreclose on a property from start to finish. This is a 28 percent increase from a year ago. The worst offenders in Q4 2017: Indiana (2,370 days); Nevada (1,933 days); Florida (1,493 days); New Jersey (1,298 days); and Georgia (1,263 days). Few improvements are made to properties about to be foreclosed upon. Three to seven years is a long time for a property to sit idle.The Colonial with the flooded basement is less than 20 years old. It's in subdivision in a town next to Springfield. It has four bedrooms, 2½ baths, and 3,000 square feet of gross living area. There wasn’t much wrong that a good cleaning, new carpeting, and a fresh coat of paint wouldn’t fix. The problem was trying to figure out the impact of the flood on value. So, in a Sales Comparison analysis, I used three recent sales – homes similar in age but requiring significant repair – to approximate a local investor’s mindset. Based on the opinion of value in my report, the bank now has the property listed for sale at auction. The minimum bid is for $231,000 – $185,000 less than the property foreclosed for back in April. Stay tuned for a follow up to this property in a future issue.