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December 19, 2016 2017 Economic Forecast

What you need to know in real estate for 2017

PHOTO/NATHAN FISKE The apartments at the 145 Front Street at City Square development will add a layer of luxury -- such as a view of Union Station from its sundeck -- to the city's affordable and market-rate housing stock.

Worcester officials and area developers have been working hard to build up development, and now the city is reaping the benefits.

Whether it is in the form of increasing property values or other developers seeing the value and moving into the area, the city is starting to see the benefit of the tens of millions of dollars that have been and are being invested in CitySquare. While 2016 was the year of development, 2017 promises to be a year of payoff.

However, this could be somewhat muted by national and statewide trends that indicate a slowing down of the recovering housing market.

Worcester: a growing value

The city's real estate is at a pivotal point. It is still extremely affordable, and yet quickly accruing value.

You don't have to take my word for it, Worcester's total property value this year experienced its largest jump in a decade, climbing by $1 billion, a 9.16-percent increase.

This has paid off for the city with Fitch Ratings upgrading Worcester's municipal bond rating to AA, up from AA-. This marks the city's highest-ever rating and the pay off for years of redevelopment work.

Heightened competition

All this growth is good news for Worcester, and much of the region, means that investors need to start looking over their shoulders.

Boston investors, struggling in an environment of staggeringly high real estate costs are looking west. While this is great for sellers, these investors will invariably lead to a more competitive market.

Cooling residential market

The last few years have been a perfect storm for those looking to make real estate investments.

Low interest rates have meant as close to free money as you will ever see, while an improved market has meant that people who have been holding assets until they could get a solid price for them were more willing to sell.

However, with an impending interest rate hike and slowing sales, the cool off is seemingly on for the residential market, with the more robust commercial market likely to weather the changes better.

Read WBJ's Economic Forecast for other key Central Massachusetts industries

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