Multi-family homes hit hard by foreclosures
Foreclosure continues to cast its shadow on Massachusetts’ flagging real estate market, with multi-family homes being especially hard-hit.
In February, lenders filed 2,835 petitions to foreclose, a 27 percent increase over February 2007. The figures included 635 petitions for two- and three-family homes, according to The Warren Group, a South Boston-based real estate information company.
People who bought multi-family properties as investments appear to be feeling the pinch especially, CEO Timothy Warren Jr. said.
“Some of it certainly may be investors who may just be less committed,” Warren said. “If things go south, they cut their losses and move on.”
Quincy real estate firm Daniel J. Flynn & Co. oversees about 10 multi-family foreclosure auctions daily in the Boston, Providence and southern New Hampshire regions. Most of the troubled properties were investments by speculators who hoped rents would cover the cost of high-risk mortgages, CEO Daniel Flynn said.
“They were hoping the income from the properties would continue to appreciate,” Flynn said. “When it stops or you have a vacancy, you’re losing 25 to 30 percent of your income. It only takes a couple of months before you’re behind the eight ball.”
Foreclosure petitions have exceeded the 2,500 mark for seven straight months. Petitions to foreclose are the first step in the process, and many homeowners renegotiate loans or sell their properties before the auction occurs.
Flynn said rental properties have suffered as tenants have found better deals for home ownership amid a decline in housing prices in the past two years.
“We haven’t even seen the worst of it yet,” he said.
Steve Adams may be reached at firstname.lastname@example.org.