Springfield is one of the oldest and most innovative cities in the country. Since the city was founded in 1636, it has grown to acquire a reputation as a center of innovation and industry. It was the first city to be home to an armory in the colonial era, and it once hosted the first American-made automobile. The city was even the birthplace of Dr. Seuss and the famous Springfield rifle. Today, Springfield has become one of the best places to live in Massachusetts, and it presents significant opportunities for investors looking to earn a return on investment.
Residential Real Estate
In recent years, Springfield has become an increasingly popular choice for Massachusetts residents searching for a place to live. It has the advantage of being situated close to both Boston and New York City. Boston is strategically located just 1.5 hours from the city, and New York City is just 2.5 hours away. Therefore, people who live in the city can commute to world-class metropolitan areas to meet with business associates and go shopping.
However, residents of Springfield do not have to travel far to find everything that they need. The city hosts dozens of shopping malls that sell nearly anything that residents could require. It also has plenty of historic sites, hotels, and other attractions that residents can enjoy during their leisure time.
Most importantly, there are also plenty of employment opportunities in Springfield. There is a downtown area that hosts many large office buildings that hire knowledge workers. Many of these jobs allow staff members to work remotely, so you can work from your nearby home instead of commuting to the city. Nevertheless, traveling to Springfield takes less than 10 minutes in most cases. There is also almost no rush hour traffic, so you can freely travel to and from work whenever you want.
Since Springfield is part of an ideal community, there is robust demand for real estate in the area. The city has been relatively large since the early days of the industrial revolution. Consequently, it has plenty of historic housing opportunities, but there are also newer options for homeowners who desire the latest styles.
Residential Property Facts
Unlike in Boston and NYC, home prices in Springfield are relatively affordable. The median home price in the city is $158,800. The cheapest homes can be purchased in the city for $20,000 or less. However, there are also homes available for over $1.5 million. The bottom line is that you can find a home that is the perfect match for you and your family regardless of your budget.
In the city of Springfield, the vast majority of residents own their homes. Only 12 percent of homes in the city are rented out. The remaining homes are primarily owner-occupied units, but there are also a few vacation rentals in the city. 71 percent of homes are single-family residences. There are also plenty of multi-family options available that can be purchased outright or rented from a building owner.
The most expensive areas of Springfield are East Forest Park and Sixteen Acres. These areas have some historic mansions and larger homes. However, most people who desire larger homes prefer to live in subdivisions situated just outside the city or on large plots of land that they purchase in exurban areas. There are also penthouses and larger condos that are available in downtown areas and in suburban high-rises.
Mid-range homes in Springfield are in high demand because the city has plenty of jobs available. The city was historically a center for industrial jobs, but it has also recently become a technology hub. Consequently, mid-range homes in the city have been maintained well over the years. Many of these homes sell for around $200,000. However, high-quality starter homes can be found for as little as $80,000 in the city.
Most residents of Springfield live inside the city on roads that have been around for hundreds of years. However, there are also some subdivisions near the city limits that can be a good place to buy. Many of these subdivisions have vacant land, so you can also have the opportunity to build your dream home in Springfield. There are also many inexpensive homes that you can tear down in the inner city if you prefer to build. Of course, finding the right plot of land can be challenging, so you will still need to put significant effort into your search if you plan to build your new home.
Springfield is one of the best cities in the country for finding affordable entry-level homes that are safe and affordable. Entry-level homes are widely available for less than $100,000. Some residents find homes for $20,000 or less. Many of these less expensive homes come with the full range of amenities necessary for living a rewarding life.
Some entry-level homes require improvements before you can move in. However, the city is happy to work with people who are serious about restoring a property. People who restore a home can often qualify for incentives and tax credits at both the federal and state levels.
Neighborhood Safety in Springfield
When buying a home, it is always crucial to consider the safety of the area you are moving to. Springfield has always been a family-friendly community. There are areas with less expensive homes, but none of these areas are slums or dangerous parts of town. You can safely walk down the streets at all hours of the day. Also, the Springfield Police Department is highly effective at fighting crime, and the city tends to attract people with good character. As a result, Springfield is a great city to live, work, and raise a family.
Jobs in Springfield
It is also crucial to consider the employment market in a city before investing in a home. After all, the availability of jobs ultimately drives demand for residential properties.
The good news is that there are plenty of employment options available in Springfield, and the number of available jobs is growing. Job growth averages just 1.6 percent per year in the U.S. as a whole, but job growth averages 3.6 percent per year in Springfield. Many of the available jobs are in emerging industries that are projected to grow rapidly in the years ahead, such as pharmaceuticals and digital technology. Therefore, the city's housing market is supported by a high probability of demand fundamentals driving up prices in the near future.
Types of Homes in Springfield
As mentioned earlier, the vast majority of homes in Springfield are traditional homes from the 1800s and early 1900s. However, the city is unique in how it has been able to preserve its historic properties. Most U.S. cities have allowed their traditional homes to become dilapidated over the years, but Springfield has succeeded at preserving the original character of its historic neighborhoods.
A major part of keeping historic neighborhoods looking good is using building codes to restrict what types of new properties can be built on certain streets. As a result, new homes in the city are often required to imitate traditional styles while still being built from new materials. New homes tend to have shutters, siding, and built-in garages. Older homes usually do not have a garage because their construction predates the availability of automobiles. However, the interiors of these older properties have ordinarily been completely remodeled, so you will still get to enjoy updated decorative styles and all modern amenities if you choose to buy one of these homes.
Multi-family properties are an excellent investment in Springfield because of growing demand for housing in the area. Many people who move to the city prefer to rent so that they can enjoy more flexibility and preserve their capital. You can help to fill the demand for rental properties when you invest in a multi-family property.
Springfield offers an extensive range of opportunities for property investors because there are many historic properties available in the city. Historic properties are ideal for investors because these properties often need to be redesigned.
Instead of redesigning a property as another single-family residence, you can divide the home into several units. You can then attract several tenants for that property. In many cases, renting out smaller units can lead to higher yields. Also, having multiple tenants in a property can increase the consistency of your rental income.
The best part about investing in Springfield's multi-family properties is that many developers in the area are able to qualify for lucrative tax credits. The Housing Development Incentive Program in Massachusetts can reward developers annually with up to $10 million in state tax credits for rehabilitating historic properties. Developers are often able to obtain enough HDIP credits to cover as much as 40 percent of their total costs.
HDIP credits can also be combined with other incentives and tax credits from the federal and state governments. Many multi-family property investors in the city have been able to qualify for Community Development Block Grants. Although nonprofits are generally more attractive recipients of CDBG funding, private companies are often able to obtain this funding when they carefully choose the right neighborhoods and follow an appropriate legal strategy. In many projects, CDBG funding can cover as much as 25 percent of your costs.
Finally, federal Historic Tax Credits can also subsidize your development project. HTC credits can be claimed for up to 20 percent of a project's costs. Investors who rehabilitate a property in Springfield, therefore, are often able to qualify for HDIP, HCT, and CDBG credits. The city is also often willing to work with qualified developers to help them acquire abandoned properties at minimal cost. When all of these incentives are combined together in the right way, investors are often able to turn a small down payment on a new construction loan into a multimillion-dollar asset that yields steady returns.
Since Springfield has an unusually high amount of historic properties, the city also offers unique opportunities for investors looking to launch a new multi-family development project. Most residents in the city prefer the style of the city's older homes, but many younger people would prefer to live in modern high-rise condominiums. Property investors who act quickly to fill the demand for new condominiums could earn a very high return on investment.
Dozens of vacant plots of land are available in the downtown area of Springfield, and the city owns most of this land. In the city, there is strong demand for high-rise condominiums but very little supply. Developers who put together a strong proposal for a new condominium project could earn a high return on investment. Land prices are very inexpensive in the city, so developers have to put down almost no money before seeking out investors for their new project. As a result, Springfield offers enormous opportunities for a diverse range of multi-family investors.
Commercial Real Estate
Similar opportunities exist in the commercial real estate markets because of Springfield's unique history and geographic location. As modern technology continues to disrupt how people live and work, the city is likely to grow rapidly. Today's workers are fleeing New York City and Boston in search of less expensive housing. Many people in these cities are accustomed to paying over $1 million for a relatively small home. As a result, they perceive Springfield as an opportunity to save money while enjoying a better property. Springfield also offers a quiet contrast to hectic life in dense urban areas.
It is important to understand that the entrepreneurs who decide where their businesses will be located ultimately create value by helping their stakeholders. When employees can easily afford housing and are happy about where they live, they will be more motivated to work hard and stay at their company. The cost of commercial real estate is also dramatically lower in smaller cities. Consequently, businesses are increasingly looking to open major offices in cities like Springfield.
The new business environment that digitalization enables will make Springfield more attractive than major cities for corporations of all sizes. As a result, investors who work to develop commercial properties that are suitable for the new business environment will be able to earn a high return on investment.
As a commercial real estate investor in Springfield, you can make money by either investing in existing properties or by launching a new construction project. In the downtown area, there are many office buildings that you could purchase as investments. Some of these facilities may need to be remodeled before you can take on new tenants, but there are also facilities that would enable you to get started immediately. The key is to do enough research to find a building that matches what your tenants need. When you give you tenants what they want, you can command higher rates for your units.
There are also big opportunities in malls, retail spaces, gas stations, and other forms of commercial real estate. The city is home to 11 malls and dozens of shopping centers. You can rent out space in these malls to start almost any type of retail business. Some of these malls appeal to specific segments of consumers, so you can find venues that precisely match your business needs. There are also shopping centers with adequate space for larger retail locations, such as hardware stores, clothing stores, or cosmetics retailers.
Interstate 90 and Interstate 91 both pass directly through Springfield. Many of these travelers are going to or from Boston or New York City. Studies have shown that many of these travelers stop in Springfield to eat and refuel their vehicles. Therefore, there are a lot of commercial real estate opportunities that seek to take advantage of this traffic. You can find plenty of venues to start gas stations, convenience stores, restaurants, and other businesses near highway exits. You could also consider developing your own project to take full advantage of this opportunity in a new way.
In the downtown area, there are usually about a dozen low-rise office buildings for sale at any given time. These buildings have conventionally be held by local companies, but you can purchase these buildings to rent them out to outside companies looking to expand. Many corporations that are relocating from dense urban areas would thoroughly consider moving to one of these office buildings in Springfield if they could lease their space on the right terms.
You could also consider starting a new construction project. If you envision implementing a plan that will be beneficial to the city's goals, you could potentially acquire land from the city at no cost. However, there are also many large semi-developed plots of land in the downtown area that are available for less than $200,000. This land could be ideal for starting the type of high-rise office center that urban businesses are accustomed to using.
There are also office space opportunities on the outskirts of the city. Many large companies have built corporate campuses outside the city to take advantage of the large amount of space that is available. Some of these companies end up needing less space than they originally planned for, so you can often buy commercial buildings from these companies at lucrative prices. You could also consider building your own corporate campus since many companies that are relocating to Springfield would rather rent a reliable facility instantly.
Although e-commerce has grown in recent years, there are still enormous opportunities in retail. Some retailers have declared bankruptcy, and their facilities have been unable to find a new tenant. If you can build a business that is capable of utilizing this space, you could potentially earn a very high return on investment due to a low cost structure.
There are also opportunities to resell distressed retail space. Some vacant retail spaces would be economically viable if the right business was aware of the space being available.
However, most of the retail space in Springfield is doing better than in other parts of the country. Low traffic and excellent roads make shoppers happy to take a short ride to their favorite retail location instead of going online. Therefore, retail businesses are doing very well in the city, and there are plenty of opportunities to build sustainable businesses.
The population of Springfield is projected to grow rapidly as people leave big cities for quieter areas, and demand for retail space will grow proportionally. Additionally, incomes in the city are rising, and people will buy more when they have extra discretionary funds. Real estate entrepreneurs who take advantage of the growing retail opportunities in the city could acquire prime space that will offer a high return on investment for decades to come.
Making the Right Investment Decisions
To avoid making a mistake, it is crucial for investors to make informed decisions. You should start by thoroughly researching the real estate market in Springfield before making a purchase. Many people who move to the city start by renting a property for a year. If you have a strong understanding of the city before buying, you can be more certain about your decision.
It is also generally advisable to work with a buyer's agent when purchasing a property. Agents who specialize in helping people find properties in Springfield can usually match you with a property that precisely fits your needs. Additionally, agents usually have a strong network of contacts that can be used to find the right property.
Working with an agent can also help you to find a property at the right price. Some opportunities can look great to an outsider, but a skilled agent may be able to point out why a property is available at a lower price. Therefore, you can avoid making a mistake that could take years to recover from.
The bottom line, however, is that Springfield offers some of the best property deals in the country. Residential prices are currently low, but demand is growing rapidly. Price appreciation in the residential markets will trail expansion in the corporate office sector that will ultimately drive the availability of employment. When people are employed, they will want to go shopping at retail establishments across the city. Springfield, therefore, presents a broad range of opportunities that can help investors to grow their wealth while residing in an ideal environment.