Sales of two- and three-family properties are up significantly across Massachusetts amid eviction moratoriums that some landlords say have driven them to get out of the business, or pull back their holdings.

In Massachusetts about $280 million in rental assistance has been distributed to tenants and landlords out of $968 million. A bill gaining traction on Beacon Hill would address the aid program’s chief bottlenecks, but also includes a provision creating a new foreclosure and eviction ban that would last until June 14, 2022.

Real estate sales of small multifamily properties, like the kind that dominate urban neighborhoods in Massachusetts, lends support to industry groups’ claims that many landlords are selling properties in response to the moratorium’s conditions, whether to exit the industry or cover losses sustained over the last 18 months.

Smaller landlords with fewer than four units, who often don’t have the financing of larger property owners, were hit especially hard by the pandemic, with as many as 58 percent nationwide having tenants behind on rent, according to the National Association of Realtors. More than half of back rent is owed to smaller landlords.

Data from The Warren Group, publisher of Banker & Tradesman, shows that sales of Massachusetts two- and three-family properties through July 31 of this year are higher than they’ve been at this point in any year since 2008.

Sales of three-family properties are up 10.78 percent statewide through July 31 over the average number of sales for the same period over the three years – 2017, 2018 and 2019 – preceding the COVID-19 pandemic. That figure, 1,535 closed sales, is also 8.17 percent greater than the number of three-family sales closed through July 31, 2017, previously the highest tally of any year since the Great Recession.

Two-family properties are seeing similar trends. The number of two-families sold statewide through July 31 of this year – 3,211 – is 18.78 percent higher than the three-year pre-COVID average through July 31. It’s also 15 percent higher than the previous record, set in 2018, of 3,315 properties sold through July 31 in any year between 2008 and 2021.

Demand for these properties appears to be up, as well. The year-to-date median sale price of a three-family home hit $500,000 on July 31, a 25 percent jump from the same figure in 2020. The average year-over-year increase in median sale price for three-families was 5 percent between 2017 to 2019. For two-families, the year-to-date median sale-price hit $490,000 on July 31, 18.36 percent above the same figure in 2020 and 25.64 percent above the 2019 figure. The average year-over-year increase in median sale price for two-family properties was 3 percent before the pandemic.

“The minute they enacted the moratorium, that trigged my decision to sell the properties,” Dorchester landlord Rick Martin told the Associated Press. “I did not want someone moving in whom I could never get rid of if they didn’t pay rent. That would make the financial situation worse.”

Before that the 62-year-old left most of them vacant due to the moratorium, depriving him of thousands of dollars in rent. Martin owns five buildings in the neighborhood, and is selling two.

Martin said he was torn about the decision to sell to investors. One has turned a building into condominiums. Another has already doubled the rent on a three-family building.

“Honestly it’s a very difficult decision,” he said. “I want the small property owners to flourish and grow. But because of this moratorium, we are having everything cut out from beneath us.”

The Associated Press contributed to this story.

Sales of Two- and Three-Families Jump as Eviction Freeze Pressures Landlords

by James Sanna time to read: 2 min
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