Home sales up across much of state, but peak still ways off

New Home: Justin Hammerle and his girlfriend, Miranda Dapont, recently purchased their first home, in East Providence. The couple looked for several months and experienced many instances of being beaten to a house because it was snapped up too quickly. In certain communities of Rhode Island, multiple offers are becoming frequent.
New Home: Justin Hammerle and his girlfriend, Miranda Dapont, recently purchased their first home, in East Providence. The couple looked for several months and experienced many instances of being beaten to a house because it was snapped up too quickly. In certain communities of Rhode Island, multiple offers are becoming frequent.

The almost-new ranch is bigger than it appears in photos. It has new appliances, granite counters, a kitchen that opens to the living room and a fenced-in backyard with a mature tree.

The three-bedroom house at 161 Nelson St., in the Elmhurst neighborhood of Providence, served Ryan Machado well. Even when he moved his young family to the suburbs of North Kingstown three years ago, he held onto their first house.

This year, when his longtime tenant moved to another state and vacated the house, the Machados decided to list the property, hoping to join what has become a seller’s market in many neighborhoods of Providence, and across much of Rhode Island.

“I feel optimistic in the fact that the neighborhood typically has older houses that need work. This has central air conditioning, a fireplace, a finished basement,” he said, rattling off improvements that he hopes, like all sellers, will attract a buyer.

- Advertisement -

“It’s just a much nicer house in that neighborhood,” he said.

Elmhurst, near Providence College, is one of the city’s neighborhoods that has firmly rebounded from the recession. Houses that are well-maintained and appropriately priced in the neighborhood routinely fetch multiple offers, according to real estate agents.

Across Rhode Island, increased sales activity has buoyed values, pushing the state median for a single-family house up to the mid-$200,000s. While sale prices haven’t returned to the peaks seen in 2005 and 2006, they have strengthened considerably. In urban and rural areas, which were hard hit by foreclosures in the recession, prices have come back by 30 percent or more since 2012, when Rhode Island real estate hit its low point.

In 2012, the median price for a single-family house fell to its lowest point in a decade, at $190,000. The peak in Rhode Island came in 2005, when the median price of a single-family home reached $282,900.

The most recent median prices, according to the third-quarter 2016 results released by the Rhode Island Association of Realtors, pushed values in the Ocean State up to $245,000. Though much of the equity lost in the recession has been recovered, most real estate professionals do not expect values here to reach the pre-recession peaks. The increases are incremental, not rising dramatically.

“Many people think the values are back to where they were, and that’s just not the case,” said Sean Harrington, a Providence-based broker with RE/MAX Integra.

Homeowners who kept out of the market waiting for prices to rebound have started to step back in. But Rhode Island still has a shortage of listings, he said. A small inventory of bigger, move-up properties might be holding some sellers back, Harrington said.

“It’s a Catch 22. They look around and see that there isn’t a lot of inventory … to move into. So, they think, let’s look at an addition to the house, instead of moving,” Harrington said. “Those houses that they want to move up to, there haven’t been many of those built in the last 10 years. The single-level, bigger houses, two-car garages.”

Butch Simoneau, a Realtor who owns Providence-based Nest Realty, said he suspects many homeowners who bought near or at peak prices, or who later refinanced, still lack equity and are holding and waiting.

“A lot of them are close, if not underwater, and they need the prices to go higher,” he said.

THEY’RE BACK

Where have prices rebounded the most? The big winners locally are the rural communities and cities.

Providence single-family values sank in the years following the end of the recession. In the state’s capital, it took three years for foreclosures and short sales to reach their maximum impact.

In 2012, the median price of a single-family home in the city was $92,000, according to the Realtors association data. By the third quarter this year, the median had reached $154,500. The Providence median excludes the East Side, a high-wealth area that includes Brown University.

The 67.9 percent increase in the median price over four years reflects how low the values went, more than the current sales data, according to agents.

Many who are focused on the Providence single-family neighborhoods think the median still undervalues the city properties. “It’s very low,” said Harrington.

In other big returns, several smaller cities have had increases in median values of 30 percent or more. They include East Providence, Newport, North Providence, Johnston, Woonsocket, Pawtucket and Warwick. The smaller communities of Lincoln, Burrillville, Scituate, Hopkinton, West Warwick, Coventry, West Greenwich and Tiverton also had similar rebounds.

Cities were beset by large numbers of foreclosures and short-sales, which had the effect of depressing surrounding values. In addition to Providence, Woonsocket and Pawtucket were among the hardest-hit cities. Their values fell into the $120,000s by 2012, and have since recovered.

Woonsocket, with a current median value of $166,250, has regained 34 percent of its value since the depths. Pawtucket has a higher value, at $181,750, which is a recovery of 45 percent.

In small towns, such as Hopkinton, a fewer number of transactions amplified the effect of any foreclosures.

West Greenwich, a rural community that has many new homes built over the past decade, saw its values drop to $226,250 in 2012. The median in West Greenwich is now more than $320,000, a 41.7 percent increase in four years.

Hopkinton, another smaller community in South County, had its values drop below $200,000 in the years following the recession. The median in the town has rebounded to $250,000 as of the third quarter 2016, an increase of 35 percent.

In close-in suburbs, such as Warwick and Cranston, prices also have come back, with individual neighborhoods leading the way.

WHERE ARE THE DEALS?

Where are the smart buys? Realtors say several neighborhoods within larger cities are seeing an uptick in buyer interest.

Given the lower inventories, this means motivated buyers must have their ducks in a row to get the house. This includes prequalification for a mortgage. Often, as a strategy, the list price will be depressed to encourage more bids.

It is now common in several communities to see multiple bids on the most desirable houses. The ones that show well are well-maintained and in established, secure neighborhoods.

Justin Hammerle, 27, recently purchased his first home, in East Providence. He and his girlfriend, Miranda Dapont, spent almost six months trying to find the right house, then racing to be the ones there first. Hammerle, a full-time student and a military veteran, started the process himself, 18 months ago, before meeting Dapont.

His lack of a job was a hurdle. But this year, with his savings, and her job as a nurse, they combined forces and were approved for a home loan up to $300,000. That turned out to be just the start.

On several occasions, Hammerle said they found a house they liked, only to be told within hours of an emailed alert that it had already been placed under contract. It got to a point where if they heard about a new listing that looked good, one of them would try to drive by.

In the Riverside neighborhood of East Providence, luck finally struck. Their house has three bedrooms, a walk-out, lower level and a quiet neighborhood. What they didn’t like about it can be fixed easily, he said.

What he didn’t realize a year ago, Hammerle said, was how much competition existed for homes in good condition.

“Everything that was good quality was going very quickly, in two to three days,” he said.

That scenario is playing out in smaller towns, as well as close-in suburbs.

One of the Rhode Island communities that swung up most dramatically over the past four years is Tiverton. The 2016 third-quarter median for the community was $245,000, a 35 percent increase over four years.

At its low point, the community had a median well-below $200,000.

Connor Dowd, a Realtor with Keller Williams, said the community has a mix of housing options in single-family homes, including vacation homes on the water, family homes in nice, suburban neighborhoods and older, modest Capes and ranches.

One of the reasons why the value has rebounded is because some of these homes fell into foreclosure or distressed sales in the recession. “Tiverton got hit pretty hard during the recession,” Dowd said. “They have more modest homes there. It’s more of a blue-collar community. A lot of them got hit with the economy.”

Now, significant value can be found in Tiverton. People who want a nice four-bedroom, newer colonial can find it for $350,000 to $425,000. “If you’re in Portsmouth, that’s another $50,000 to $100,000 more,” Dowd said.

In the suburban cities of Cranston and Warwick, popular neighborhoods for homebuyers include Gaspee, in Warwick, and Garden City, in Cranston, according to agents.

Gaspee is located east of T.F. Green Airport, on Narragansett Bay. “It has that New England, beach feel to it,” said Harrington. “There are good values there. Across Warwick, there are good values. You can raise a family in a nice house, have a nice yard, and still be very close to the city.”

In Cranston, the established residential area of Garden City has become popular, he said, in part because of its easy access to shopping and the highways. “It’s an older, established neighborhood. A lot of people like it because of its proximity to Garden City shopping. There’s a lot of one-level living.”

In Providence, some of the bargain areas include Elmhurst, the North End and Mt. Pleasant.

“I’ve seen a lot more activity,” said Simoneau, who established his real estate business almost 25 years ago, while working as a Providence firefighter. After retiring from the fire department, he made it through the recession by selling and buying homes for a network of firefighters, police officers and their relatives.

“Right now, it’s a seller’s market because there’s no inventory,” he said. “We typically try to carry at least six months of inventory. As of not too long ago, the numbers I was privy to, we had … a little higher than three months.”

Simoneau has been working with younger millennials, including those in their 20s, as well as younger professionals who are choosing homes in Elmhurst and Mt. Pleasant. Both have predominantly single-family homes, tree-lined streets and more value for the dollar than more-expensive areas of Providence, such as the East Side neighborhoods, he said.

While not to the extent of the Boston suburbs, and not as widespread, competition for some homes is resulting in multiple offers that drive up the sale price. On Smith Street in Elmhust, Simoneau said he recently sold a house for $315,000 that had been listed initially at $275,000.

“We’re getting into what we call bidding wars,” he said. Of his last five sales, he said, three had multiple offers.

“It basically came about in the last quarter or two,” he said. “Those who can afford to sell their homes are listing it at a reasonable amount, anticipating multiple offers, which will drive the price even higher.” •

No posts to display