By Avis Gunther-Rosenberg

Too many buyers, not enough houses sometimes creates bidding wars Jean Kusiak could not have been more surprised by what happened when she listed a modest six-room log cabin in Rehoboth, Mass. Kusiak, a real estate agent at DeWolfe's East Providence office, got a call in January from Paul and Lena Cudworth of 9 Oak St. Could she do a market assessment of their home? Built in 1974, the multi-level house had 2,208 square feet of living area, including three bedrooms, dining room, kitchen on lower level and living room with fireplace and cathedral ceiling. It had only one bathroom, no basement, and -- because of renovations -- no carpeting over the subfloor. The house sat on 1.5 wooded acres on a quiet street in the northern part of town and had a horse barn and work shed. The Cudworths were shopping for a Realtor, and two other agents were also called to assess the property. All came within $5,000 of one another, estimating it would sell for approximately $179,000, Kusiak says. She was optimistic. "I told the sellers that in this market, we should try for $199,000," she says. She got the listing. "What happened was something none of us was ready for," Kusiak says exuberantly. "We received over 125 calls, had 30 showings and six offers, all within two weeks. We had so many calls, we decided to raise the price to $224,900 before the first showing. There was a bidding war between two of the offers. It closed on March 29, selling above the asking price at $226,000." It's a cute house, Kusiak says, darling actually. But $226,000? You can almost hear her shaking her head over the phone. "What's the phenomenon here?" she says. "Rehoboth has no public sewer systems or public water. It doesn't even have trash pickup. What it does offer is an oasis from the hustle and bustle of life. It's quiet, country living, yet it's relatively close to Providence, Boston, even Taunton, Attleboro and Fall River, and the school system is the best in the area. Rehoboth is really a hot market." Even "overpriced," the house was a bargain, Kusiak says. "Right now there are only about 30 houses for sale in Rehoboth, ranging from around $200,000 to over $500,000. The average price of houses is close to $300,000. Even the price of land is ridiculous. I don't deserve to drive on the roads out here." "It's crazy" While bidding wars aren't the rule, low inventory and high demand are inflating real estate prices across the board. "It's crazy," says Jay Readyhough, broker/owner of Bay Realty, Narragansett. "It's a wonderful market and a terrible market all at once. Things are moving very quickly, and at a higher price than last year, a more frenetic pace than we've seen in ages and ages. But inventory is at historic lows." Michael Saccoccio, broker/owner of Century 21 Alliance Group, is seeing the same thing in Cranston, where the market is busy, inventory is lower than normal, and prices are rising. North Kingstown is short on inventory, too, says Dana Phillips, RE/MAX Post Road Realty, with the higher-end market picking up from a dip last fall. "My specialty is new construction, and most of my listings start at $400,000," Saccoccio says. "When the Enron story broke, activity got quiet on my high-end product. Then Enron faded to page three, and activity in the high end has built up dramatically. We hit a funny little lull. These people are involved in those markets. The news controls the consumer confidence. They start looking at their 401ks, and their portfolios, and wondering what's going to happen now." National trend Nationally, the Office of Federal Housing Enterprise Oversight reports that the average sale price of houses continued to grow more rapidly than inflation in the last quarter of last year, and broke all records in January 2002 -- up 10.2 percent from the previous year. Sales continued strong in February, remaining at the second highest level since record-keeping began in 1968. (Figures for March won't be available until the end of this month.) "The supply of homes on the market is historically low, with multiple buyers competing for the same house in many areas across the country," NAR's chief economist David Lereah says. "We expect the balance between buyers and sellers to improve as the year progresses, so we're forecasting the median price to generally increase 5.1 percent this year." Rhode Island statistics agree. "Thus far this year, the statistics have been record-breaking, better than any since we've been keeping statistics," Rhode Island Association of Realtors president Sharon Steele says. "Real estate has not only kept the economy afloat, it is continuing to do that as the economy recovers. We have the lowest number of single-family houses since we've been keeping statistics. It was in the 1900s in January, but we continue to eat into the inventory. "It was a marvelous winter," she says. "Little precipitation helps account for strong numbers, with people out there continuing to buy." Now that spring is here, inventory should increase, Steele says. "People wait for the greening out -- the grass to come back, the trees to leaf out -- so that things will look fresh and wonderful. People are holding back putting their house on the market until things look prettier, but those serious about selling and trading up know the times couldn't be better to take their appreciation and use it toward their next house. "We're looking forward to a fabulous spring. We're certainly on track for another record-breaking set of statistics."

Published 4/14/2002