By Mike Colias

Virtually every housing market in Rhode Island posted huge increases in the value of single-family homes sold this past spring, according to statistics released last week, except for one conspicuous omission: the East Side in Providence.

The value of median single-family home sales statewide jumped to $184,000 during the second quarter (April through June), a 19.5 percent increase compared with the same period in 2001. A number of cities and towns saw double-digit growth in the value of home sales: Providence (excluding the East Side) jumped more than 26 percent, from $95,000 to $120,000; North Providence grew nearly 29 percent to $164,900; and Pawtucket home values were up more than 20 percent, to $145,000. Median home prices in South County, Newport County and northern Rhode Island posted similar gains.

But on the East Side, median home prices grew less than 9 percent, to $389,000. And the average number of days that East Side homes sat on the market also grew, from 40 days a year earlier to 62 days this year.

Could it be that the explosive growth in home values on the red-hot East Side, long the anchor of Greater Providence's residential real estate market, has finally reached a plateau?

"I don't think so," said Sharon Steele, president of the Rhode Island Association of Realtors. "The East Side was on the leading edge of the increases, whereas a lot of these other areas are really playing catch-up."

Steele said many of the communities that have seen robust growth in home values this year, such as East Providence and North Providence, had been undervalued in past years. She said she expects the entire state to post similarly strong gains in the third and fourth quarter this year, before cooling off to more like 8 to 10 percent growth next year.

"I can't imagine we're going to sustain this kind of appreciation in 2003," Steele said.

Homes on the East Side, meanwhile, began recording spectacular appreciation during the late 1990s, and continued to benefit over the past two years from the "spillover" effect of buyers from Boston and Connecticut looking for relative bargains, Realtors have said. Because of its relatively scant supply, homes listed on the East Side have been snatched up in short order, often fetching prices higher than initial listings.

In 1999, 2000 and 2001, single-family home prices on the East Side posted gains of 31 percent, 19 percent and 22 percent, respectively, according to the association. Meanwhile, home prices in North Providence, for example, gained just 5 percent in 2000.

But the East Side's appreciation growth appears to have ebbed so far this year. In the first quarter, the median home price on the East Side fell 22 percent when compared with the same period from 2001. But Steele attributed that to an aberration in the numbers, with a small handful of homes selling at unusually low prices. Still, that was followed by modest 8.9 percent growth for the second quarter.

Libby Isaacson, manager of the Residential Properties Ltd. office on Wickenden Street, who sells homes primarily on the East Side, said she hasn't seen a noticeable slowdown in the market. But she said she isn't surprised that many outlying cities, such as North Providence and Cranston, have vaulted ahead in terms of percentage appreciation.

"Prices have gone up so rapidly on the East Side over the last four years, I think it has pushed a lot of people outward, so prices are going higher in those places too," Isaacson said.

While she said there still is fierce competition among buyers for homes at the "lower end" of the East Side housing market, $400,000 or less, Isaacson said the market for higher-priced homes has definitely cooled.

"($600,000) and over is dead," she said.

That slowdown in the sale of expensive homes likely helped push higher the average period of time it took to sell a home on the East Side. Steele said that more expensive homes always take longer to sell.

"There are more higher-priced homes on the East Side now than I've seen in my 22 years in the business, and I'm talking north of $1 million," Steele said. "The higher the price point, the longer the market time."

As of last week, 12 homes on the East Side were listed for at least $1 million, according to the statewide Multiple Listing Service.

Elsewhere in the state, most South County communities saw huge increases in home values. In North Kingstown, 109 single-family homes were sold from April to June, with a median price of nearly $340,000 - a 54 percent increase over the median of homes sold in the same period during 2001.

In South Kingstown, 113 homes sold with a median value of $254,000, which was 36 percent higher than first quarter 2001. The median cost in Westerly was $160,000, 31 percent higher than a year earlier.

Multifamily and condominiums also saw big jumps in appreciation during the second quarter. A total of 354 condos were sold statewide, at a median price of $147,9000 - nearly 25 percent more than a year earlier. The median price of multifamily homes was $142,500, up nearly 19 percent from 2001.

Steele attributed the state's booming residential real estate market to record-low mortgage rates, a surge in out-of-state buyers and more baby boomers buying second homes.

Published 8/5/2002