August pours water on Rhody's red-hot market
By Avis Gunther-Rosenburg, Providence Journal Staff Writer

Despite a declining stock market, higher unemployment and lower consumer confidence, Rhode Island house sales soared in the first half of the year, followed by a record-breaking July.

And then came August.

"In August, we weren't experiencing the number of showings," says Rhode Island Association of Realtors president Estelle Smith, who is co-owner and broker at Benchmark Associates, Middletown. "The Rhode Island real estate market is changing. It has started to slow." But just how slow it'll be this fall, and whether this is a trend or just a normal end-of-summer rest period, Smith says it's too soon too predict. "It's not the kind of quiet where the phone never rings," she says. She and other agents are still busy. "It isn't the way it was 10 years ago when it came to a screeching halt, but we do notice there appears to be less buyers." For several years now, the real estate market has been red hot. High demand, fueled by low interest rates, caused inventory to drop and prices to rise, and many agents reported the return of '80s-era bidding wars. The typical real estate agent no longer carried the phone-book-thick listings book. Instead, they juggled cell phone, laptop computer plugged directly into the State-Wide Multiple Listing Service (MLS) and electronic organizers crammed full of phone numbers. Buyers wanted to be reached as soon as the right property went on the market, any time of the day, so they left a long list of numbers -- their home, their work, their cell phone, their car, their stylist, their 3 p.m. appointment . . .

On your mark, get set, sell

A prime property being listed on MLS was akin to a pistol shot at the beginning of a race. Cell phones rang all over the state as agents rushed their buyers in the door. For seller Ron Foster, that meant close to instantaneous sale. This summer, Foster sold a four-bedroom colonial on Signal Ridge Way, East Greenwich, in "three or four days," after a dozen people crowded through to look at the house. Foster accepted the first offer, which was at the full asking price, $425,000, a "significant capital gain" over his purchase price five years earlier. Foster, who builds fiber-optic equipment, is no stranger to moving. He has bought and sold 10 houses over the past 30 years and moved all over the country, but this sale stands out as one of the smoothest and quickest. "My sense was, the market was right, and it was priced to sell," Foster says. "I was optimistic, but still quite surprised it went so quickly." Melinda Lemos-Jackson, of Cumberland, had a similar experience. She sold her three-bedroom colonial at 27 Paine Rd. to move to a large house at 17 Ferncrest Drive. just 31/2 weeks after she put it on the market. The house was shown only three times, and the Massachusetts family who purchased it saw it twice. Initially, the house was listed at $249,000 but Lemos-Jackson had reduced the price to $239,000. The buyers, scared of losing the deal to another family, offered an additional $1,000 over the asking price. The $240,000 represented a significant appreciation from the $152,000 Lemos-Jackson had paid only five years before. Lemos-Jackson and her husband had put over $25,000 into the house in home repairs, from new tile and carpets to a home office, thinking they'd stay there forever, but three growing children made them rethink their plans. Meanwhile, Lemos-Jackson had to find another home for her family. Before they placed their home on the market, she had seen a couple of other properties they were interested in, but the sellers wouldn't wait for them to list their house. They were the second couple to look at the house they eventually purchased -- a four-bedroom colonial priced at $325,000 -- and they made a list-price offer that night. Still, because back-to-back closing times could not be arranged, they sold their house on Aug. 17 and rented from the new owners until they could close on Ferncrest Drive four days later. Lemos-Jackson's husband, a computer programmer, works north of Boston in Bedford, Mass. He telecommutes three days a week, and her children now have plenty of space to play and children their own age to play with. "When my son goes to play baseball with the kids down the street, it's worth all the money in the world," she says.

Record-breaking July

Foster and Lemos-Jackson's moves were part of the summer push that made July the month with the highest level of houses sold, the lowest number of listings on the market, and the highest gross-dollar volume for any July on record. Add those figures to those of January through June, where resales were the third-highest ever and new records were made for gross-dollar sales as well as average and median sales, and you have an impressive pattern. During the first half of the year, the median-priced single-family house broke all records. During April through June, for example, the median price for a single-family house was 13.7 percent higher than the same period last year -- $153,500 compared with $135,000. (In other words, half the houses sold for above $153,500 and half below.) This was accomplished despite the lowest supply of houses on the market in over 10 years, an average of 9-percent less inventory than last year. The MLS, a subsidiary of the Rhode Island Association of Realtors, reported that 4,220 single-family houses sold in the first half of the year, just shy of the 4,251 sold in the same period last year. The average selling price (where you add all of the sales figures and divide by the number of properties) was the highest ever at $198,069, up about $20,000 from last year's mid-year mark, when home-dollar-sales broke all records. Although the number of units sold is down slightly, the total gross dollar sales topped $835 million -- up from $757 million in the first half of last year. Median sales were up to a record $149,000, compared with the previous mid-year best of $132,000. Houses also sold faster than they have in at least 14 years, flying off the market in an average of 62 days. In contrast, houses stayed on the market for twice as long only five years ago. In June, the average single-family house stayed on the market only 46 days, an all-time low since MLS began tracking days on market in 1979. Records were also broken in multi-family and condominium sales. Multi-family house sales were the highest they'd been in 15 years, with 918 properties selling between January and June. The median sales price was $117,000, up 16 percent from last year. Condominium sales set a mid-year record with 608 sold, while the median sales prices jumped to $115,000, up nearly 20 percent from the same period last year.

Statewide phenomenon

These kinds of sales figures were happening all over the state. On the East Side of Providence the average sale price for a single family house in June 2000 was $331,000. One year later, it leapt to $429,000, says Sharon Steele, owner of the Sharon Steele Group and president-elect of the Rhode Island Association of Realtors. "That represents approximately a 30-percent increase," Steele says. "And that's on top of a 20-percent increase from the end of year 1999 to the end of year 2000, so the East Side had some phenomenal appreciation." Lincoln was one of the top 10 selling communities in the state, with a 211/2-percent increase in the median sales price from last year, and Woonsocket had a 26-percent increase, says Holly Applegate of Residential Properties and president of Northern Rhode Island Board of Realtors. "We had a wonderful second quarter," Applegate says. "We would have sold a lot more if there were more available. Some people are trying to decide what to do, and are reluctant to put their home on the market if they don't have a place to go."

A cool August

But last month, Applegate saw a change. "There was a correction in the market," she says. "It was a little bit slower." But that's not atypical for August, when people are trying to get ready for the new school year. "Interestingly, I'm seeing a lot of houses coming on the market now," Applegate says. "People are thinking we should do it now rather than wait. They don't want to wait too long, wondering what the future will bring. I still think it's going to be strong. Prices might level a bit, but stay steady." "Traditionally, August is slower," Smith agrees. "People go away for vacation, and with schools starting up, we always experience a slowdown. I don't know if that's what this slowdown is or whether it is truly the real estate market catching up with the economy. "All we know is that it's quieter. Is it so quiet that everyone is nervous? No. It was a more normal month. Next month will be a better indicator. We still don't have listings."

Published 09/16/2001

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