East Side of Providence – Single Family 2013
The year 2013 will be remembered as relatively stabile for single family homes on the East Side of Providence. The number of sales, days on the market, and sales prices per square foot have remained within the same range over the last few years. The once-pervasive fear has dissipated. It was also the year for the elimination of the homestead exemption and the creation of two tax rates, however East Side residents are still unhappy about their property taxes. Interest rates remain low, benefiting both buyers and sellers alike.
Number of Sales
There were 173 sales of single family homes in 2013, a 9% decrease from the previous year. Despite the drop, this is far better than the low of 133 sales in 2009, indicating a continuing slow upward-stabilization trend. Sellers are doing far better than they were in 2008-2011 when it was truly a buyer’s market.
Median Sales Price
The median home sales price was $439,500, down -2.14% vs. $449,100 in 2012. To put this in perspective, the high median sales price was $510,000 in 2005. We are 15% off the peak. Relatively speaking, the East Side has performed better than the rest of the state in terms of holding values. Some areas of RI are down 30% or more. We seem to be returning to a more normal, balanced market.
Average Days on Market
Even though there were more buyers in the 2012 market, homes in 2013 actually sold 17 days faster—an average of 84 days. This 80+ days on market has been the norm since the market turned in 2008. Prior to the turn, the seller’s market frenzy between 2000-2005 saw fewer days on the market (45-60). Still, well priced homes in good condition moved very quickly, sometimes resulting in bidding wars. This was especially evident in the spring, when interest rates were at historical lows in the 3.5% range on a 30 year fixed.
Median Sales Price per Square Foot
The median price per square foot for a single family home on the East Side of Providence, RI was $207. The median price per square foot has leveled off from the peak of $234 in 2005. The price has remained stable over the last several years.
Sales by Price Range
The bulk of single family home sales on the East Side of Providence are in the $350K-$599K range, representing 43% of all transactions. For this segment, the average square footage of a home is 2388, with a price per square foot of $209 and an average of 75 days on the market.
For comparison, the upper end of the market ($900K+) had 12 sales, representing 7% of home buyers. The highest sale price on the East Side was $2,550,000 for 40-50 Channing Ave. The lower end of the market (up to $350K) had 47 home sales, representing 27% of home buyers. The lowest sale price was $106,700 for 10 Knowles in Mt. Hope. The upper mid-range ($600K-$899K) had 40 sales, representing 23% of home buyers.
Interest rates reached a historic low in late 2012 and early 2013. This drove bidding wars in early spring and by summer, interest rates had increased by a full percentage point. For every percentage point increase in interest rates, a buyer loses 10% of their purchasing power. Sales slowed in the summer and fall with the government shut down adding instability to the market.
Taxes on the East Side of Providence have not been friendly. Despite the lower re-evaluation, the tax rates have increased and are, effectively, the highest they have ever been. Last year marked the first year of the eliminated homestead exemption (a 50% reduced tax rate) for owner-occupancy. It also marked the establishment of two separate rates: one for owner-occupied and non-owner-occupied. Taxes continue to put downward pressure on home sales on the East Side.
What to expect for 2014?
Certain segments of the market will continue to be in the sweet spot. If you own a home in the $350,000 to $599,000 range in very good and updated condition, you can expect your home to attract many buyers and have fewer days on the market. The key in this equation is getting your home into the absolute best condition possible. An updated, move-in ready house that is priced well in a good location will contribute to a successful sale with many buyers. More interested buyers mean a better selling price for you. Prioritize staging and quality photographs. Of the buyers in this segment, 90% start their search online, so have the house photo-ready from the day it hits the market. Anything you can do to differentiate your listing online is essential.
Interest rates are higher than last year, but still in the low 4%s for the most well-qualified buyers. Our inventory on the East Side of Providence at this writing is extremely low. This may put upward pressure on prices, especially in those segments of the market that move quickly, like the $350,000 to $599,000 range. If you are thinking of buying this year, the best strategy is to familiarize yourself with the market and get pre-qualified so that you know an opportunity when it comes along and can be ready to make an offer.
If you are a buyer at the uppermost range of the market, this could be the time to buy and get a good deal for the long run. There are fewer buyers in this category, a trend unlikely to change in 2014, indicating an opportunity to negotiate a good deal.