Year-End Annual Report For Condos on the East Side of Providence, R.I.
Condos in 2014 showed a slight decline vs. 2013 when the market was stronger. A healthy amount (98) sold, vs. the return of the condo market in 2013 which had more buyers (127). Of particular note is that nearly 75% of all East Side condos sell for $399,000 and under, indicating that the majority of our East Side market for condos are as a rental alternative or first time homebuyer purchase. One bright spot is that sprinkling of high end condos sold in the 77 Angell ($945,000) , 101 North Main ($850,000) and 2 Thomas Street locations ($720,000). To illustrate the unevenness in the condo market, the Friedrich St Florian-designed 2 Pratt Hill had one surprising low resale at $500,000. For perspective, these highly desirable units sold for $750,000 (off 33%) at the height of the market.There are HALF the amount of condo buyers that there were in 2005. However, condos are still selling and larger associations, like East Side Commons have had strong sales. We are on the road to recovery with condos, but they still have a way to go.
East Side Condos: Median Sales Price
The median sales price was $239,000, down 10% vs. $265,000 in 2013. To put this in perspective, the high median sales price was $275,000 in 2004. So, prices rose in 2013 but have remained uneven in 2014.
East Side Condos: Number of Sales
There were 98 sales of East Side condos, which was up nearly 60% over last year. The peak of the condo market was in 2005 when there were 205 buyers for condos. So, there are still 38% fewer buyers than the peak but we are far better off than in 2011 when there were only 64 buyers.
East Side Condos: Days on the Market
Even though there were fewer buyers in the market in 2014, condos sold a bit faster, averaging 96 days vs. 107 in 2013. 80+ days on market has been the norm since 2008 when the market turned. Prior to the turn, the seller’s ‘market frenzy days’ of 2000-2005 saw lower days on market (57-73).
East Side Condos: Price-Per-Square-Foot
The median price-per-square-foot for a condo on the East Side of Providence, RI was $212. The median price-per-square-foot has leveled off the peak of $255 in 2005. The price-per-square-foot has hovered between $203 – $228 over the last several years.
East Side Condos: Sales Prices
The bulk of condo sales on the East Side of Providence are in the $200K-$399K range, representing 50% of all transactions.
For comparison, the upper end of the market, $750K+, (the highest sales price on the East Side, 77 South Angell at $945,000) had 4% of condo buyers with 4 sales. The lowest end of the market, up to $199K, (the lowest sale price was great deal short sale in the heart of College Hill at $83,850) had 33% of home buyers.
East Side Condos: Interest Rates
Interest rates for 30-year-fixed reached their lowest point in history in March, 2013, then ticked up early in 2014 then despite predictions have fallen to 19 month lows. Contributing to this is the Fed’s concern over the lack of income growth in the economy. As of this writing, 30-year-fixed rates are 3.71%. Predictions for 2015 have rates moving up. Only time and the economy will tell for this wild card. For now, interest rates are extremely favorable, adding to buyer’s purchasing power.
East Side Condos: Property Taxes
Providence total taxes (including car tax) are the second highest in the state of Rhode Island and represent 13.2% of median income. Despite the lower re-evaluations, the tax rates have increased and effectively they are the highest they have ever been. 2013 marked the first year of the elimination of the homestead exemption (or 50% less tax rate) for owner-occupancy and the establishment of 2 separate rates: one for owner occupied and non owner occupied. Providence is the largest city in the smallest state and a hard place to be in with tax-exempt colleges and hospitals. We do not foresee a break in property taxes any time soon.
What to Expect for 2015?
We predict continuing, slow, sustained recovery for condos especially since interest rates remain extremely low. East Side condos will continue to grow as a rental alternative and as a first time homebuyer product. What we see putting downward pressure on this segment is the high end rental offerings such as Ken Dulgarian’s newly constructed “The Premier” apartment building with 26 units that rented at full occupancy before finishing construction. One has to think that down-sizers see this as a viable alternative to purchasing while they bid their time for market recovery. Also, Downcity Waterplace Park and certain condo offerings in the Jewelry District provide unique products (concierge, full service, or loft spaces) that rival East Side condo offerings. Larger associations with distinct and desired amenities like underground parking and elevators such as East Side Commons remain attractive to buyers.