Year-End Report on Single Family Homes on the East Side of Providence
When we look back at 2014 there are some key points to note —- the market continues to stabilize and improve with small gains in median sales price, shorter days on the market and slightly higher prices per square foot. Our bottom in this market was clearly in 2011 but we have seen stabilization and slow growth movement ever since. One wild card that helped the market was the falling interest rates (predicted to rise higher in 2014, but did not), which buoyed sales even into the late fall.
East Side Single Family Homes: Median Sales Price
The median sales price was $460,000, up nearly 5% vs. $439,500 in 2013. The good news is that this is the highest median price-per-square-foot since 2008, and is up 8% since the market low in 2011. To put this in perspective, the high Median Sales price was $510,000 in 2005, so we are 9% off the peak. Relatively, the East Side has performed better than the rest of the state in terms of holding values. The East Side is exhibiting stability and growth in the single family market.
East Side Single Family Homes: Number of Sales
There were 177 sales of single family homes, which is relatively stable at -2% vs. the prior year, and still far better than the low of 2009: 133 sales. This is indicative of a slow upward stabilization trend since the bottom of the East Side single family market in 2011.
East Side Single Family Homes: Days on the Market
Another bright spot: days on market are decreasing. At 76 days, 2014 showed the fastest movement in recent years.
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 (45-60). Like last year, well-priced homes in good condition moved very quickly, sometimes resulting in multiple offers.
East Side Single Family Homes: Price-Per-Square-Foot
The median price-per-square-foot for a single family home on the East Side of Providence RI, was $210. The median price-per-square-foot has leveled off the peak of $234 in 2005, however, it is showing upward trending since we bottomed out in 2011 when the price-per-square-foot was only $197.
East Side Single Family Homes: Sales Prices
The bulk of single family home sales on the East Side of Providence are in the $300K-$499K range, representing 37% of all transactions. Of note however is that the $500K-$749K segment picked up steam, growing 28%. This indicates solid trade-up volume.
For comparison, the upper end of the market: $1mm+, (the highest sales price on the East Side was a 3 bedroom contemporary at 51 Prospect Street for $1,964,000) had 7% of home buyer with 12 sales. The lowest end of the market, up to $299K, (the lowest sale price was 175 Pleasant Street in Mt. Hope for $104,600), had 16% of home buyers with 28 home sales. The upper mid-range, $500,000-$749,000, had 33% of home buyers with 59 sales.
East Side Single Family Homes: Interest Rates
Interest rates for 30-year-fixed reached their lowest point in history in March, 2013, then ticked up into 2014 despite predictions, and have paradoxically 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.
East Side Single Family Homes: 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.
2014 will be remembered as a year for solid improvement and continued stability for the East Side single family market. Median sales prices are up since the bottom of 2011, sales prices per-square-foot are up and days on market are shorter. There are fewer bargains at the low end as prices inch upward and foreclosures are few, and there is more movement in the trade-up market. Taxes on the East Side are still the top complaint we hear from homeowners.
What to Expect for 2015?
Take of advantage of the low interest rates that buyers have right now and consider listing your home in the winter instead of waiting until spring. At this writing, there is not one home listed between $500K-$649K, one of the biggest growth areas of last year. As in 2014, certain segments of the market will continue to be in the sweet spot. If you own a home in the $350K to $649K range in very good and updated condition, you can expect your home to attract many buyers and have shorter days on market. Key in this equation is getting your home to be in the absolute best condition possible. An updated, move-in ready house that’s priced well and in a good location will contribute to a successful sale with many interested buyers. Many interested buyers means a better selling price for you. Pay attention to staging and the quality of your photographs. Of the buyers in this segment, 90% will start their search online, so you need to have the house photo-ready from the day it hits the market. Anything you can do to differentiate your listing online is essential.
We encourage you to be in touch with us if you are thinking of selling your house, as is it is imperative to have a realtor with the skills, knowledge and experience to get your house properly and beautifully staged and photographed.
The surprise of 2014 was that interest rates did not rise as predicted but fell instead. The Fed has promised higher rates moving into 2015 so if you are to purchase, do it sooner rather than later in the year. We have noticed this year that more sellers are putting their houses on the market in winter rather than waiting until spring. Buying in winter may give you more purchasing power than waiting if interest rates tick upwards and more buyers enter the marketplace (more competition = higher selling prices).
We have returned to more normal times, with slow but steady appreciation. The trade-up market has seen continuing momentum. This segment could see increased buyer competition in 2015.
We still believe that the high end of the market holds some good bargains.
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 which is not likely to change in 2015, indicating an opportunity to negotiate a good deal.