High-end housing sales seem to be picking up
The Providence Business News, September 14, 2009 by Chris Barrett, PBN Staff Writer
The summer forced a period of reflection on those looking to purchase million dollar-plus homes. As the stock market gyrated and credit tightened, CEO's, vice presidents and the like took a hard look at what extras they really needed. A swimming pool? A guest cottage? Many froze, bringing the state's high-end real estate market to a standstill for months. But slowly buyers are starting to return, real estate agents say.
"I think the market was so paralyzed between November 1 and May 1 that we got used to a new norm, which was nothing selling in the high end," Sally Lapides, owner of Residential Properties, said. "Then all of a sudden people started feeling a little more confident about their job or the economy or a change in the administration or all of them, and people decided to start spending money on housing."
The Rhode Island Association of Realtors (RIAR) reports that 45 homes above the $1 million mark have sold thus far in 2009. That's compared with 138 in 2008 and 190 in 2007. Agents say expensive homes are also staying on the market longer and selling for lower prices, but a recent uptick in sales has them smiling again.
"It's nice to report to people that I'm busy, " said Paul Leys, owner of Gustave White Sotheby's International Realty and president of RIAR. "It's been more than several months. I think the last year to 18 months has been a slow time, but at the beginning of summer I felt that someone turned the faucet on."
But the face of the buyers has changed. No longer CEO's moving to the state and paying the asking price without question, Leys said. Today, agents are seeing Ocean State residents moving within the state or Massachusetts residents seeking new primary houses in a lower-priced market. Buyers are also asking more questions and pushing to negotiate, but they are making offers at the end of the day.
Melanie Delman, owner of Lila Delman Real Estate, said the firm has sold 18 properties for more than $1 million since January. The market, she said, has become tempting for buyers as prices drop and sellers are more willing to negotiate "I think a lot of people are going to look back and say, 'Why didn't we buy this?'" she said.
In Middletown, Gustave White recently sold a 3.6 acre waterfront residential lot for $3.6 million. That was one of the highest prices per acre ever paid in the state. But it was not an easy sale. The property was originally part of an estate that was being offered for $10 million. Only after the lot was trimmed off the full listing did Gustave White receive a nibble, and eventually the sale.
Leys said the split lot made the price more palatable and opened up the property to a new group of buyers that could afford a few million dollars but not prices in the $10 million range. "It's a very price-sensitive market and something that's priced aggressively is probably going to sit out there," said Leys.
And perception is everything, said Delman. Constant news reports about the crashing housing market and dismal credit scares off potential buyers. The market will stay that way until newspapers, television stations and radio reporters change their tune, Delman said. "A more positive message has to be sent by the media before it can truly improve," she said. But the negativity isn't all bad. Delman said many buyers looking for lower prices have turned to Rhode Island in search of a bargain. Just recently, Delman's firm persuaded a client to purchase a home in the Ocean State instead of on Nantucket. He did, citing the lower cost.
"It's a little state but suddenly getting some recognition," Delman said.
Those that price low are getting extra recognition. Leys said owners that price their homes at 2006 market levels often see the properties languish on the market while those that are willing to reduce the asking price receive offers. Owners and real estate agents are kidding themselves if they think the market is going to boom again like it did in 2005 and 2006, Leys said.
"People have got to realize that that wasn't realistic," he said.
The Providence Business News, September 14, 2009
Chris Barrett, PBN Staff Writer
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