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What to make of the local real estate market? It’s slower, but still busy, and holding ground, rea |
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Friday, 13 March 2009 |
BY ABBY FOX
The housing market is “a sad story,” REMAX owner David Iannuccilli said recently.
It’s sad, he pointed out, that looking at the overall picture in Rhode Island, out of the 364 houses sold in January, 174 were “distressed,” meaning in foreclosure or a short sale. And two of the three sales in East Greenwich were distressed. “That’s not very good,” he said.
The average sales price of a single family home in East Greenwich, in 2007, was $562,995, the last year local realtors consider good; a year later, it declined to $491,050.
196 single family homes sold in East Greenwich, in 2007. The next year, there was a 47-percent drop, to 133. Condos really fell, from 29 sold in 2007 to just six the following year. Meanwhile, multi- families are becoming desired, as just two were sold in 2007 and 17 in 2008.
For the real estate agent pounding the pavement, this means work harder, but also smarter, to keep going as sales are decreasing (from a total of 227 in 2007 to 156 in 2008.) Several local agents concurred that despite the gloomy news found in the numbers, day-to-day activity is far from dead – a hopeful sign that there’s nice work, if you can get it. “It’s very busy,” real estate agent Dotti Giamette of Cress & Co. said. “We probably work twice as hard for about half as much as we’ve had before.”
One way to get a sense of the activity is the average days-on-market, or DOM, Iannuccilli said. Single family home DOM was 95 in January 2008 and this year, it was 109, not that much longer, which he sees as “the good news,” the “ray of hope” that at least the market is moving. “The good news in all of this, is as bad as things may seem, it’s presenting opportunities to many people,” he said.
Opportunities such as? The $8,000 federal tax credit for first-time home buyers, in 2009. The new low interest rate of five percent, great for single and/or first-time home buyers. And programs like the Federal Housing Authority’s loan opportunity for younger homebuyers; “that’s huge,” Giamette said, though less important in a wealthier market like East Greenwich.
“The way we need to view things, is with every down slope, an opportunity is presented,” Iannuccilli said. “Young people have been boxed out and there is opportunity for young people today; prices are down and rates are good. Yes, you need a job and you need good credit; that’s the way things should be.”
Giamette agreed that “there are people out there; there’s money out there” and she’s more determined than ever to seize it, and to encourage younger people to carpe diem. “First-time buyers should be out looking now,” she said. “If they have a job and if they can afford it.”
About 135 homes in East Greenwich are on the market currently.
Swim with the current
Coldwell Banker led the local real estate pack with the data it provided. Pat Lenihan, a veteran realtor there, pointed out two important things buyers and sellers should investigate before they dive into the market. First, read up on the ratio between how many new listings there are in the particular town you’re interested in, versus how many pending sales there are. The closer that ratio is 1:1, the more you are in a market where the houses are moving and you can get in on the action. In East Greenwich, for example, the ratio has been pretty good, but not the best. It was 4:1 in February; 24 new listings came on, with six pending, and it was 2.5:1 in January. But in South Kingstown, by comparison, the ratio was an enviable 1.5:1 in February.
The other side of the bay has a far worse ratio – things are moving even slower – in places like Newport, for example, with a February ratio of 8:1.
The other crucial data to study, Lenihan said, are a town’s absorption rates: how many houses in a particular price bracket were sold in the past 12 months, versus what is the bracket’s current inventory – a great indicator of whether the price range you are thinking of is competitive or a stagnant one that will get you nowhere.
Here’s a good example. In East Greenwich, if you have a house priced in the upper $500,000s and not many people are taking the bait, take a look at the absorption rate for that price, and it’s clear that the number in the inventory far exceeds the numbers sold. When the inventory is not being replaced, it’s a sign that this is not the price that’s going to tempt people. But bump your price down into the lower 500,000 or even the upper 400,000 bracket, and you’ll see that the “months of available” inventory is shorter, a sign that the market is hot there. If it hurts to think about your house is not as valuable as it used to be, Lenihan says to buck up and deal with it, telling yourself, once you’ve done you’re homework, “This is the market I’m in and this is the market I need to be in.”
To sum up, Lenihan advises against setting an arbitrary price in the sand. “Go down, bring it to a number to drive more traffic,” she said, and then when several people start showing interest, you can negotiate a higher price.
Luckily for some in East Greenwich, plenty of houses are selling in, say, the $450,000 to $499,000 range – ten in the past year -- while the unlucky wealthier homeowners, stuck with a house in the $1 to $5 million range, have seen just four houses sell the in the past year, while 16 are in the current inventory, waiting to be snatched up.
As realtors cross their fingers for a decent spring, Lenihan said the winter wasn’t too bad – “we are selling” – and she’s heartened to see two or three new listings coming on per day. “The buying public is out there; there’s always somebody for something,” she said, while “It’s the perception of value that’s critical,” and luckily, East Greenwich still gives good value.
EG still strong
“East Greenwich is still the town people want to live in,” Iannuccilli agreed.
“I don’t see East Greenwich losing its brilliance and its reputation,” Lisa Avedisian of Real Estate One said. Yes, “I don’t see East Greenwich giving ground,” said owner Diane Foley.
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