The Toughest Product to sell on the East Side of Providence RI

Foreclosures and short sales notwithstanding, the hardest product to sell these days in 02906 is the Multi-family.

Here is why:

In 2004, condo developers bought up existing inventory of multi-family properties and then converted them to condos.  It was a good strategy and a product ripe for the moment.  At the time, the median price of a single family home on the East Side of Providence was $475,000. Condominiums offered a way for a first time home buyer to afford a home on the East Side, with a median price of $275,000.  This new product emerged as an answer to the unaffordablilty of the East Side and a lifestyle consideration. Prices of Multi-families soared as developers saw the condo as sensible opportunity. 

At their peak, Multfamily properties sold for $148 a square foot.  Now they are down to $121 a square foot.  Most telling however, is the number of multifamilies for sold which was 162 at its peak in 2004 and is now down to 52 for 2007 and 30 sold ytd in 2008.  Days on market in 2004 was 43 compared to 117 in 2008.

If a multifamily is non-owner occupied, the tax rate jumps substantially.  New fire code regulations also require that owners install hardwired systems (expensive) on 3 family properties and above. Lead safe certificates are also required if the multi-family is a rental property. 

What this means is that multi-families don't make sense anymore for the condo converter (too much supply in the condo market) or the landlord (no cash flow).  They are betwixt and between.
The quick rule of thumb for cash flow is 100 times the monthly income.  So if a property has income of 3000 per month on a gross basis, the selling price should be $300,000. Hard to do here on the East Side of Providence. 

That in a nutshell is why Multifamily Properties take on the number one slot for "toughest housing products to sell right now".

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