C. C. Wall

State of the Market for Informed Homeowners and Investors East Side Providence

C. C. Wall — Wed, 03 Jun 2009 12:07:00 GMT

We were recently asked some questions by a reporter for Personal Real Estate Investor Magazine. Since I noticed I had not posted since February (yes, its been that long) perhaps this interview will make up for it! This will be a long post and in the interest of time, I am just going to post our answers as they were asked by the interviewer. The market has changed dramatically since my last post with this agent too busy to blog! Hope you enjoy.

Ok - in response to your questions, keeping your readership in mind:

What's the state of the market:

First of all, let me say that our (my husband, Christopher Wall are a real estate team) focus in Providence is primarily the East Side of Providence, which includes the area in and around Brown University. We deal in the rest of Providence and can speak to in general about those trends as well, but our focus is the area that is known as the "East Side". Therefore, our responses to your questions will be based primarily on that area.

As background, the East Side of Providence is the "blue-chip" area of the city. To understand the area, it is important to know a couple of things. First and foremost, this is a college "town", a city that is driven by several well known Universities. On the East Side, you have Brown University (Ivy League) and the Rhode Island School of Design (world-class art institution). In Downcity (as the locals call it - really, the downtown - city area) you have Johnson and Wales (Hospitality - Food Industry) and in the West part of the city of Providence, you have Providence College (Dominican - Liberal arts). More later on how that impacts the city in a negative way (high property taxes) and in a positive way (great for diversity, intellectual thought, and investment).

The other important thing to know is that the geography of the city and the mentality of the local Rhode Islanders ("oh, I have to drive to Cranston - about 10 minutes away - I better pack a lunch"!) keeps the micro-neighborhoods of the city very distinct. The West End of Providence has an entirely different feel from the East Side of Providence and one has to cross over I95 to get there as there is no street in Providence that leads directly from the East Side, going straight through Downtown to the West Side of Providence. The East Side also has a natural barrier by the way it sits next to the Seekonk river on its Eastern side and to the west, the canal that separates it from the Downtown. This physical barrier creates a scarcity of housing (people want to live on the East Side for all that it offers - great demand) and physical limits, i.e. "geography is destiny" or "location, location, location." This desirability keeps prices up. That is very, very different from the rest of Providence and something an investor should note.

So back to "what's the state of the market"?

For all of 2008, the median price of Single Family Homes on the East Side rose 3.8%. I'd say that is pretty good. Our real drop in this segment came in 2007. Condos and multi-families have not fared as well as noted below.

Please note that the data I am providing comes from the MLS system and does not include for sale by owners or other private transactions which may account for 5% of sales at most.

SINGLE FAMILY MEDIAN SALES PRICE - EAST SIDE OF PROVIDENCE

		2000	2001	2002	2003	2004	2005	2006	2007	2008
Median Sales Price	Median Sales Price ESID	$286,859	$352,500	$375,000	$389,000	$475,000	$510,000	$520,000	$468,075	$486,000
	% Change	15.2%	22.9%	6.4%	3.7%	22.1%	7.4%	2.0%	-10.0%	3.8%

CONDO MEDIAN SALES PRICES - EAST SIDE OF PROVIDENCE

		2000	2001	2002	2003	2004	2005	2006	2007	2008
Median Sales Price	Median Sales Price ESID	$130,000	$156,000	$211,750	$230,000	$275,000	$271,500	$266,750	$265,500	$259,000
	% Change	21.8%	20.0%	35.7%	8.6%	19.6%	-1.3%	-1.7%	-0.5%	-2.4%

MULTIFAMILY SALES PRICES - EAST SIDE OF PROVIDENCE

		2000	2001	2002	2003	2004	2005	2006	2007	2008
Median Sales Price	Median Sales Price ESID	$200,000	$242,500	$287,000	$360,000	$384,750	$423,300	$387,000	$390,000	$332,500
	% Change	0.0%	21.3%	18.4%	25.4%	6.9%	10.0%	-8.6%	0.8%	-14.7%

Here is what I will say about the state of the market in 2009 on the East Side of Providence and my advice for the informed homeowner or investors.

SINGLE FAMILY

Any single family home in renovated condition and priced under $400,000, your first time home buyer segment is moving very, very quickly. There is pent up demand from first time home buyers and the Obama Stimulus plan has made an enormous impact. We have been involved in several bidding wars which we have not seen in quite some time. Nothing moved at all until after February, now there is a lot of heat in the first time home buyer segment on the East Side. I always advise our clients that they will not go wrong purchasing a first time homebuyer single family home in a quality location on the East Side of Providence. That is where the demand is and when there is much demand and little supply, well, you know the story.

The midrange of the market - the $500K - $850K is not moving as quickly. One would think that those people who are selling their first time homebuyer - smaller houses - would need their next house - the trade up. There is some of that, but not as much as one would like. What I have noted some of these people are deciding to rent for a little while and figure out what to do. They are not jumping in the real estate market but are approaching it with caution. Also, Rhode Island employers are not hiring and the local economy is suffering which also contributes to slower movement. We are not seeing many relocating executives these days.

Another factor in this segment is a dilemma many families with children face about where to send their children to school. There are many quality pre-school programs on the East Side, but until very recently the quality of the public elementary and middle schools was a big question mark for many parents. Thankfully, lead by our two young and talented East Side City Councilors and a dedicated group of parents the elementary and middle schools on the East Side have witnessed a dramatic, positive transformation in recent years. The Vartan Gregorian and Martin Luther King Elementary schools now provide two excellent choices for public education on the East SIde. The completely remodeled Nathan Bishop Middle School will re-open this fall with a solid enrollment from East Side families. The Nathan Bishop renaissance is a great example of the positives of Providence at their best: community involvement, a dedication to preserving historic buildings and an emphasis on "green" renovation. Bishop was initially slated to be torn down, but the parents led the charge for the study that showed renovation of the existing historic school was more cost-effective and environmentally friendly than demolition. Now parents faced with the unwelcome choice of paying private school tuitions or moving to the suburbs have a cost-effective, quality education alternative.

The upper tier of the single family category - $850k - $5M (our highest priced single family house currently) is just about dead. I can't help but think of all the stock portfolios which these individuals own and how they have plummeted. Don't expect this segment to turn around until you have a major increase in the stock market.

What about single family foreclosures? Forget about it. We don't see much of that on the East Side and when we do, rest assured they are bought up quickly since they are a very safe investment in a safe area.

CONDOS

This is a whole other story.

There are times when a condo makes sense for someone as an investment. When you called me the first time, I was out with a client who is the mother of a daughter who is going to Johnson and Wales for the next 3 years and wants to save money on room and board or rent (which runs $1000 a month). With interest rates as low as they are and the prices of condos the lowest we have seen in a while, it only makes sense to do it. As a rent alternative, and as long as you purchase in an area where you are assured of resale in a short time frame (areas right around Brown University), then it can be a no-brainer. Better yet, if the student can quality to purchase on their own with a gift from mom and dad, then there is that $8000 tax credit too.

As an investment vehicle, you do see a few foreclosures in the condo market. If the numbers make sense (very low purchase price) to offset the non-owner occupied tax rate (appx. $23 per thousand of assessed value) and condo fees, then you could rent the condo out for profit. I'd say these are fairly hard to come by however.

In general, I prefer the single family to the condo. There is stronger resale in the single family market and no problems with pesky condo boards. The condo products that are primarily on the East Side are converted multifamily homes and we sure have an abundance of them. The bulk of the conversions were done in 2004 and now the resale valuations are down significantly and there continues to be an over-supply of these units. This segment carries more risk of price depreciation.

You may ask, what about luxury condo products, like the Downtown Westin, or Waterplace Park? If you have beaucoup bucks and want to walk to everything, be close to the train station, downsize and live in the city, then go for it. For the average person, the prices are inaccessible and don't make sense. With the downturn in this segment, you can just rent them for a while and see if you like them. With the lack of sales and an abundance of inventory, these products are being rented, not sold. In fact, one project, Capital Cove, just signed a long term lease agreement with Johnson and Wales University for student housing. I wonder what that will do to the condo project's future desirability with college kids having lived there for 3 years.

MULTI-FAMILIES

Ah, the multifamily.

This is where I come back to the beginning - the couple of things to know about Providence - College Town and Taxes. The two go hand in hand. As a state, Rhode Island is a wee-little. As a city, we are also small, and our main employers are the Universities, Hospitals and Municipal Government. What they have in common is that they are non-profit institutions and off the property tax roles. That means our property taxes are very high, since a city has to support its infrastructure and the property owners are footing the bill. Rhode Island has some of the highest property taxes in the nation. While single family homeowners are impacted, multifamily property owners holding property for investment are hit even harder.

In Providence, here is how it works. Let's say you own a 3 family property that is assessed at $400,000 and rent it out, your tax bill is approximately $9200 a year, pretty hefty and hard to turn a profit. However Providence has a homestead exemption so if you live in the 3 family in one of the units, your tax bill cuts in half to $4600. For a first time homebuyer who does not mind living with renters and managing rental property, this is a great way to go. The rental market here is very strong because of the universities and the high cost of housing. So doing this is a great way for someone to live on the East Side of Providence and offset their mortgage.

For the investor, it becomes a bit more tricky. Plain and simple, the numbers just have to work.

The greatest opportunity for the multi-family investor on the East Side of Providence is the student rental property and you just have to have the stomach for it. The area that I like for this is the Fox Point neighborhood which is close to Brown and Rhode Island school of design but also close to Wickenden Streeet, a popular area with students and younger people. Some landlords choose to pay for the heat and utilities themselves, then charge by the bedroom. This makes it easy for students to pay one bill and keeps it simple. On the East Side of Providence, student rental apartments are leased for an entire year, not just the school season. By the bedroom rent can be $400 - $500 a bedroom depending on the location and if heat and utilities are included. If dealing with student rentals appeals to you, then this is a great place to do it. Those institutions are here to stay and there is a consistent demand.

One thing to note with multi-families, is the change in the fire code. In what will forever be an sad and devastating part of Rhode Island history, 100 lives were tragically lost in the "Station Night Club Fire" in Warwick, RI in 2003. As a result, statewide laws became more stringent regarding the fire code. Any building over 4 stories must have sprinkler systems and any commercial property which is anything above 5 units, must be have a hard wired system. These are costly items to an investor. As for rents, they are high. A one bedroom in a good location goes for $850 to $1000, two beds $1150 and up. Some of the higher end rentals (College Hill/ Benefit Street) areas can go for $2000 and up.

Moving on ....... Sell me on Providence - as a destination and as an investment:

Well, this is not hard to do at all. How do I love thee Providence, let me count the ways..........

I've lived in a lot of places, Baltimore, Los Angeles, NYC, Fairfield County CT as has my husband Chris, in Kansas City, Bermuda, Connecticut, Vermont, Washington, DC, Wyoming and Louisiana and we both feel the same way about our beloved "Little Rhody". Providence is small and accessible and easy to get involved in the community. With the universities, you have a diversity of backgrounds in the population and much intellectual stimulation. Brown and RISD (the way Rhode Island School of Design is known) offer continuing education classes with world class instruction. We have some of the best restaurants (in a contest with Boston - Providence won) because of Johnson and Wales cooking school and the chefs come from this program stay in Providence. It is architecturally beautiful, historic, and full of charm and life. It is vibrant and walkable. It is close to beaches, Cape Cod and a 50 minute ride to Boston by car or train line.

What an informed homeowner or investor needs to be aware of and this is very important, is the neighborhoods in Providence and even on the East Side change very quickly, even street by street. There were some condo investors during the boom of 2004 that were lured here from Boston and sold products for conversions in the Mt. Hope neighborhood of the East Side, far down on North Main. They may have been sold on the "East Side" but not all of the East Side of Providence is created equally. One has to be careful and really get to know the neighborhoods and streets very, very well.

For the record, we also own investment property here ourselves, two multi-families that provide some cash flow and what we hope will be good retirement income. These are not student rentals, but well located buildings rented to professionals. We are of the buy and hold philosophy, slow and steady. Providence's East Side, with its growing, vibrant community and stability from the Universities is a great place for solid, low risk appreciation and .......it is a great place to live!

How the $8000 Tax Credit Helps Home Buyers in Rhode Island

C. C. Wall — Sun, 15 Feb 2009 14:22:00 GMT

This is a follow-up to my last post on the $7500 tax credit for first time home buyers which has now been revised in the new Stimulus Bill just signed by President Obama. The amount of the credit has been increased to $8,000. Here is how it works:

First time homebuyers are entitled to a tax credit of 10% of the purchase price up to a maximum of up to $8,000 provided they meet the following requirements:

- Must have not purchased a home within the last 3 years.

- Income (adjusted gross- AGI) is less than $75,000 for individuals and $150,000 for joint filers

- Must purchase and close on the home before December 1, 2009

- The credit will be taken from the amount of tax due or given back on a refund. For example, If you owe the IRS 10,000 and qualify for the deduction, you will pay the IRS a net amount of $2000. If the IRS owes you $2,000 as a refund and you qualify for the tax credit, you will get a check back from the IRS for $6,000.

It is best to check with your accountant on all of this.

For the first time home buyer, this is absolutely great news. I know it may be disappointing to those that were expecting the $15,000 credit proposed by the senate, but the $8000 is a vast improvement over the earlier $7500 which was essentially an interest free loan. This credit DOES NOT have to be paid back UNLESS you sell the house before 3 years. So 3 years and one day and the money is yours to keep.

Here is the direct language from the bill as reported by CSpan.

From C-Span:

Refundable First-time Home Buyer Credit. Last year, Congress provided taxpayers with a

refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the

purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes

purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit

are currently required to repay any amount received under this provision back to the government

over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out

for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint

return). The bill eliminates the repayment obligation for taxpayers that purchase homes after

January 1, 2009, increases the maximum value of the credit to $8,000, and removes the

prohibition on financing by mortgage revenue bonds, and extends the availability of the credit

for homes purchased before December 1, 2009. The provision would retain the credit recapture

if the house is sold within three years of purchase. This proposal is estimated to cost $6.638

billion over 10 years.

First Time Home Buyers in RI benefit from Tax Credit

C. C. Wall — Mon, 09 Feb 2009 19:13:00 GMT

While I was conducting open houses this weekend, I had some interesting discussions with first time home buyers and agents about the $7500 tax credit offered by the government. There was a bit of confusion and speculation about the $15,000 credit proposed by the U.S. Senate. So as of today, here is an explanation of how the current credit works and what is proposed, but not yet passed.

Right now, there is a $7500 tax credit available to certain first time home buyers- it works like this:

Available to: First Time Home Buyers who have not owned a primary residence in the last 3 years

Limited to: 10% of purchase price or a maximum of $7500

Adjusted Gross Income Limits: Single - $75,000; Married $150,000

Applies to: Purchases made between April 8, 2008 and July 1, 2009

Essentially, this is an interest free loan from the government. It must be paid back over a 15 year period or at the time the house is sold. After a 2 year grace period, the homeowner must pay back the loan. If they pay it back over 15 years, they would pay $500 on their tax return each year. If the house is sold before the loan is repaid, the homeowner must pay back the IRS.

Here is a link to the IRS website explaining the credit: http://www.irs.gov/formspubs/article/0,,id=203083,00.html

At the same time, there is another proposed tax credit on the table which is included in the Senate version of the stimulus bill. This would provide for a tax credit of up to $15,000 for buyers of primary residences. This bill is scheduled for a vote tomorrow. Once the Senate passes its version of the stimulus bill, the House and Senate versions will go to conference, where House and Senate versions will be reconciled. We will be keeping an eye on how the final version of the bill treats real estate issues and report back.

So for now, what we know is that $7500 is available to home buyers as an interest free loan to qualifying individuals. The difference between the current plan and both programs being considered by the House and Senate is the treatment of the credit as a loan to be repaid (the current program per the IRS link above) or an outright tax credit, not to be repaid. Either way, an interest free loan, or a hunk of money is good news for first time home buyers.

Stay tuned for more information on this stimulus program and how it affects first time home buying in Rhode Island.

Too Many, Too Few. The story of condo sellers, condo buyers on the East Side of Providence.

C. C. Wall — Wed, 04 Feb 2009 15:30:00 GMT

There was an article published in the Providence Journal yesterday that reported the results of the 4th quarter condo sales for 2008. For closed transactions, the number of sales were down -17.4% and the median price -21.1% from $355,000 to $280,000. Days on market increased substantially +65% to 141 days.

Not a pretty picture.

So how are we doing now? Chris and I like to look at pending transactions because we feel that they are most reflective of the direction of the market NOW, not 3 months ago. So let's take a peek:

January 2009 Pending Sales for Condominiums - East Side of Providence

In January, there were 7 pending sales of condominium homes on the East Side compared to 10 pending transactions for the same period last year. Of these 7 properties, the highest list price was $589,000 while the lowest was $89,900. Two condos on Cole Avenue and the lowest priced of the 7 were foreclosure, bank owned properties.

January 2009 Condominium Pending Sales East Side Providence

Listing Address	Listing Price	Sq Ft.	Beds/Baths	Days on Mkt	Sale Type	Photo	Neighborhood	Comments
124 Blackstone Blvd	269,000	980	2 beds, 1.1 baths	285	Conventional		Blackstone on the Blvd	Established association. Desirable location.
170 Prospect Street	160,000	647	1 beds, 1 baths	9	Conventional		College Hill Prospect St. near University Heights	NearBrown University & Whole Foods Market
47 South Angel St	289,000	2400	3 beds, 2.1 baths	0	Conventional		Wayland Square	New Construction -sold before print
12 Cole Ave #1	114,900	1000	2 beds, 2 baths	107	Foreclosure		Wayland Square Area near Blackstone Blvd	3 unit Multifamily building - small condo association
14 Cole Ave #2	89,900	865	2 beds, 1.1 baths	270	Foreclosure		Wayland Square Area near Blackstone Blvs	3 Unit Multifamily building - small condo association
275 Angell St	589,000	1732	3 beds, 2 baths	154	Conventional		College Hill. Near Hope Street	Historic Building. Luxury finishes.
79 Taber #2	499,000	2250	3 beds, 3.1 baths	209	Conventional		Wayland	Newly Revovated. Luxury Finishes.

Our take on January 2009 Condo Sales on the East Side:

Hold on to your hats!

This category is down, down, and then some.....and probably more to go.

What you have in this segment are an abundance of resales from small condo associations from the condo conversion boom of 2004 - 2005. The one on Cole Avenue was a foreclosure of two such units. From having viewed these units when they first went on the market, I know that there were no upgrades made to the buildings previous life as being an apartment building. They were just originally put on the market as "condos" but still looked like apartments and were priced at were then "good values" for home ownership. Now they went to foreclosure. The smaller unit was priced at almost double its current listing price, starting at $172,900 to the current list price of 89,900. Hard to say who bought these as they would appeal to both a first time home buyer and an investor - at current rents, both units would provide positive cash flow.

Currently there are 90 Active Condos on the market, yes, 90. Over half of them are condos priced under $300,000, a full 51 of them. That sure is a lot to chose from. The inventory in this segement cannot sustain the slow rate of sales. I predict that prices in this segment will have to come down substantially. A buyer just has too many options and no urgency. That means lower prices when high supply meets low demand. Last year there were 117 condos in total sold on the East Side and 71 sold under $300,000. So roughly we are looking at a year's worth of inventory since the sales rate in this category has also slowed. More inventory should hit the market in spring, further driving down prices.

For the higher end condos that went pending, 79 Taber and 275 Angell Street. Both saw reductions from their initial asking price of $130,000 and $150,000 respectively, both 79% from the original asking. Condos that are new or have high level finishes still hold appeal although not at the prices once commanded as evidenced by the two examples above.

Unless inventory can correct itself, we predict that condos still have more downside.

Still not a pretty picture. In fact, you could say, just downright ugly.

Wanted - More Houses Priced under $450,000 on the East Side of Providence

C. C. Wall — Tue, 03 Feb 2009 00:07:00 GMT

What's selling in the Single Family Market on the East Side of Providence?

Well, houses in good condition and priced under $450,000 - that is what's selling. The point is that we have far too much inventory in the upper ends of the market and far too little in the lower end, first time home buyer market. Consider the following pending transactions for the month of January 2009:

January 2009 Pending Sales Single Family Homes - East Side of Providence

In January, there were 4 pending sales of single family homes on the East Side compared to 6 pending transactions for the same period last year. Of these 4 properties, all were listed under $450,000 and the one on Sessions Street was a foreclosure.

January 2009 Single Family Pending Sales East Side Providence

Listing Address	Listing Price	Sq Ft.	Beds/Baths	Days on Mkt	Sale Type	Photo	Neighborhood	Comments
9 Belair Ave	449,000	1684	3 beds, 2 baths	88	Conventional		Blackstone near Brown Stadium	Providence 4 square. Price started at $465K.
137 Sessions	310,000	2343	4 beds, 1.1 baths	10	Foreclosure		Blackstone near Brown Stadium	Shortest time on market. Had multiple offers. Intereting to see if it closes above asking price.
301 Rochambeau	409,900	1426	3 beds, 1.1 baths	214	Conventional		Blackstone near Hope Street - Rochambeau Library	Open floor plan, newer construction 1997.
60 East Manning	415,000	2706	7 beds, 2.1 baths	61	Conventional		Fox Point - Near Gano Street	Largest Squar footage and number of bedrooms

Our take on January 2009 Single Family Property Sales on the East Side:

With credit markets in a deep freeze, just about the only people who are purchasing property are the first time home buyers. With the FHA limit at $426,000 for the Providence area, conforming FHA loans are the easiest way to finance in this this tight credit market. Nothing over $450K sold in the month of January. Other price segments remain frozen in place.

Interestingly, of 49 active single families on the market, just 13 or 27% are priced below $450,000, yet 16 properties, or 33% of the active listings are $1,000,000 and above. We have a lopsided level of inventory at this point with too few for the areas that are selling (first time home buyers) and too many (73%) in the trade up and luxury ranges. Hopefully we will see more in the first time home buyer price range come spring. In general, there are less pending sales this year (one third less volume) as there were in 2008. Click here to view all East Side Single Family Listings.

Foreclosures don't happen often on the East Side, but when they do, be sure there will be multiple offers as in the case of 137 Sessions, and the price of the property will be bid up. Best to bring cash in this circumstance and your very highest and best offer at the get-go.

Just a note --- Pending sales are an important measure of what is selling on the market, not what has sold then "closed", but what people are interested in buying NOW. It is more predictive of the future selling market than looking at closed sales. For pending sales, we have no "closed" sale price, just the "asking" price at which the home was last listed. In this market, it is safe to say that the majority with finally close at a price less than asking and if 2008 is an indication, then we can assume at least 95% of list price on average. This does not hold true for properties with less than average days on market, which tend to sell closer to their asking price.

So it you are a seller out there and on the fence and you have a home priced under $450,000 there is still lots of demand, the MOST demand in the single family home market on the East Side right now.

Year in Review - Single Family Housing on the East Side of Providence

C. C. Wall — Wed, 28 Jan 2009 20:58:00 GMT

So how did we do last year?

The Single Family Housing Market on the East Side of Providence experienced less severe declines than other areas of the State. In fact, for 2008, the Median Price of a Single Family Home was $486,000, up +3.8% over 2007. From the peak of the East Side Market which was 2006, the single family housing market is down just -6.6%, far less than other areas of the state.

The East Side market is comprised of 6 distinct neighborhoods, College Hill, Blackstone, Wayland, Foxpoint, Summit, and Mt. Hope.

The College Hill neighborhood showed a gain of 25% over last year with a median house price of $825,000, the highest in the neighborhood's history. This area is the East Side's local Historic district and has gained in popularity with its proximity to Downtown and the larger overall trend of returning to Urban Living.

The Blackstone Neighborhood, which comprises the area from Olney St. north to Pawtucket and east to the Seekonk River is the largest neighborhood on the East Side. Some of the most expensive homes on the East Side are located along Blackstone Boulevard and the Grotto section, but this area also includes more affordable areas off of Hope Street. Overall, the median price in this area increased +4.2% in 2008 but is off -11.5% from its peak in 2005.

The Fox Point neigborhood experienced a large decline in 2008 where the median price of a single family home decreased 35% to $381,000, over 38% off its peak. The Fox Point area includes both the Historic District west of Brook Street and the less expensive areas east of Governor Street. The area west of Governor street and foreclosures account for the decline in the median prices in this neighborhood. The areas west of Brook Street followed the sales trends of the College Hill neighborhood which it borders.

Oak Hill Pawtucket, which is directly over the line from the East Side in Pawtucket, saw a 15.2% decline in its median sales price for a single family home to $288,000. This area has also seen a number of short sales and foreclosures which have affected the pricing there.

2008 Median Sales Prices by Neighborhood

Neighborhood	Median Sales Price	Percent Change vs. 2007
All East Side	$486,000	+3.8%

College Hill	$825,000	+25.0%
Blackstone	$538,000	+4.2%
Wayland	$570,000	+1.8%
Foxpoint	$381,000	-35.1%
Summit	$310,000	-11.8%
Mt. Hope	$351,000	+10.7%

For an 8 year analysis of Median Sales Price Trends for the East Side of Providence, see http://www.wall2wallrealestate.com/Sales_Trends_East_Side_and_Oak_Hill_2000-2008/page_2178545.html.

Should I list My House for Sale During the Winter?

C. C. Wall — Tue, 20 Jan 2009 20:47:00 GMT

The Case for Listing Your House in the winter

I am writing this as I am headed home from Los Angeles, where I spent a week in some of the most beautiful January weather they have seen there in a long time. As I took walks in some of the neighborhoods, the air was fragrant, with flowers like roses, snapdragons, orange trees and magnolias in bloom, not to mention the rosemary that homeowners use for year round shrubbery.

As I am flying home I am informed that Providence has received 6 inches of snow after seeing temperatures this week in the single digits. With so striking a difference, I began to think of some clients who are trying to decide whether or not to list their house on the market now or wait for spring when at least our daffodils and tulips are up. I can see their point. Things just look great in spring.

Chris and I however are big proponents of listing a house during the winter. While not true in every case, here are some compelling reasons to do so which we will outline below.

The biggest driving factor in the housing market is supply and demand, which ultimately determines PRICE. Plain and simple, in the winter, there are just fewer houses with which to compete. With less competition, the seller will get a better price for their house.

Sometimes your house may have a deficiency, such as a non-existent yard for example. Buyers will be less inclined to notice at this time of year. Conversely, if the yard is THE selling point of the house, then the seller could consider waiting; however, the yard would have to be spectacular for it to have that much influence on a buyer's decision. The bottom line, for the vast majority of properties: You can't catch a fish if your bait is not in the water.

The buyers that shop during the winter, who dig out, get in the car, and run around in the cold to go to open houses, are MOTIVATED and SERIOUS buyers. So the quality of the buyer you have at this time of year is better.

In addition, there are some specific intricacies to this 2009 winter market that make a case for a winter listing. First, interest rates in some cases are in the low 5’s and have even dipped into the high 4’s on occasion. These are historical lows for interest rates and mortgage applications for the purchase of homes (not just refinancing) is up.

Seasonal inflation also plays a role in the rise and fall of interest rates. Typically and especially in the Northeast, workers, painters or construction workers for example) take money out of the economy, unemployment claims rise, and economic activity is down. By spring, these workers reenter the workplace, spend, and boost the economy and interest rates rise (we are talking minimally here, but enough to cause an up tick in interest rates in spring).

Importantly, this market with our recession and high unemployment in Rhode Island is still a declining market. In a declining market, as opposed to an accelerating market, time is not your friend. The longer the property stays on the market, the less a seller will get. In fact, every day that goes by in this type of market, the property loses a little bit of value.

Every seller should consider his or her individual circumstances and motivations for selling at any time of the year. Winter does present a great opportunity to connect with the serious buyer, have less competition for your property (better sales price for the seller) and have buyer take advantage of favorable interest rates. The head of our company, Sally Lapides actually listed and sold her own home in a January time period and had it under agreement in before the end of February.

One last consideration is what other properties and how many are on the market at the time you are considering listing. Chris and I keep a close watch on the market, and will recommend listing time to coincide with a gap in the market. Maybe there are no other houses similar to yours on the market now, or maybe there are too many and you should wait it out. Knowing when to launch your property is determined by all of these factors and every property is different.

But please, don’t forget about winter as a great listing time. Granted, we don’t look like Southern California in January, but we in Rhode Island have our own special seasonal charm. We have to wait for at least February until we see our first crocus though……

Warm Winter Regards,

C.C. and Chris Wall

Should I get my house inspected prior to listing it for sale on the market?

C. C. Wall — Sun, 11 Jan 2009 17:08:00 GMT

Recently we suggested that a seller who is putting their house on the market in the next few months do a pre-listing inspection. Granted, the house is in great shape, so it came as a surprise that we would recommend this. The current owners wondered whether or not the potential buyers would trust the report since it would be coming from the seller and why they should do one when the buyer would do one anyway.

As I am in Los Angeles right now and just having read the Los Angeles Times, I came across a great article that addresses just this topic. The question posed by the reader was " a friend recommended we hire a home inspector before putting our home up for sale.......what good does it do us to pay for a home inspection"? The answer is summarized below (I wish I could access the link online but could not, so I summarized below.....).

1. Providing an inspection report to a buyer demonstrates that you have nothing to hide as a seller. It establishes a basis of trust among the parties and increases the likelihood of closing the deal in an atmosphere of good relations.

2. If an undisclosed defect is discovered after the sale of the property, it is less likely that you will be suspected of trying to have deliberately concealed the problem.

3. When you present an inspection report at the outset of a transaction, it eliminates the need to renegotiate the terms of the deal after the buyers hire their own inspector. Usually, a seller anxiously waits the buyer's inspection, hoping some unknown problem will not kill the deal. This anxiety is eliminated with the seller conducting their inspection.

4. A pre-sale inspection allows you to sell the property "as-is" while still providing full disclosure.

I would also add:

5. It gives the seller an opportunity to correct any repair issues that could cause a buyer to walk away from a deal. In this climate of buyer uncertainty, a little upfront knowlege goes a long way.

6. Gives the seller more control over the repair issues and their costs.

7. Gives the seller a competitive advantage over other homes for sale that do not provide up front inspections.

In this real estate market and highly uncertain times, I would highly encourage sellers to do a pre-listing inspection.

At Bottom for Real Estate Prices in Providence Area?

C. C. Wall — Sun, 11 Jan 2009 17:02:00 GMT

Could Housing be close to a bottom?

While I don’t like to overly dwell on National numbers, there was one statistic posted from a credible source I felt worth sharing.

Business Week recently reported an interesting statistic from the Case-Shiller Home Price Index. Case Shiller cites that in some key large cities, the price of single family homes are now priced at or below what they should actually be worth, based on supply and demand factors.

While the Case Shiller Index does not measure Providence, it does track the trends in Boston, from which Providence closely follows. In the Boston area, it is estimated that the Median Price of a Single Family Home which is $324,000 is actually off 16% of its estimated “correct” market value.

Admitedly it is impossible to measure whether we are at the bottom of the market or not based on a statistic such as this, but it is encouraging. Other concerns for Providence and Rhode Island is the state of our economy and our high unemployment rates. Plus, Providence tends to follow or lag Boston so we may see a bottom later.

It is also impossible to predict when we will reach a bottom but I think we are pretty close. Plus, with interest rates continuing to decline, I think those that truly need to buy and can afford it will see early 2009 as an opportunity.

Rates at 4 year lows, if you can get them.....

C. C. Wall — Fri, 12 Dec 2008 15:58:00 GMT

It's a good time for buyers who have waited to purchase property. Rates are now at a 4 year low on 30 year mortgages, averaging 5.47%. The rate has not been lower since March of 2004 when the rate averaged 5.40%.

What does this mean?

For borrrowers with credit scores of 740 and above, the rate is even lower, at 5.125% with no points or origination fees according to the Wall Street Journal today. Also, rates are down so much that even borrowers with credit scores of 600 to 700 could find it a goood time to refinance. However, these borrowers with lower credit scores will wind up paying as much as a half a percentage point more because of extra charges by Fannie Mae and Freddie Mac and those whose credit is weak or have insubstantial equity in their homes will not be able to qualify.

So with good credit, a purchase or a refinance may make sense now. Remember that with ONE percentage point drop in interest rates, a borrower gains a full TEN percent in purchasing power.

Personally, for the East Side of Providence and surrounding areas, I have noticed good spots in the market where opportunity exists, and those areas where the inventory is scanty. The single family market under 400K is in short supply of attractive inventory as the properties in good condition sell quickly and as sellers have pulled their properties off the market in hopes of relisting in spring. The upper end of the market, provided one can afford it, offers some very attractive inventory and a better supply from which to chose.

If you have waited, and are renting, I would not wait much longer to jump in. Just make sure you have the fundamentals in place: a 20% downpayment, good credit scores, and debt to income ratios' and importantly do not overextend yourself.

Luxury Market for Single Family Homes on the East Side Providence - Excess inventory?

C. C. Wall — Sun, 23 Nov 2008 17:17:00 GMT

Looking through the Multiple Listing service today and doing a search on the East Side of Providence I was surprised to see so many single family properties in the million dollar and above category. Is the East Side just growing the luxury market? Just how much inventory is out there I wondered.

Digging deeper into the numbers, I found in this segment that there are 24 active properties on the market ranging in price from 1,050,000 all the way up to $5,850,000 with a low price per square foot of $134 to the high price per square foot of $984. The median price for these active listings is $1,389,000 and the median price per square foot is $324. This seemed like a lot of inventory in this segment. In fact, of all the active listings for single families, nearly one third of the listings are 1,000,000 or above.

So how much inventory does this represent?

Last year there were a total of 14 sales of properties over 1,000,000 which means that there is 1 year, 8 months of inventory on the market. Median days on market for the properties that sold were 10 versus median days on market of 144 for all actives in this segment.

So what does this mean? Clearly, there is an excess of supply in this segment of the market. There are not enough buyers for the amount of inventory on the market. With trends in the market, I would expect less than 14 properties to sell going forward as the rate of sales is slowing. That does not bode well for the actives on the market. Basic laws of supply and demand say that too few buyers and too many properties would mean that prices should fall. The horrible month we have had in the stock market further depreciates sales in this segment as potential buyers have seen their stock accounts depreciate by up to 40%.

Contrast this inventory with the opposite segment of the market, those homes priced under $400,000. This segment has 14 active listings with 48 sold in the last 12 months, or only 3 months of inventory. This is a first home buyer category, which given market trends should continue to grow as renters see the opportunity to buy at historic low prices. Median days on market for this category are only 43 days.

Holiday Stroll - Downtown Providence

C. C. Wall — Sun, 23 Nov 2008 15:45:00 GMT

Mark you calandars for December 6th for the Providence Preservation Society's annual Holiday Stroll! This year's event will be held entirely in Downtown Providence. The event will inclued horse-drawn carriage rides, a special tree lighting by the mayor at City Hall, carolling, mulled cider and much much more seasonal merriment. As a usual part of the stroll, homes in the downtown area will be open to the public to tour. Tickets for this non-profit event are $25 in advance and $30 the day of the tour. All proceeds benefit Providence Preservation Society's advocacy and education initiatives. Contact Providence Preservation Society at 401.831.7440 or click on the above link to be directed to their site.

What a crazy week.

C. C. Wall — Sat, 22 Nov 2008 19:27:00 GMT

Here's how we are feeling about the economy after last week: Money is too tight to mention!

Normally we have a falloff in real estate sales during November but this year is worst than most. I sympathize with all sellers who need to sell right now and with buyers who have seen the credit markets dry up.

One of our seller's took their property off the market this week deciding to wait a couple of years to see what the future would bring. I can't blame them although I cannot predict the recovery yet either.

Chris and I see this as a natural progression of real estate inventory. In some categories, real estate inventory is NOT too tight to mention! This goes for condos on the East Side and Providence area. There is more than a year's inventory on the market right now and buyers are responding by not rushing. More seller's are choosing the pull their inventory off the market by renting or withdrawing the property from sale.

There still some categories where inventory is tight. Take a single family house in good condition located on the East Side of Providence or in Oak Hill priced in the low $300's and below. These move quickly and inventory is still very low. So there are some bright spots in the market.

It is a great time to be a buyer. The choices are endless and bargains are out there for the taking.

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East Side Providence - A Walker's Paradise

C. C. Wall — Thu, 20 Nov 2008 19:11:00 GMT

I came across a website that measures the walkability of a location. I typed in Benefit Street in Providence where we live.

Our walkability score came out to be at 94 out of 100 which the site calls a walker's paradise!

Take a look at the site and see just how many things there are within walking distance. That is one of the very reasons Chris and I moved to the area. We get plenty of exercise and have so much to do just steps away........

Take a look: http://walkscore.com/get-score.php?street=+benefit+st%2C+providence+ri&go=Go

What are you crazy? Sell now in this market?

C. C. Wall — Wed, 19 Nov 2008 22:49:00 GMT

Thinking of selling now or in the future?

Every day that goes by in a declining market, a property loses a bit of its value. So the longer the property is on the market, the more the seller is chasing the market down. A property must be priced right from
the very beginning or risk becoming stale and simply not selling at all. A SELLER in a buyer's market really has to be motivated to sell and understand that they will not get what they would have gotten in the
seller's market a few years ago. This is a fact that one has to accept. If you think the market still has further down to go, then the decision to sell becomes a question of predicting how long the market will take to recover. Is it 2 years, 4 years? In a declining market, a seller gets their best price NOW, not in the future.

The best strategy is to price the property right from the beginning. In many cases, this will mean 5% under the recent comparables. This ensures that the property has its best chance of selling NOW because in a declining market, the in the future you will get LESS not more.

If you are considering selling your property and purchasing another, it is good to pay careful attention to interest rates. For example, a rise interest rates erases declines in the market. A 10% drop in home prices is nullified by just a 1% increase in interest rates. For example - if the home price is 200K
and the interest rate is 6%, the payment for a 30 year mortgage is $1199. If the home price dropped 10% to $180K but the interest rate increased a point to 7%, the payment is $1198, or exactly equal!

I guess the bottom line is - its a great time to buy, not a great time to sell. What would I do? For me it
comes down to where I would want to be long term and if I could stomach pricing my current place to sell quickly (which in a declining market, you want it to sell quickly, because that is the best price you will
EVER get until the market starts upward). If you are trading up, this is a great time to buy but that's for another post..........