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Investors snatching up multifamily houses
06:34 AM EDT on Wednesday, August 6, 2008
Real estate agent Steve Gilliken checks on one of the many multifamily homes, at 57 Bowdoin St. in Providence, that have been foreclosed on. The Providence Journal / John Freidah
Prices of double- and triple-decker houses in Rhode Island are taking a beating, their rate of decline nearly four times that of single-family houses, as investors move to cash in on the nation’s worst real estate crisis since the Great Depression.
Buyers snatched up more than 400 multifamily houses in the state during April, May and June, as the median price plunged 43 percent from a year earlier, according to data from the Rhode Island Association of Realtors.
Investors buying up foreclosed multifamily properties helped drive up sales during the second quarter by nearly 20 percent, as prices in almost every city and town in the state plunged by double-digits.
The median price of a multifamily house during the second quarter was $150,000, the lowest since 2002.
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The rate of depreciation — 48.3 percent in less than three years — already exceeds that experienced during the last major real estate crisis, in the 1990s. From 1991 to 1996, the median price fell 31.7 percent, according to data from the State-Wide Multiple Listing Service.
“This is a very different market than the last time we saw this kind of disinvestment,” said Sharon Conard-Wells, executive director of the West Elmwood Housing Development Corp., a private, not-for-profit organization in Providence. Back in the 1990s, if the group wanted to find out who the owner was before a property went to foreclosure sale, “you could call a local bank,” she said. Now, “you’re talking to 800 numbers.”
About 61 percent of the 407 multifamily houses sold — 247 properties — were bank-owned, according to the Realtors. The steepest price declines were in Providence, where 168 multifamily houses sold and the median price fell 57.8 percent, to $105,400, according to the Realtors data.
Some real estate professionals say the increase in investor interest is a positive sign.
“Investors of multifamily properties are typically the first to leave the market during a downturn,” the Realtors report stated, and “the first to jump back into the market when prices become attractive…”
Others say there is little evidence of a market turnaround in sight.
“There’s so much on the market and some of these properties are so beat up that the only people who can buy them are the cash investors,” said Re-Max real estate agent Steve Gilliken. “A lot of these guys are just letting the property sit there and not doing anything. They’re buying so cheap…[they can afford to] hold on and see if the market turns.”
Despite the increase in sales, a “glut” of foreclosures in the market drove up listings. At the current pace of sales, it would take 15 months to sell all the multifamily houses on the market during April, May and June.
A market is generally considered “balanced” when the supply of unsold properties averages about six months.
On Providence’s East Side, sales of multifamily houses fell along with prices. Only 10 multifamily houses were sold during the second-quarter — half as many as a year earlier — and the median price dropped 10.5 percent, to $357,500, the Realtors’ data show.
Sales of single-family houses during the second quarter also slowed to a crawl, and economic forecasters now say that conditions in Rhode Island and much of the country are expected to deteriorate through next year.
The median price of a single-family house in the state fell 10.7 percent, to $250,000 — the lowest since mid-2003.
Meanwhile, sales of condos plunged 27.7 percent during the second quarter from a year earlier, according to the Realtors.
Of the 397 condos sold during April, May and June, only 35 were bank-owned, the Realtors reported.
At the current pace of sales, it would take 15 months to sell off all of the condos on the market during April, May and June, compared with 12 months a year earlier, according to the State-Wide Multiple Listing Service.
The Realtors reported that the second-quarter statewide median price of a condo was $220,000, down just less than one percent from $222,000 a year earlier.
In Providence, where condo sales remained relatively unchanged from a year earlier, the median price of a condo ticked down 3.6 percent, to $190,000 from a year earlier, the Realtors reported.
By contrast, on the East Side, 47 condos were sold during the second quarter, compared with 64 a year earlier, and the median condo price rose 6.6 percent, to $265,500.
The Warren Group, of Boston, reported condo prices during the first six months of the year declined 2.5 percent, to $220,000. (The Warren Group data include sales by owners as well as through real estate agents.)
Condo sales from January through June declined 35 percent, The Warren Group reported.
3–MONTH SALES LISTED WITH MEDIAN PRICES AND DAYS ON THE MARKET
| Ranked by median price percentage change | |||||||||||
| 2nd QUARTER | 2008 | 2007 | No. | Pct. | 2008 | 2007 | Amount | Pct. | 2008 | 2007 | Pct. |
| COMPARISONS | sales | sales | chg. | chg. | med. price | med. price | chg. | chg. | days | days | chg. |
| RHODE ISLAND | 407 | 340 | 67 | 19.7% | $150,000 | $265,000 | –$115,000 | –43.4% | 93 | 84 | 10.7% |
| NEWPORT COUNTY | |||||||||||
| Jamestown | 0 | 0 | 0 | – | – | – | – | – | – | – | – |
| Little Compton | 0 | 0 | 0 | – | – | – | – | – | – | – | – |
| Tiverton | 0 | 0 | 0 | – | – | – | – | – | – | – | – |
| Portsmouth | 1 | 2 | –1 | –50.0% | $250,000 | $296,750 | –$46,750 | –15.8% | 638 | 2 | – |
| Newport | 12 | 9 | 3 | 33.3% | 358,500 | 436,000 | –77,500 | –17.8% | 161 | 72 | 123.6% |
| Middletown | 1 | 1 | 0 | – | 295,000 | 550,000 | –255,000 | –46.4% | 390 | 27 | – |
| METRO & EAST BAY | |||||||||||
| Barrington | 2 | 2 | 0 | – | $293,000 | $315,000 | –$22,000 | –7.0% | 68 | 55 | 23.6% |
| Prov. East Side | 10 | 20 | –10 | –50.0% | 357,500 | 399,500 | –42,000 | –10.5% | 118 | 72 | 63.9% |
| Bristol | 3 | 4 | –1 | –25.0% | 257,000 | 326,100 | –69,100 | –21.2% | 137 | 36 | 280.6% |
| East Providence | 9 | 15 | –6 | –40.0% | 215,000 | 285,000 | –70,000 | –24.6% | 82 | 39 | 110.3% |
| Warren | 4 | 1 | 3 | 300.0% | 244,950 | 325,000 | –80,050 | –24.6% | 71 | 96 | –26.0% |
| Cranston | 39 | 28 | 11 | 39.3% | 167,900 | 266,000 | –98,100 | –36.9% | 81 | 48 | 68.8% |
| Johnston | 7 | 3 | 4 | 133.3% | 165,000 | 285,000 | –120,000 | –42.1% | 90 | 144 | –37.5% |
| North Providence | 10 | 5 | 5 | 100.0% | 150,800 | 261,000 | –110,200 | –42.2% | 104 | 56 | 85.7% |
| Providence | 168 | 131 | 37 | 28.2% | 105,400 | 249,900 | –144,500 | –57.8% | 86 | 101 | –14.9% |
| NORTH | |||||||||||
| Burrillville | 1 | 3 | –2 | –66.7% | $285,000 | $275,000 | $10,000 | 3.6% | 71 | 33 | 115.2% |
| Smithfield | 1 | 0 | 1 | – | 176,000 | – | – | – | 8 | – | – |
| Glocester | 0 | 0 | 0 | – | – | – | – | – | – | – | – |
| Scituate | 0 | 1 | –1 | – | – | 337,000 | – | – | – | 161 | – |
| Foster | 0 | 0 | 0 | – | – | – | – | – | – | – | – |
| Cumberland | 4 | 4 | 0 | – | 232,500 | 272,500 | –40,000 | –14.7% | 92 | 49 | 87.8% |
| Pawtucket | 48 | 38 | 10 | 26.3% | 165,000 | 260,000 | –95,000 | –36.5% | 71 | 90 | –21.1% |
| Woonsocket | 31 | 23 | 8 | 34.8% | 160,000 | 255,000 | –95,000 | –37.3% | 104 | 116 | –10.3% |
| Central Falls | 17 | 13 | 4 | 30.8% | 134,000 | 265,000 | –131,000 | –49.4% | 89 | 66 | 34.8% |
| Lincoln | 1 | 4 | –3 | –75.0% | 175,000 | 350,000 | –175,000 | –50.0% | 29 | 14 | 107.1% |
| North Smithfield | 1 | 1 | 0 | – | 115,000 | 262,000 | –147,000 | –56.1% | 203 | 54 | 275.9% |
| SOUTH COUNTY | |||||||||||
| Charlestown | 1 | 1 | 0 | – | $565,000 | $373,500 | $191,500 | 51.3% | 288 | 10 | – |
| South Kingstown | 3 | 2 | 1 | 50.0% | 420,000 | 402,500 | 17,500 | 4.3% | 95 | 89 | 6.7% |
| Exeter | 0 | 0 | 0 | – | – | – | – | – | – | – | – |
| Hopkinton | 0 | 0 | 0 | – | – | – | – | – | – | – | – |
| Richmond | 0 | 2 | –2 | – | – | 233,500 | – | – | – | 59 | – |
| Westerly | 6 | 2 | 4 | 200.0% | 223,350 | 295,000 | –71,650 | –24.3% | 76 | 230 | –67.0% |
| North Kingstown | 2 | 3 | –1 | –33.3% | 239,000 | 455,000 | –216,000 | –47.5% | 76 | 28 | 171.4% |
| Narragansett | 1 | 1 | 0 | – | 230,000 | 485,000 | –255,000 | –52.6% | 8 | 365 | –97.8% |
| KENT COUNTY | |||||||||||
| East Greenwich | 3 | 1 | 2 | 200.0% | $350,000 | $380,000 | –$30,000 | –7.9% | 292 | 148 | 97.3% |
| Warwick | 3 | 6 | –3 | –50.0% | 155,000 | 222,450 | –67,450 | –30.3% | 15 | 63 | –76.2% |
| West Warwick | 14 | 11 | 3 | 27.3% | 130,000 | 245,000 | –115,000 | –46.9% | 126 | 48 | 162.5% |
| West Greenwich | 1 | 1 | 0 | – | 196,500 | 385,000 | –188,500 | –49.0% | 12 | 181 | –93.4% |
| Coventry | 3 | 2 | 1 | 50.0% | 105,050 | 288,450 | –183,400 | –63.6% | 40 | 44 | –9.1% |
Information is provided by State–Wide Multiple Listing Service, Inc. Readers are cautioned that the median sales price — with half the prices higher and half lower — generally reflects the quality and the mix (type and size) of the properties being sold at the time and is not an true measure of home values. Information deemed reliable but is not guaranteed.
THE PROVIDENCE JOURNAL/PAT POTHIER
3–MONTH SALES LISTED WITH MEDIAN PRICES AND DAYS ON THE MARKET
| Ranked by median price percentage change | |||||||||||
| 2nd QUARTER | 2008 | 2007 | No. | Pct. | 2008 | 2007 | Amount | Pct. | 2008 | 2007 | Pct. |
| COMPARISONS | sales | sales | chg. | chg. | med. price | med. price | chg. | chg. | days | days | chg. |
| RHODE ISLAND | 397 | 549 | –152 | –27.7% | $220,000 | $222,000 | –$2,000 | –0.9% | 94 | 98 | –4.1% |
| NEWPORT COUNTY | |||||||||||
| Jamestown | 1 | 0 | 1 | – | $3,000 | – | – | – | 64 | – | – |
| Newport | 15 | 36 | –21 | –58.3% | 300,000 | $300,500 | –$500 | –0.2% | 96 | 120 | –20.0% |
| Middletown | 5 | 5 | 0 | 0.0% | 344,000 | 423,000 | –79,000 | –18.7% | 104 | 270 | –61.5% |
| Portsmouth | 4 | 10 | –6 | –60.0% | 444,588 | 558,500 | –113,912 | –20.4% | 170 | 79 | 115.2% |
| Tiverton | 6 | 3 | 3 | 100.0% | 416,385 | 712,500 | –296,115 | –41.6% | 37 | 203 | –81.8% |
| METRO & EAST BAY | |||||||||||
| Warren | 5 | 9 | –4 | –44.4% | $408,000 | $145,000 | $263,000 | 181.4% | 226 | 146 | 54.8% |
| Bristol | 11 | 13 | –2 | –15.4% | 340,000 | 315,000 | 25,000 | 7.9% | 106 | 63 | 68.3% |
| Prov. East Side | 47 | 64 | –17 | –26.6% | 265,500 | 249,000 | 16,500 | 6.6% | 84 | 100 | –16.0% |
| Barrington | 0 | 0 | 0 | – | – | – | – | – | – | – | – |
| Cranston | 16 | 34 | –18 | –52.9% | 208,750 | 208,750 | – | – | 93 | 102 | –8.8% |
| Providence | 44 | 47 | –3 | –6.4% | 190,000 | 197,000 | –7,000 | –3.6% | 73 | 87 | –16.1% |
| East Providence | 7 | 8 | –1 | –12.5% | 216,000 | 232,500 | –16,500 | –7.1% | 68 | 110 | –38.2% |
| North Providence | 26 | 44 | –18 | –40.9% | 158,450 | 200,000 | –41,550 | –20.8% | 99 | 105 | –5.7% |
| Johnston | 3 | 8 | –5 | –62.5% | 118,000 | 185,000 | –67,000 | –36.2% | 125 | 84 | 48.8% |
| NORTH | |||||||||||
| Lincoln | 15 | 36 | –21 | –58.3% | $206,000 | $174,900 | $31,100 | 17.8% | 89 | 117 | –23.9% |
| Cumberland | 14 | 18 | –4 | –22.2% | 261,500 | 248,585 | 12,915 | 5.2% | 100 | 62 | 61.3% |
| Smithfield | 10 | 21 | –11 | –52.4% | 243,000 | 235,000 | 8,000 | 3.4% | 81 | 92 | –12.0% |
| Burrillville | 9 | 11 | –2 | –18.2% | 173,000 | 172,500 | 500 | 0.3% | 140 | 97 | 44.3% |
| Central Falls | 3 | 1 | 2 | 200.0% | 165,000 | 172,000 | –7,000 | –4.1% | 142 | 49 | 189.8% |
| North Smithfield | 3 | 4 | –1 | –25.0% | 344,900 | 372,923 | –28,023 | –7.5% | 4 | 57 | –93.0% |
| Woonsocket | 10 | 29 | –19 | –65.5% | 159,250 | 181,900 | –22,650 | –12.5% | 108 | 84 | 28.6% |
| Pawtucket | 14 | 15 | –1 | –6.7% | 161,000 | 208,000 | –47,000 | –22.6% | 99 | 106 | –6.6% |
| SOUTH COUNTY | |||||||||||
| Narragansett | 11 | 11 | 0 | – | $339,900 | $180,000 | $159,900 | 88.8% | 68 | 58 | 17.2% |
| Westerly | 28 | 16 | 12 | 75.0% | 241,500 | 212,500 | 29,000 | 13.6% | 103 | 119 | –13.4% |
| Exeter | 0 | 0 | 0 | – | – | – | – | – | – | – | – |
| Hopkinton | 0 | 0 | 0 | – | – | – | – | – | – | – | – |
| Richmond | 0 | 0 | 0 | – | – | – | – | – | – | – | – |
| Charlestown | 0 | 6 | –6 | –100.0% | – | 174,000 | – | – | – | 52 | – |
| New Shoreham | 0 | 1 | –1 | –100.0% | – | 392,000 | – | – | – | 160 | – |
| South Kingstown | 14 | 7 | 7 | 100.0% | 400,000 | 476,950 | –76,950 | –16.1% | 142 | 185 | –23.2% |
| North Kingstown | 11 | 10 | 1 | 10.0% | 198,850 | 295,000 | –96,150 | –32.6% | 37 | 53 | –30.2% |
| KENT COUNTY | |||||||||||
| Warwick | 31 | 42 | –11 | –26.2% | $180,000 | $207,500 | –$27,500 | –13.3% | 83 | 80 | 3.8% |
| West Warwick | 23 | 26 | –3 | –11.5% | 173,000 | 203,250 | –30,250 | –14.9% | 101 | 97 | 4.1% |
| East Greenwich | 7 | 8 | –1 | –12.5% | 300,000 | 453,750 | –153,750 | –33.9% | 92 | 83 | 10.8% |
| Coventry | 4 | 6 | –2 | –33.3% | 107,501 | 186,750 | –79,249 | –42.4% | 131 | 56 | 133.9% |
Information is provided by State-Wide Multiple Listing Service, Inc. Readers are cautioned that the median sales price — with half the prices higher and half lower — generally reflects the quality and the mix (type and size) of the properties being sold at the time and is not an true measure of home values. Information deemed reliable but is not guaranteed.
THE PROVIDENCE JOURNAL/PAT POTHIER
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