The Waterplace Towers condominium complex commands a good view of downtown Providence. Overall, condominium sales in Rhode Island have softened significantly.

The Providence Journal

Condominium sellers in Rhode Island have not been as quick to slash their prices as sellers of houses and multifamily properties, and last year, there was a marked decline in the number of condo units sold.

The median sales price of condominiums fell last year, but the declines were not as severe as those for single-family houses and multifamily properties, according to statistics from the Rhode Island Association of Realtors.

But at the same time, the condominium sector of the market has experienced the sharpest drop in the number of units sold.

This disparity was most evident in November numbers from the Realtors’ association: the median sales price of condos dropped 9 percent, from $217,250 to $198,000, while the number of condo sales was down 55 percent, from 148 to 67.

Most of these 67 condo sales — 52 — were identified as distressed, meaning they were foreclosures or short-sale transactions.

While the median house price dropped in November by 24 percent, down to $202,000, the number of houses sold fell just 16 percent, from 542 to 455, according to the Realtors’ group.

Meanwhile, the multifamily market continued to display a trend of prices in freefall spurring a surge in sales.

In November, the multifamily median price fell more than 50 percent from $215,000 [in November 2007] to $105,000, with an increase in the number of units sold of nearly 46 percent, 143, compared to 98 in November 2007. The association said 111 of the 143 multifamily sales were distressed.

The November figures showed a nearly equal median price for houses ($202,000) and condominiums ($198,000).

“Condo prices have softened, but haven’t collapsed,” said Robert S. Roth, developer of the Capitol Cove condominium project in Providence, which is still under construction. The 96 units in the first phase of the Canal Street project, located near the border of the downtown and the East Side, will be priced from the mid-300s to the mid-500s.

Roth said condo prices may be falling more slowly because condo developers have the choice to rent out unsold units, or slow completion of construction projects, while they “ride out the storm.” He added that the demographics of people who live in condominiums suggest a high percentage of “older people, empty nesters,” who as a group are more economically secure than younger property owners.

In addition, many of Rhode Island’s condos are luxury and second-home properties, he said.

Roth said four units at Capitol Cove are presold, and he expects four to six units a month will sell once construction is completed next month.

The Residences at the Westin, along with the other newer condominium developments in downtown Providence — The 903 and Waterplace — have turned to rentals in the housing market downturn.

“Obviously, we are unable to comment on pricing strategies at other developments,” said Ralph V. Izzi Jr., of The Procaccianti Group, developer of the 103 luxury condominiums at the Westin tower in downtown Providence. “The prices at the Residences at The Westin continue to hold due to the high caliber of the development, its prime location and connectivity to Providence Place, The Convention Center and the new Dunkin’ Donuts Center, and upscale four-star amenities not found at other Downcity developments.”

Condo prices at the Westin have ranged from near $400,000 to more than $1.5 million.

“We can not speak for activity at other developments but we have, and continue to experience a steady pace of sales/leasing activity,” Izzi said. He said the Westin is “approximately 60 percent occupied via a combination of sales and leased residences.”

“Did it slow in 2008? Absolutely,” said Beth Devine, director of marketing for the Carnegie Abbey Club in Portsmouth. The developer, O’Neill Properties Group, plans to open its 22-story, 79-unit luxury condominium tower at Carnegie Abbey this year. Devine said about half the units there are under sales-agreement contracts. But despite the downturn, there has been no cutting of prices, which start at close to $1 million.

“That’s not what we do here,” she said. “We’re holding firm on our pricing, and we’re not meeting much pushback on that.”

Waterplace, Intercontinental Real Estate Corp.’s new luxury condominium project in downtown Providence, opened for occupancy in September, according to Paul J. Nasser, the company’s chief financial officer and chief operating officer. The 17-story and 19-story towers house 193 condos priced from about $400,000 to $1.8 million.. Nasser said 5 units have sold and 70 more have been rented, many by people who have exercised a rent-to-own option.

Nasser also said price cuts have not been considered, because “price is not the problem” in the current market. “There definitely is a demand for luxury housing in Providence,” he said.

In Newport, the owners of another high-end condo project, the Residences at Brown & Howard Wharf, have sold 4 of 16 planned luxury waterfront condominiums, according to Stacie E. Mills, vice president of sales and marketing for the Stonestreet Corp. Two other sales are scheduled to close this month, she said.

Providence developer Joseph R. Paolino Jr. remains a partner in the Newport condominium project by Stonestreet Corp., which took it over from Paolino’s father. Stonestreet is a privately held Providence corporation headed by Timothy G. Fay, president, and David N. Patrick, vice president.

“It’s not anything fast,” Mills said of the sales pace last year. She said her company, which is also marketing the Stone Harbour condo development on the Bristol waterfront, has had to intensify work with buyers, offering interest-rate buydowns or assistance with selling another residence.

Mills said all but 10 of the 80 residences at Stone Harbour have sold, “and our goal is to close those out” this year. Stone Harbour prices range from $550,000 to $2.6 million, she said.

Bridget Torrey, marketing and sales director for the Villages at Mount Hope Bay, a 55-plus age-restricted waterfront development in Tiverton, said 145 units have sold and about 20 remain in the first phase of the project, which includes townhomes and single-level condominiums. She said 13 units sold last year. Townhome prices range from $700,000 to $1.2 million, and the condo prices are in the 400s.

Torrey said advertised prices did not change, but several owners were able to negotiate bargains for units they bought last year. Still, “waterfront properties, in general, hold their values” even during economic downturns, she said, “because it’s supply and demand.”

Like the higher-end condo developers, Roth said the market downturn has not caused a change in the pricing plan for Capitol Cove. “We have a Web site consistently getting between 250 and 300 inquiries every week,” he said.

“There are people who are out there who are interested,” he said. “They’re just on the sidelines … until we get a real model inside the building. People really need to see the product.”

Roth said he expects a difficult first quarter this year, but “as the year goes on, I think things will start loosening up … Interest rates have fallen quite dramatically.

“Once the public gets a sense that there’s stabilization in the market, I think we’ll start seeing movement.”

cdunn@projo.com