Fewer single-family homes sold during the first six months of this year compared with the same period last year. But in the luxury home corner, sales have been rising in Rhode Island and in many upscale communities across New England.
Bruce Allen, a real estate agent at RE/MAX Professionals of Newport, specializes in sales of luxury homes. He recently took some time to discuss the local market.
PBN: RE/MAX recently released a report that showed sales of luxury homes in many New England communities rose during the first half of the year. Did we see a similar trend in Rhode Island?
ALLEN: Rhode Island sales of luxury homes followed the trend in many New England communities during the first half of this year. We saw a slight rise in the sale of luxury homes selling for $1 million or more.
From August 2010 to August 2011, there were 130 sales of homes in excess of $1 million compared with 114 sales over the period of August 2009 to August 2010.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
PBN: Are there differences in the activity or the market even within Rhode Island? When buyers look at Rhode Island are they just as interested in the East Side as they are Newport? Or is every area an enclave to itself?
ALLEN: Although Rhode Island is a very small state, the interests of luxury buyers for the most part are concentrated in certain areas, namely Newport, Jamestown, Barrington, East Greenwich and Providence’s East Side. Each of these areas has a particular cache, which is attractive to the varied interests of the buyers.
PBN: The report also mentioned prices remain volatile. What are you seeing in the Ocean State? Is the economy forcing sellers to rethink their listing prices?
ALLEN: The economy has forced some sellers to rethink their pricing. However, the prestigious homes are thought of as a market within themselves and although the buyers are paying substantial monies for these properties, they are still looking for value and may not be as cavalier in their purchase as when the economy was more robust.
PBN: Moving to the buyers, are they having difficulty – given the economy – finding financing for these multimillion-dollar homes?
ALLEN: The lenders have made it much more difficult for buyers of traditional homes and purchases in the low to moderate ranges due to many factors. Interestingly enough, we see the upper-level buyers not having a difficult time in the financing process due to less dependence on traditional lender guidelines and the ability to either purchase with cash or with a substantial down payment, which helps the ratios to ease the burden if a traditional lender is used.
PBN: Who is buying the homes? Are they the same people that bought luxury homes when the economy was riding high?
ALLEN: Many people who bought in the luxury market five or six years ago were able to have an excess of disposable income garnered from their investments in the stock market. These purchases have been replaced by more buyers that are looking less at these properties as either investments or “trophy” purchases but more of a utilitarian use as well as a solid investment due to the nature of the lower prices in their particular real estate cycle.
