MULTI-FAMILY HOME SALES are breaking records.
Rhode Island is experiencing a record market for two-, three-, and four-family home sales as the popularity of these types of real estate purchases grows. First-quarter Rhode Island multi-family home sales increased to the highest level in more than 15 years. The Rhode Island Association of Realtors reports multi-family home re-sales through its statewide Multiple Listing Service (MLS) subsidiary reached 381 units in the state during the first quarter of 2000, topping the old January-through-March record of 305 multi-family sales set during the same period just last year. Analysts add that multi-family home sales during the first quarter have increased from 13.8 to 14.5 percent share of all housing re-sales in the last few years.
During the first quarter of this year, the medial selling price of a multi-family home was $92,900. This is a 2.2 percent decrease from the $95,000 first-quarter level last year when 25 percent fewer similar properties were sold. The decrease in the median sales price marks the end of two consecutive years in which the January-through-March median sales price had risen.
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”The drop in median sales price doesn’t necessarily mean that values are going down, “said Ronald Phipps, president of the Rhode Island Association of Realtors and broker/president of Phipps Realty, Warwick. “All it means is there are more inexpensive properties being sold. We have actually seen the average first quarter selling price for a multi-family home climb steadily since 1990.”
The median sales price, with half the prices higher and half-lower, generally reflects the mix and location of homes offered and sold in a given period. The mix can vary greatly with multi-family properties.
”Multi-family sales are clearly out of the doldrums of the early 90s when the first quarter sales were one third to one half of what they are this year,” Phipps said. “The climate for ownership is right. The Rhode Island economy remains strong. Record high employment, very low inflation, and fair market prices coupled with moderate interest rates expand the affordability of multi-family dwellings.”
A multi-family home purchase in Rhode Island is one of the best real estate buys in recent years. Based on the median sales price, entry level for the multi-family home market is 27 percent less than its single-family counterpart. This should be financially meaningful to the growing segment of first-time homebuyers who are looking into home ownership. The fact that sales improved in the face of continuing increases in mortgage interest rates demonstrates the very high demand for multi-family housing in Rhode Island and how important home ownership is in achieving the American Dream.
”Multi-cultural buyers are also influencing this market,” Phipps said, “A new wave of immigrants have and will continue to enter Rhode Island as well as the rest of the U.S. This influx of new residents is providing a new market of first-time home buyers – many of who chose a multi-family home purchase as their preferred residence of choice.”
”This multi-family market, I believe, is unquestionably going to appreciate in value in the long run,” Phipps said. “Both investors and owner-occupied buyers alike have the opportunity to purchase on the upward side of the value curve.”
There are about 800 multi-family homes for sale through the MLS. This compares with nearly 1,050 similar properties for sale mid-May of last year. It took the average multi-family home 116 days to sell during the first quarter compared with the 130 days to sell a similar property during the same period last year.
Affordable solution for home ownership
According to Phipps, the attraction of having a tenant’s rent help pay the mortgage and taxes “continues to draw many new buyers into the multi-family home market – particularly in the last five or six months with interest rates on the rise.”
He continued. “There are many potential first time buyers in Rhode Island who could qualify for a mortgage but aren’t in the market because they are not aware that a major portion of rents factor into the overall mortgage qualification process. Moderate multi-family home prices have made them affordable to many families.”
Of the 36 communities that have ever registered multi-family homes transactions, 13 had increased sales, 11 remained unchanged, and 12 had decreased activity. Seven metro areas — Providence, Pawtucket, Cranston, East Side Newport, Woonsocket, and Central Falls – account for 76 percent of all multi-family home sales in Rhode Island during the first quarter of 2000. Providence and Pawtucket have the lion’s share of activity, with near one half of all sales.
Greater Providence
Providence tops the state in sales of multi-family homes, with 140 during the first three months of this year, excluding the East Side. This equates to 36.7 percent of the entire Rhode Island market. On the East Side, the first-quarter median sales price increased to $196,000 on 20 multi-family sales, up from $143,500 median on 22 comparable sales during the same period last year. For the rest of Providence, the first-quarter median sales price of $69,150 this year compares with $75,250 on 80 sales registered January through March of 1998. The years 1995 and 1997 had been the most active first quarters for multi-family homes in Providence’s history when 106 and 104 sales were registered respectively. The year-end multi-family median sales price peaked in Providence in 1989 at $115,000.
Blackstone Valley
Multi-family home sales in Pawtucket tied the record first quarter level of 40 also registered in both 1997 and 1995 during the first three months of this year. The first-quarter median sales price decreased by 14 percent from $108,000 in 1999 to $92,500 this year, however, it is at the second highest level since 1993 when the first-quarter median was $120,000.
Woonsocket saw multi-family re-sales through MLS rebound from 118 in the first quarter of 1999 to 27 in the first three months of this year. The medial sales price decreased to $96,000 this year compared with $101,750 during the same period a year ago.
Central Falls’ first-quarter median sale price decreased from $78,700 to $72,500 last year, while tying the record of 17 multi-family properties sold during the first three months of any one year.
Newport
The sale of multi-homes in Newport, January-through-March reached 20 properties with a statewide high median sales price of $215,000. Last year, 19 multi-family homes were sold during the first quarter through MLS having a median sales price of $160,000. The first-quarter median sales price is at the highest level since 1990 when it reached $215,000.
The Rhode Island Association of Realtors previously reported a record first-quarter 1,698 existing single-family properties were sold during the first three months of 2000. These figures represent a 2.2 percent increase over the 1,661 similar properties sold in the first quarter 1999 when home sales broke all previous records. Further, the first quarter median sales price of existing family homes sold through MLS has risen steadily for the fifth consecutive year since hitting a decade low of $110,000 in 1995.
More recently, the median sale price increased from $120,000 in the first quarter of 1999 to $127,950 during the same period this year and is at its highest level since 1989 when it was $128,000.
