The residential real estate market started to cool in 2018, returning to an equilibrium between buyers and sellers, after two solid years of appreciation in sales and median prices.
Prices were still climbing but at a more-moderated rate, based on third-quarter statistics released by the Rhode Island Association of Realtors.
Real estate specialists said the return to a balanced market was expected, as the market transitioned over the calendar year from one with few active listings, to one with an increased supply of homes.
By the end of the third quarter, the median price for a single-family home in Rhode Island was $275,000, up 3.8 percent from the same quarter in 2017, when the median was $265,000.
Sales activity as measured by transactions fell throughout the year, to 3,062 closings on single-family homes in the third quarter, down 7 percent from the prior year.
Joseph Luca, the 2018 president of the Rhode Island Association of Realtors, had predicted the downward pressure on house sales, given the limited listings that characterized the residential market through 2017 and much of 2018.
“We’re not surprised to see that sales are beginning to plateau, in fact, we welcome it,” said Luca. “A moderation in sales activity gives the market a chance to ‘catch up’ by alleviating the shortage of homes for sale. We should see more balance between buyer demand and seller supply in the year ahead, which is a good thing for the overall health of Rhode Island’s housing market.”
In the investor-driven multifamily market, it was another story. Sales and prices continued to strengthen throughout the year.
The third quarter ended with the median price of a multifamily structure at $250,000, up 14 percent from the prior year. The sales activity in that category rose almost 15.5 percent year over year.
In the commercial real estate market, 2018 was characterized by sales of prominent buildings in Providence and the listing or sales of several notable golf clubs and resorts.
In March, Agawam Hunt in East Providence emerged from bankruptcy under a reorganization that sold the club assets to a new ownership group and which included the sale of a conservation easement to The Nature Conservancy.
The club in August was discharged from bankruptcy protection by a U.S. District Court judge.
The easement will protect the 130-acre real estate holding from future development, while freeing the club from a cash crunch.
Several other notable golf clubs also made real estate news in 2018.
In East Providence, Metacomet Country Club in October was listed for sale for $3.5 million. And in Newport, the Carnegie Abbey Club, including golf course, equestrian center and marina, was sold in a bankruptcy auction Dec. 4 to a group of members, for an undisclosed amount.
Several Class A commercial buildings changed hands in downtown Providence, including the city’s second-largest skyscraper.
One Financial Plaza was sold for $51.8 million in late August to the Brooklyn, N.Y.-based JFR Global Investments. The 25-story building, formally known as the Hospital Trust Building, has tenants that include Santander Bank NA, Locke Lord LLP and Duffy & Sweeney Ltd.
Its previous owner, Meritage Properties of Scarsdale, N.Y., had purchased the building in 2007 for $65.6 million.
In November, One Citizens Plaza, the headquarters of Citizens Financial Group Inc., was sold to a collection of buyers for a $10 land-lease. The sale reflected the building only, as it was constructed on leased land. On the same day as the purchase, the buyers entered into agreements with BancFirst Corp. for a total of $17.2 million in mortgages.
In September, Paolino Properties purchased the six-story Federal Building on Westminster Street, for $9.5 million and $5.8 million in tenant improvements.
In mid-July, the 1902 Providence Journal building on Westminster Street and the adjoining art-deco-styled Kresge Building were sold to Abdo Development, whose CEO and president said he planned a conversion to a boutique hotel.
The original newspaper building was sold for $4 million, while the Kresge Building sold for $650,000.
In retail, the ownership of the Providence Place mall changed this past year. In March, Brookfield Property Partners announced it had reached an agreement to purchase General Growth Properties for $9.3 billion in cash.
At the time, GGP was the second-largest owner of shopping malls in the nation, second only to Simon Property Group.
In October, the new owner announced that one of its original anchors, Nordstrom, would leave the Providence mall in 2019. Taking its place after a renovation of the nearly 200,000-square-foot space will be Boscov, a department store that operates primarily in the Mid-Atlantic states.
The family-owned retail company is expanding into several new locations, according to its website.
Mary MacDonald is a staff writer for the PBN. Contact her at Macdonald@PBN.com.