Multi-family home sales for the first half of this year reached their highest level in more than 15 years and, like other residential properties in the state, demand for the multi-family’s continues to outpace supply.
Industry experts are attributing the trend to a combination of factors, including the shortage of entry-level single-family homes, favorable prices, low mortgage rates, and demand for rental property.
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Harry Bilodeau, whose Providence-based Bilodeau Property Management manages properties throughout the state, said he has only a few unrented apartments, none of which is a multi-family unit.
“I get the impression the multi-family market is really strong,” he said. “We have no studio apartments until October. We have one, one-bedroom and the only reason that’s even here is that it’s under construction, and that will be on the market Wednesday, and probably be gone by Thursday.”
He added, “We manage properties from West Warwick to East Providence, and there’s just nothing available anywhere.”
During the first six months of this year multi-family home re-sales recorded through the Statewide Multiple Listing Service (MLS) subsidiary of the Rhode Island Association of Realtors reached a record 918 in the state, representing a 6.4 percent increase in sales from last year’s mid-year level of 863.
There were 501 sales recorded from April through June, which marks the second busiest single quarter since 1986. Only the fourth quarter of last year, with 545 multi-family homes sold, had more sales.
Joseph Tenori, a broker for Providence-based Peter M. Scotti and Associates, has been selling multi-family homes for the past 25 years. He said buying a multi-family home is as sound an investment as it’s ever been, if not more so than before.
“It’s really one of the last frontiers available for affordable housing,” he said. “Historically, condominiums were created to provide affordable housing, but that’s no longer the case, because the same factors driving up the multi-family market are making condos less and less affordable.”
Tenori rents 50 to 100 apartments within multi-family structures per year. Currently his firm has only three available. Tenori said there is one multi-family apartment for sale by Scotti and Associates, and the last one the firm had on the market was sold in one day to the first person who looked at the property. According to the Rhode Island Association of Realtors, multi-family homes took 19 fewer days to sell during the first six months of this year than last year.
“It’s an extremely tight market,” said Tenori. “Even more so than the single-family market. It’s just following the supply and demand, and responding to a situation where there is much more demand than there is supply.”
When demand increases, prices soon follow. The mid-year median sales price for multi-family homes moved upward for the fourth year in a row and is at the highest level since 1991. During the first six months of 2001 a median priced multi-family home cost $117,000, an increase of 16 percent from the 2000 mid-year level of $100,885.
Total dollar volume for multi-family homes sold in Rhode Island increased 25 percent to a record $117.6 million from $93.5 million mid-year 2000, because of the number of sales and the average selling price increasing.
Estelle Smith, president of the Rhode Island Association of Realtors and broker/co-owner of Middletown-based Benchmark Associates, said there are many advantages to the increase in popularity of the multi-family home.
“Multi-family homes are helping to offset the current shortage of lower priced single-family homes on the market,” she said. “They are also the property of choice for a very ethnically diverse group of homebuyers, particularly in our cities, as evidenced by the most recent census.”
