John Mason

Interesting data on the median home prices for the 3rd quarter in Providence. For the city of Providence itself, there was an almost 33% increase in the number of single family units sold over the same period in 2007, but a decrease of almost 40% in the average selling price! The average selling price for the 3rd quarter of 2008 was $118,000. However, these statistics do not include all of Providence, because the East Side of Providence is reported separately. The change in single family houses on the East Side was only a 5.66% increase over 2007, but there was a 4.12% INCREASE in the average selling price, which was $461,500 in the 3rd quarter. (For all the uninitiated, there are 3separate cities, Providence, East Providence, and North Providence. However, Providence itself consists of different regions, and the East Side of Providence is treated as its own area by MLS)

For Multi-family homes, the changes in Providence are even more dramatic. There was a 69% increase in the number of units sold, and a corresponding 52% decrease in the average selling price!

This all is evidence of the foreclosure market in this area. Many marginal buyers got in over their heads and have been foreclosed on, resulting in the properties becoming REO's and eventually reaching a price point where investors or new 1st time buyers can afford them. The bottom line, don't wait around for a better deal. Now is time to buy if you are looking for a cheap house or investment property, but the expensive areas are still expensive.

(From RI Association of Realtors RI Home Sales Statistics)

You can get a really cheap house in parts of Rhode Island, but for the most part, the saying still holds true, "You get what you pay for." I have a couple of buyers who have been lured into the market when they see houses for $50K. The description only says: "Sold in current condition - no warranties etc etc." You get there, and there is no kitchen, the pipes have been removed, and even the furnace is gone. The buyer was told that they could qualify for the mortgage with 3% down. They figure it will take $20K to fix up the house, so they go back to the bank. "We have a renovation loan program!" they say. "We will loan you money to fix-up the house!". They buyer is excited - then the catch: you have to put down 10% to qualify for that kind of loan. And, you have to have a licensed contractor give an estimate for the repairs, not your friend who hung some drywall in his basement once. Rhode Island Housing has a program that still allows the buyer to have a 3% down payment, and will loan up to $15K for renovations. However, the bank wants to have a home inspection, which requires the electricity and to be turned on. It's understandable; who wants to loan all that money to a marginal borrower if the plumbing leaks? The problem is someone removed half the plumbing. Very hard to turn on the water in such a case. In the meantime, the seller, who is most likely the lein holder, isn't going to do any work on the house and doesn't want to take the it off the market while waiting for the loan to go through when the lending bank wants inspections. Bottom line; educate your buyers beforehand to be realistic.