Providence, Rhode Island has transformed itself over the last ten years, but its brisk real estate market has begun to slow down, says a local Realtor.

"Providence has experienced a wonderful transformation over the past 10 years from a city with darkened and empty streets, to a bustling metropolis filled with light and people at all hours," says Realtor Steve Gillikin, "New down-city mall and entertainment complex, world-class theater, five-star dining and entertainment with plenty of new hotels to serve the public. New river walk and wonderful waterfront. Affordable housing compared to Connecticut and Maryland. High speed rail and a new and easy-to-get-through airport. What more can you ask for?"

About the market, Gillikin says, "Homes are not selling nearly as quickly as they were last year. There still is a great demand, and interest rates are still at an all-time low, however the asking prices on some new listings are as high as 40 percent over the average selling price of similar recent comparable sales. Even though on average selling prices were up 22 percent in RI in 2003 over 2002, the asking prices are up more than 60 percent from a year ago.

"Providence is split into two distinct areas," explains Gillikin. "The East Side, which is where Brown University is located along with the Rhode Island School of Design, is a much more expensive part of the city. The rest of the city is generally less expensive.Right now on the East Side, there are 126 listings of single families, multi-family and condos with an average asking price of $630,839. These listings have been on the market an average 63 days. There are 107 pending sales under contract with an average asking price at the time of the sales contract $406,488. Almost $225,000 under the average list price of those that are active now. Those pending sales have been on the market an average 50 days. Finally, there have been 103 closed sales so far this year with an average selling price of $460,435 and on the market an average of 68 days until a contract was signed. That is a huge gap between average asking prices and average selling prices on the East Side, and if you notice, the average asking price of those that are pending now is lower than the average selling price of those that have actually closed so far this year. Prices are coming down on the East Side now."

He adds, "In the rest of Providence, there are 371 active listings with an average asking price of $234,550. and 89 days on the market. There are 429 pending sales with the asking price at time of sale being $203,514. and 75 days on the market. There were 395 closed sales so far this year with the average selling price of $200,176. and 63 days on the market. Average selling prices on the East Side were up only 1.98 percent in 2003 over 2002 last year and up 21.75 percent in the rest of Providence. Providence is up because many Massachusetts buyers are moving here because they can not afford to live in Massachusetts.

"The inventory of available homes for sale is increasing and many buyers are pulling out of the market for now because they just can't afford it or are just plain refusing to pay the high asking prices of some sellers. Buyers were having a tough time finding a decent home at a price they could afford. Some have been looking for over a year. Good single-family homes priced under $250,000 are almost nonexistent. Even multi-family homes that just two years ago were selling for $120,000 are now on the market for more than double that price. In most cases, neither rents nor buyers income have remotely kept up with the asking prices and with a rise in interest rates, more and more buyers are driven out of the market.

Gillikin advises, "These days, serious sellers have been reducing their initial asking price and the not-so-serious sellers are just taking their homes off the market."

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Published: June 7, 2004

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