2011-12-01 / News

Realtors talk about the state of the housing market in Jamestown


The Daybreak mansion, located at 330 East Shore Road, sold for $6.4 million in September. The home was designed by Estes/Twombly Architects of Newport and the main house is 6,456 square feet. 
PHOTO COURTESY OF CYNTHIA MORETTI The Daybreak mansion, located at 330 East Shore Road, sold for $6.4 million in September. The home was designed by Estes/Twombly Architects of Newport and the main house is 6,456 square feet. PHOTO COURTESY OF CYNTHIA MORETTI The local real estate market again told a tale of two economies, Jamestown realtors said. On the high end, buyers unscathed by the recession still came to Jamestown and bought, as evidenced by the sales of The Pink House and Daybreak, which both topped $6 million, Bob Bailey of Lila Delman Real Estate said.

That’s about the same net result as last year when the luxury market also saw two high-end sales, one for $5.6 million and one for the record-breaking $7.8 million price, Gloria Kurz of Mansions and Manors said. Also similar to last year – but in a troubling way – zero homes in the $2 million to $5 million price range closed.

“There’s been activity,” Kurz said, but in that price range no contracts have been inked and no houses have sold in about 23 months. For context, she said, in the five years before the end of 2009, when the housing market collapsed nationwide, Jamestown had averaged five to seven sales in the $2 million to $5 million range annually.

She predicts the market will return to the old normal by the first and second quarter of 2012, if not before.

As for the overall market, the number of houses sold (based on the state Multiple Listing Service data) fell any way you define “summer,” Kurz said. If you look strictly at the third quarter and count July, August and September sales, the year-over-year comparison number dropped by 17 percent in 2011 with 23 closings, compared to 19 the year before. But average prices leapt 25 percent buoyed by the $6.4 million sale that went through this summer.

If you extend summer into the period from April 14 to Nov. 15, Ginny Pritchett of Island Realty said, the net drop is 13 sales (from 52 a year ago to 39 this year).

Looking at the year-to-date numbers, Kurz said, sales are off 21 percent, with another net drop of 13 homes – from 63 a year ago to 50 this year – and the average sale price dropped 5.6 percent.

She blamed some outside influences, such as the Beltway debate, over raising the debt ceiling and austerity measures in Europe.

“Uncertainty affected everyone,” she said. “People ended up taking a more conservative posture.”

On the low end, prices have slipped “a bit,” Pritchett added. “The buyers are competent, savvy and knowledgeable,” she said, and they still have the upper hand.

Bailey and Kurz used the word “stabilizing” to describe the action in this summer’s real estate market.

“It’s not bottoming and it’s not on an uptick,” Bailey said, but the number of available houses has at least sunk below the century mark. Currently, 80 houses are for sale on the island. Many are no longer on the market because the sellers are opting to rent them for the winter, he said, but over time, lower inventory will help sellers.

“We are seeing encouraging signs the market is stabilizing,” Kurz said. She suggested people can be “cautiously optimistic” that this real estate market may be near “the beginning of a return to normalcy.”

Pritchett said the current drop in sales numbers looks worse than the reality. She could not say if Hurricane Irene was a factor, but for some reason, houses went under contract later this summer than in 2010.

“Some people may have taken their boats out of the water” before the storm and not returned to Jamestown, she said. “However, we got some people to return and do things in September, and that was good.”

Kurz said the winter storm before Halloween also had a shortterm impact on housing and pushed back a few timelines.

Five houses are sale pending and will be sold before Dec. 31, Pritchett said. On five other properties, the buyers and sellers have reached agreement, but the sale is being held up due to contingencies, such as a seller not being able to move out yet. She estimated one property from that group will close before the end of the year “for sure,” and three or four other sales might go through.

“It’s not as dismal as it appears,” Pritchett said. She also said 39 sales were not below the typical range.

Moreover, the action can still be fast and furious, she indicated, reporting a buyer snapped up one house in the mid-$600,000 price range two days after it became available.

One of the luxury houses, The Pink House, sold after 107 days on the market, Pritchett said, although she conceded, the other one, Daybreak, had been listed and relisted three times.

Daybreak, which sold for $6.4 million, is so far the year’s big- gest R.I. real estate sale but not a record for Jamestown, Bailey said. (That all time record was set with last year’s $7.8 million price tag.) And The Pink House, weighing in at $6,341,500, also landed in the top five statewide.

Bailey said these estates’ price tags illustrate the value of waterfront locations, which have outpaced the stock market, making real estate the better investment.

On average, houses sat on the market 166 days between April 14 and Nov. 15, Pritchett said, but that number was “skewed” by The Pink House, which had gone on the market three different times for 426, 366 and 486 days, and was originally listed at $8.9 million.

“That’s a long time,” she said. “It’s a beautiful, beautiful house.” She said that in the luxury market, closing the deal depends on “finding the right person at the right time” who is also willing to pay the list price.

“This summer, it’s down a little bit due to the economy,” Bailey said. Sellers were more eager to close the deal, he said, and that drove the prices down, too.

Lending continues to be a sticking point, he said, because both banks and appraisers have turned cautious due to the housing crisis. Although mortgage rates on the 30-year fixed rate loans are below 4 percent, some prospective buyers can’t qualify for financing and need to improve their credit scores before they can buy property.

But Kurz said the mortgage rates had dropped to levels not seen in years, making now a good time to buy real estate.

“Buyers are still eager to purchase and have been taking time to shop for houses,” Bailey said, especially in the second home and third home markets. His advice is for sellers to be patient. “Buyers are out there but just working through the inventory.”

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