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The Real Estate Boom Moves Out
RISMEDIA, Oct. 6, 2005 — (KRT) — The grand old Tudor for sale on Blackstone Boulevard in Providence, Rhode Island, courted a lot of attention when it debuted on the market in the spring of 2002 for nearly $5 million.
The Wall Street Journal ran a story about the house—seven bedrooms, three fireplaces and an in-ground swimming pool—titled, “House of the Week: A Providence Place.”
People came to look, but nobody bought. Weeks passed; then months.
Today, the same house is still on the market -- for less than half the price.
“It’s a fantastic home,” said the property’s listing agent, Harold Silverman, “but it was way out-of-line.”
The new asking price is $1.95 million.
Drive around the higher-priced neighborhoods of Providence’s East Side and you’ll see For Sale signs that announce “New Price.”
Sellers who just a few years ago watched their houses appreciate like stocks during the tech boom are being advised by their real-estate agents to lower their expectations -- and their prices.
“There’s a lot of ego around pricing your house,” said Sally Lapides, president of Residential Properties Ltd. and host of the WHJJ radio talk show Real Estate Insight. “Sometimes when you go to a seller and say, ‘You really need to reduce your house from 2.5 to 1.9’ it’s not the dollars they’re upset about, it’s like really, ‘What are you saying about me and my value?!’“
Just two years ago, the Providence metro area ranked nationally in the top five for price appreciation. This year, out of 149 metro regions surveyed, the Providence metro area, which includes New Bedford and Fall River, Mass., ranks 96th, according to the National Association of Realtors.
Prices of single-family houses in the Providence area during April, May and June increased about 6 percent, the national data shows, compared with 22 percent during the same period in 2003. (During the first half of this year, the median sales price in Rhode Island stood at $269,000.)
A big reason for the slowing in appreciation is the growing supply of houses for sale.
The number of houses and condos for sale in Rhode Island is now at its highest level in seven years, according to data from the Multiple Listing Service. So buyers have a lot more houses to choose from.
“If sellers are prepared to wait maybe until the spring market . . . I’ll price the way I did six months ago; but that’s not what I’m suggesting,” said Rebecca Mayer, a real estate agent and appraiser who owns Real Estate Collaborative, in Providence. “I am adjusting downward.”
House sales, like hiring, tend to be seasonal. They generally rise in the spring, when more families with children are buying, and fall after Labor Day. Yet, this summer, the pace of sales ebbed.
Gerri Schiffman, a real estate agent at Residential Properties, has felt the balance tilt to favor buyers.
“A lot of people are putting their houses on the market,” Schiffman said, “and not as many people are looking.”
Schiffman, who calls herself “the open house queen,” said she normally does “a minimum” of two open houses each weekend, and sometimes as many as four or five. “None of the open houses have been very well attended,” she said. “Half as many people are coming.”
And so, houses are taking longer to sell.
During the first half of this year, the Rhode Island Association of Realtors reports, single-family houses in Rhode Island sold, on average, in 69 days, compared with last year’s average of 59 days.
That’s a long way from the stagnation experienced in the late 1990s, when the average selling time for single-family houses in Rhode Island was 100 days or more.
This time real-estate agents say that it’s the more expensive houses that are taking longer to sell.
Consider the historic colonial on the East Side that Residential’s Sally Lapides put on the market a year ago at $1.65 million. After it failed to sell, the buyers took it off the market.
The owners put the house back on the market in March, at $1.39 million. This month, they agreed to lower the price again, to $1.17 million.
In one year, the sellers have dropped their asking price by 29 percent.
“It’s hard to be objective when it’s your house,” said Michael Young, president and coowner of Coleman Realtors and the Rhode Island Association of Realtors. “The homeowner always sort of compares it with other homes he knows and thinks his is better.”
Nobody wants to hear that he’s asking too much for his house.
Economists say that house prices, unlike shares of stock, tend to be “sticky” on the way down, meaning that sellers are generally slow to lower their prices when the market softens.
“They say they’re going to be dammed if they’re going sell their house for less than it’s worth,” said Carl Case, a housing economist and professor at Wellesley College. “They think it has some intrinsic value. But in truth, any asset is worth what someone’s willing to pay for it.”
When a market slows: Inventory rises. Asking prices fall. Sellers take their houses off the market and then re-list them.
“What you’re seeing is consistent with a coming slowdown,” Case said. “It seems to start at the high end in the big fancy places and spread.”
Walter Molony, a spokesman for the National Association of Realtors, in Washington, described it not as a slowdown but rather as a “rolling boom” that began in cities such as Boston, and spread to smaller metro areas such as Providence. Now, the boom has moved on to Arizona and Florida, where house price appreciation is running at 45 percent or higher.
“After you see a market go through a period of exceptional price growth, there’s an actual slowing down that occurs,” Molony said, “which is healthy long-term…because otherwise that’s going to create affordability problems.”
But will prices fall in the near future? That’s a question nobody can answer for certain.
David Lereah, the chief economist for the National Association of Realtors, said that during the last 4-1/2 years, “no area that has experienced a sustained period of double-digit price growth has later seen a price decline.”
But the realtors association is projecting that house prices nationally will rise, on average, about 5 percent next year.
Thomas Pearlman, the owner of the Tudor for sale on Blackstone Boulevard, said he isn’t worried.
When he put the house on the market three years ago for $5 million, Pearlman said, he was “testing the market, because it was very tight then.”
Nobody even came close, he said.
Now, he said, he has become more realistic at $1.95 million. With renovations, he said the house cost about $200,000 in 1960.
A lawyer and former legislator and Providence councilman, Pearlman, now 78, lives with his wife in a smaller house down the block. He visits the house on Blackstone to swim in the pool.
“This is where my children grew up,” Pearlman said on a recent afternoon, leading a reporter on a tour of the property.
The man, like his house, has a look of elegance from another era. Plaid bow tie. Navy blazer. Brown brim hat.
The living room and master bedroom, Pearlman said, are part of the “new wing.” It was redone in 1928. Old family snapshots cover a kitchen bulletin board.
Outside, Pearlman stepped into a side yard and settled into a chair under a shady tree, with a view of the swimming pool.
“Do you want to know if the housing market is going to go down?” Pearlman said, flatly. “Yes, it’s going to go down.”
He measures housing market forecasts not in months or years, but in decades.
“There came a time when the market was glutted in 1960, and there came a time when the market was glutted when the banks went bust,” Pearlman said. “The East Side always came back -- and came back stronger.
“I have no doubt that this property is going to come back,” he said, gazing toward the swimming pool, “and people will be begging for houses.”
News source:
RISMEDIA, Oct. 6, 2005 — (KRT) — The grand old Tudor for sale on Blackstone Boulevard in Providence, Rhode Island, courted a lot of attention when it debuted on the market in the spring of 2002 for nearly $5 million.
The Wall Street Journal ran a story about the house—seven bedrooms, three fireplaces and an in-ground swimming pool—titled, “House of the Week: A Providence Place.”
People came to look, but nobody bought. Weeks passed; then months.
Today, the same house is still on the market -- for less than half the price.
“It’s a fantastic home,” said the property’s listing agent, Harold Silverman, “but it was way out-of-line.”
The new asking price is $1.95 million.
Drive around the higher-priced neighborhoods of Providence’s East Side and you’ll see For Sale signs that announce “New Price.”
Sellers who just a few years ago watched their houses appreciate like stocks during the tech boom are being advised by their real-estate agents to lower their expectations -- and their prices.
“There’s a lot of ego around pricing your house,” said Sally Lapides, president of Residential Properties Ltd. and host of the WHJJ radio talk show Real Estate Insight. “Sometimes when you go to a seller and say, ‘You really need to reduce your house from 2.5 to 1.9’ it’s not the dollars they’re upset about, it’s like really, ‘What are you saying about me and my value?!’“
Just two years ago, the Providence metro area ranked nationally in the top five for price appreciation. This year, out of 149 metro regions surveyed, the Providence metro area, which includes New Bedford and Fall River, Mass., ranks 96th, according to the National Association of Realtors.
Prices of single-family houses in the Providence area during April, May and June increased about 6 percent, the national data shows, compared with 22 percent during the same period in 2003. (During the first half of this year, the median sales price in Rhode Island stood at $269,000.)
A big reason for the slowing in appreciation is the growing supply of houses for sale.
The number of houses and condos for sale in Rhode Island is now at its highest level in seven years, according to data from the Multiple Listing Service. So buyers have a lot more houses to choose from.
“If sellers are prepared to wait maybe until the spring market . . . I’ll price the way I did six months ago; but that’s not what I’m suggesting,” said Rebecca Mayer, a real estate agent and appraiser who owns Real Estate Collaborative, in Providence. “I am adjusting downward.”
House sales, like hiring, tend to be seasonal. They generally rise in the spring, when more families with children are buying, and fall after Labor Day. Yet, this summer, the pace of sales ebbed.
Gerri Schiffman, a real estate agent at Residential Properties, has felt the balance tilt to favor buyers.
“A lot of people are putting their houses on the market,” Schiffman said, “and not as many people are looking.”
Schiffman, who calls herself “the open house queen,” said she normally does “a minimum” of two open houses each weekend, and sometimes as many as four or five. “None of the open houses have been very well attended,” she said. “Half as many people are coming.”
And so, houses are taking longer to sell.
During the first half of this year, the Rhode Island Association of Realtors reports, single-family houses in Rhode Island sold, on average, in 69 days, compared with last year’s average of 59 days.
That’s a long way from the stagnation experienced in the late 1990s, when the average selling time for single-family houses in Rhode Island was 100 days or more.
This time real-estate agents say that it’s the more expensive houses that are taking longer to sell.
Consider the historic colonial on the East Side that Residential’s Sally Lapides put on the market a year ago at $1.65 million. After it failed to sell, the buyers took it off the market.
The owners put the house back on the market in March, at $1.39 million. This month, they agreed to lower the price again, to $1.17 million.
In one year, the sellers have dropped their asking price by 29 percent.
“It’s hard to be objective when it’s your house,” said Michael Young, president and coowner of Coleman Realtors and the Rhode Island Association of Realtors. “The homeowner always sort of compares it with other homes he knows and thinks his is better.”
Nobody wants to hear that he’s asking too much for his house.
Economists say that house prices, unlike shares of stock, tend to be “sticky” on the way down, meaning that sellers are generally slow to lower their prices when the market softens.
“They say they’re going to be dammed if they’re going sell their house for less than it’s worth,” said Carl Case, a housing economist and professor at Wellesley College. “They think it has some intrinsic value. But in truth, any asset is worth what someone’s willing to pay for it.”
When a market slows: Inventory rises. Asking prices fall. Sellers take their houses off the market and then re-list them.
“What you’re seeing is consistent with a coming slowdown,” Case said. “It seems to start at the high end in the big fancy places and spread.”
Walter Molony, a spokesman for the National Association of Realtors, in Washington, described it not as a slowdown but rather as a “rolling boom” that began in cities such as Boston, and spread to smaller metro areas such as Providence. Now, the boom has moved on to Arizona and Florida, where house price appreciation is running at 45 percent or higher.
“After you see a market go through a period of exceptional price growth, there’s an actual slowing down that occurs,” Molony said, “which is healthy long-term…because otherwise that’s going to create affordability problems.”
But will prices fall in the near future? That’s a question nobody can answer for certain.
David Lereah, the chief economist for the National Association of Realtors, said that during the last 4-1/2 years, “no area that has experienced a sustained period of double-digit price growth has later seen a price decline.”
But the realtors association is projecting that house prices nationally will rise, on average, about 5 percent next year.
Thomas Pearlman, the owner of the Tudor for sale on Blackstone Boulevard, said he isn’t worried.
When he put the house on the market three years ago for $5 million, Pearlman said, he was “testing the market, because it was very tight then.”
Nobody even came close, he said.
Now, he said, he has become more realistic at $1.95 million. With renovations, he said the house cost about $200,000 in 1960.
A lawyer and former legislator and Providence councilman, Pearlman, now 78, lives with his wife in a smaller house down the block. He visits the house on Blackstone to swim in the pool.
“This is where my children grew up,” Pearlman said on a recent afternoon, leading a reporter on a tour of the property.
The man, like his house, has a look of elegance from another era. Plaid bow tie. Navy blazer. Brown brim hat.
The living room and master bedroom, Pearlman said, are part of the “new wing.” It was redone in 1928. Old family snapshots cover a kitchen bulletin board.
Outside, Pearlman stepped into a side yard and settled into a chair under a shady tree, with a view of the swimming pool.
“Do you want to know if the housing market is going to go down?” Pearlman said, flatly. “Yes, it’s going to go down.”
He measures housing market forecasts not in months or years, but in decades.
“There came a time when the market was glutted in 1960, and there came a time when the market was glutted when the banks went bust,” Pearlman said. “The East Side always came back -- and came back stronger.
“I have no doubt that this property is going to come back,” he said, gazing toward the swimming pool, “and people will be begging for houses.”
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