There were plenty of people seeking to purchase that perfect home in Rhode island, including in the high-end market, according to local real estate agents. It was finding those homes for buyers that proved challenging last year.
For a second straight year, sales of high-end homes in Rhode Island fell as the supply of properties priced at $1 million or more could not meet the demand for them.
1. Sea View Villa | 333 Tuckerman Ave. | Middletown Price: $15,000,000 | Date of sale: Jan. 23, 2023 Buyer: 333 Tuckerman Avenue Holdings LLC Seller: Spiratos Family Limited Partnership Broker(s): Gustave White Sotheby’s International Realty (buyer and seller) Year built: 1881 | Bathrooms: 9 full | Bedrooms: 11 Living space: 8,105 square feet Previous price: NA / COURTESY GUSTAVE WHITE SOTHEBY’S INTERNATIONAL REALTY
According to the Rhode Island Association of Realtors, 560 homes in the state sold for more than $1 million in 2023, down 9.2% from the number that sold a year earlier. Still, the 2023 mark is nearly twice the number of million-dollar-plus sales in 2019, before the COVID-19 pandemic. That year, 293 sold.
Across the entire market at all price points, the number of single-family home sales in Rhode Island last year dropped 22.5% from 2022, the Realtors association says. While 2023 was still considered a strong sales period, local real estate agents point to one factor – inventory – as to why sales of homes priced at more than $1 million crept backward for a second year from the all-time high of 698 in 2021. It’s a phenomenon that’s happening at all levels of the housing market.
“Right now, the driving factor for us [is] inventory,” said Paul Leys, co-owner and broker for Gustave White Sotheby’s International Realty in Newport.
Local real estate agents are optimistic that the number of luxury homes on the market will improve this year. But exactly when that will happen is unclear.
“How I wish I had that crystal ball,” said Lori Joyal, sales manager and broker for Lila Delman Compass.
You have to go back to the Great Recession when the number of million-dollar-plus homes sold in the state declined for two straight years. There were 190 such homes sold in 2007, then 138 in 2008 as the mortgage industry underwent a historic implosion. Sales bottomed out at 85 in 2009.
Also, the median sales price among luxury homes retreated from a record high of $1.8 million in 2022 to $1.35 million last year. That ties the 2019 mark for second-lowest median home sales price recorded by the Realtors association since 2005 – the lowest was $1.31 million in 2006.
Seeing median sales prices and the number of sales dip is “the natural cycle” of real estate, Leys says.
Heightened interest rates in 2023 also may have been a factor in transactions even in the million-dollar-plus range, real estate agents say. Jumbo mortgage rates – loans for more than $766,550 – jumped nearly 2 percentage points between January and October, from roughly 6.4% to 8.1%.
While many luxury homebuyers do cash deals, Sally Hersey, president of the Rhode Island Association of Realtors and agent for Williams & Stuart Real Estate, says some potential buyers “may have been waiting” for rates to decrease for a better deal in return.
One thing that hasn’t changed: Waterfront homes along the Rhode Island coastline are still fetching the highest prices.
The 8,105-square-foot home at 333 Tuckerman Ave. in Middletown known as Sea View Villa was the top sale in Rhode Island last year, selling for $15 million.
The Queen Anne-style house with Italianate porch sits on 4 acres with an expansive lawn that runs to the rocky seashore on Easton’s Point with a view of the Cliff Walk across Easton’s Bay. Built in 1881, the property had been owned by the Spiratos family since 1945.
Anthony Spiratos, a real estate developer who has run for a state Senate seat a few times since 2015, listed the property for $25 million in August 2022. He founded Dine Out Life, a food-delivery company supporting local restaurants, during the COVID-19 pandemic.
All top 11 homes sold last year were in Newport County, Washington County and on Block Island. A 4,545-square-foot contemporary home on the island at 928 Coast Guard Road sold for $6.65 million.
The number of homes sold in Rhode Island for more than $1 million saw another drop in 2023, declining by 9.2% from the year before. It is the first time since 2009 in which the state had decreases in high-end home sales in consecutive years. Four of the top 10 home sales last year were in excess of $10 million. / SOURCE: RHODE ISLAND ASSOCIATION OF REALTORS
Also, Fox Sports Radio personality Colin Cowherd and his wife, Ann, in August 2023 purchased Highland Lodge at 2 Ninigret Ave. in Westerly for $8.5 million. Portsmouth saw its highest home sale ever last year when a 3,552-square-foot home along the Sakonnet River at 179 Indian Ave. sold for $8.55 million.
Hersey says a stable market needs about five to six months’ worth of inventory. However, she says the market has had less than two months’ inventory for several years.
Leys says that in a normal market he would have between eight to 12 listings and they would have “for sale” signs on them for about eight to 10 months. Now, he would have about two listings at all price points and they sell “within one to two weeks.”
It’s a double-edged sword for real estate agents.
“When you do have something to sell, it’s going to sell and not stay on the market,” Leys said.
In recent years, real estate agents have reached out to high-end property owners to ask if they are interested in selling their multimillion-dollar homes in an effort to drum up inventory to meet demand.
In 2023, however, Gustave White agents, including Leys and sales associate David Huberman, had less success than they did in 2021 when the pandemic spurred a rush of people looking to move to more-secluded homes to get out of the city. That desire to change locations has subsided, local agents say.
“It’s not a vacation home for them anymore. It’s their permanent residence,” Huberman said.
Hersey says some real estate agents who sought out potential high-end sellers emphasized that they could get top dollar if they put their property on the market. Other agents relied on developing strong relationships with past clients and patiently awaiting their decision to sell.
“The most important part of the sale happens after the sale where you take care of a client and they always remember you,” Joyal said. “When they’re ready to sell, they’ll call me.”
The luxury housing market is not all about coastal estates.
Inland areas, such as Providence, are becoming more attractive to high-end buyers. The Realtors association says the percentage of million-dollar-plus homes sold in Rhode Island’s capital city has increased sixfold since 2019. Plus, 45% of those who bought in Providence last year came from out of state, up from 34% before the pandemic.
National real estate marketplace company Zillow Group Inc. also sees Providence as trendy, predicting that the city will be among the top five hottest housing markets in the country this year. Hersey says for the high-end buyer who is looking for a “beautiful city experience” close to fine dining and arts and culture, then Providence “is a can’t-miss city.”
Real estate agents foresee inventory increasing at all price points this year, but it won’t be overnight. Leys says interest rates will need to decrease enough to get what he calls “incidental sellers” off the fence. Both Leys and Joyal feel buyer demand will remain strong and homes will sell just as fast as they go up for sale.
Hersey believes the high-end market will have a “wait-and-see” attitude given that 2024 is a presidential election year and any shifts in the stock market as a result could impact the country’s economy. Nevertheless, she says Rhode Island in general needs more housing development and the Realtors association is working with lawmakers to create legislation to help with that.
Still, the bottom line for real estate agents for 2024, they say, is having a product to sell.
“The supply needs to catch up with the demand,” Huberman said. “We’re still seeing multiple offers [when houses go on the market]. As long as that keeps happening, people are waiving financing contingencies and inspections. But until that [increased inventory market] correction happens, it’s not going to change.”
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