COVID-19 shows it can heat up body temperatures and well as the local real estate market, bringing boom times this past 10 months with home sales and bringing out-of-state buyers to the Ocean State.
Local real estate agents confirm the obvious that many residents have been chatting about for months: Homes are selling like hot cakes and they aren’t on the market long.
“The lack of inventory created fierce competition among buyers, which in turn reduced the number of days a listing stayed on the market from 59 days in November 2019 to 41 days last month,” Kerry Park, a spokesperson for the Rhode Island Association of Realtors, said about November 2020 figures.
There has certainly been a surge in out-of-state buyers to the South County region this year, said Nate Chatterly of North Kingstown’s Caldwell Realty.
“This has also carried over to the custom home builders and new construction as well,” he said, adding, “With COVID coming along and more and more people being able to work from home, they are no longer putting as much of a premium on proximity to places like Boston and New York City.”
For the homebuyer with a large income those areas might provide, this means “the price of real estate here in Rhode Island is a fraction of what they would pay especially for waterfront property,” he said.
Shannon Buss, with Randall Realtors in North Kingstown, and Robin Leclerc, with Residential Properties, Ltd. In Narragansett, agreed.
“In my personal experience with South County homebuyers, the market is extra competitive. Inventory is low and interest rates are low which has created an extreme demand. I have been practicing for 16 years in RI, MA and NJ and have never seen a market so fierce,” she said.
Leclerc said the attractions also include a “coastline with the most beautiful beaches in RI, close access to the Block Island Ferry, lower tax rates and quaint communities.”
RI Realtors data shows an increase in out-of-state buyers, particularly from New York and Massachusetts. When comparing November 2019 to this past November, home buyer traffic from those areas grew 159 and 63 percent.
Buss also offered that buyers are “in the ring” with multiple offer situations that require creative offers and out-of-the box solutions to beat the competition.
“One of my recent home buyers were beat out on several properties after submitting very competitive offers. Ultimately, they decided to purchase land and build their forever home,” she said.
That solution was actually less expensive in the long term than purchasing a resale and overpaying for it in this market, she explained.
“Multiple offers have driven record high sales prices that many cannot compete with. Our local buyers are competing with out-of-state buyers who want a coastal property rather than working from home in the city,” she said.
For South County, the driving issue for quick sales – some on the market just a few days while others a little longer – remains its proximity to waterfront activities and many willing sellers looking to cash in on the COVID market potential, real estate agents said.
“If I had to pick one unique issue that was driving the market in South County in 2020, it would be the amount of high-end waterfront property that South County has in relation to the rest of the state,” Chatterley said.
Leclerc said close to the ocean, whether high-end, middle-of-the-road or rental considerations, along with a perceived safer distance from COVD-19-plagued high-density living areas, has prompted many calls to her.
“In 2020, I have experienced a plethora of customers and clients that want to purchase here, solely for a “get-a-away” place, for certain reasons like the NYC shutdown due to the pandemic. People got scared with no place to go,” she said.
Numerous inquiries for rental properties also came from people in New York City, as well as other states, who wanted to rent for one to five months or so, specifically to be in a safe area, she said.
This has created a shortage for the itinerant population who live in low-cost winter rentals whose prices skyrocket for the summer tourism business. New buyers and renters have now devoured many of those once-cheap winter rentals. Local community activists have become concerned about an affordable housing shortage for these below and just-above-the-poverty-line residents.
Coming to Rhode Island for that home by-the-sea setup also was a driving issue because of remote work for adults and distancing learning allowed more mobility, said real estate agents.
“With children distance learning, it’s the same. Families are able to spend more time together at home so they have re-imagined their spaces and requirements in order to make it an opportunity and a family experience,” Buss said.
Leann D’Ettore, president of the Rhode Island Association of Realtors, said the features buyers want are changing and that’s fueling demand.
“Offices or Zoom rooms, exercise rooms and open space are very desirable amenities right now. It makes sense for people living in cities and more expensive areas to make a move if they are now able to work remotely in a place that more affordably meets all their needs,” she said.
These and other agents said that anyone thinking of selling or buying need to consider carefully their approach in this fast-moving market.
Tips for Buyers and Sellers
Local real estate agents offered the following tips for people entering the market on either side of a transaction:
• Find a real estate agent who knows the market well and whose experience will be beneficial for the right transaction for your desired property and ability to afford it.
•Interpret the market. Whether buying or selling, the strategy session with the agent is important. This market is extremely competitive and you need a strategy entering the market.
• Choose your own lender and attorney so that you are comfortable throughout the entire process, which can become tedious with the various lending and legal requirements.
• When buying, start the process early, get your financing in line before you start looking at houses. Know what you don’t want in a house before focusing on what you do want. For instance, don’t over reach for a house just because it has that porch you always wanted.
•Have a price you are willing to pay for a house in your head before you even look so that once you look at it you can make your decision fast.
• If buying for investment purposes, tap the knowledge and experience of the agent about the rental market and how to strategically maximize the investment opportunities.
• When selling, again start early. Review with the real estate agent your needed property improvements to maximize return. Clean and organize your home. It is one of the cheapest and best returns on getting a desired price.
• When selling or buying, timing is important. It’s a hot market and overlooking some steps may affect the eventual price you pay or the proceeds you receive.
• Be prepared to act on price. Negotiations on price these days have less allowances for contingencies and fewer enticing inclusions such as buyers contributing to seller closings costs or buyers offering rent-back options to the seller so they have time to find suitable housing.