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Luxury Real Estate Market Overview – Emilio DiSpirito
By Emilio DiSpirito, Real Estate Advisor/License Partner of Engel & Völkers Rhode Island
When existing in the luxury real estate industry, it is important to have a good handle on the state of the market at any given moment. That’s why we’re going to take a look at the ups, downs, and projections of the current luxury market.
- In-Demand Real Estate Price Points
Overall, the real estate industry has been heavily affected by COVID, for good and bad. Demand for houses increased, supply plummeted, and price points wavered as many lost jobs and a steady income. Interestingly, the market for luxury houses has not experienced quite the same effects. As of February 2021, the median sale price of a luxury single family home sits at 1.36 million dollars, which is $40,000 higher than it was in February of 2020. Paralleling this is the median list price of a luxury single family home, which increased from 1.55 million dollars in 2020 to 1.75 million in 2021. Even with the increase of listing prices, most of these houses typically sell for 98.39% of their listing price. Therefore, look to list some of these properties in the near future, you can get almost as much as you ask for, especially if you market it properly[1] .
- What Creates this Demand?
Throughout COVID, even those who kept their jobs were pushed out of offices and back into their homes. Consequently, they were pushed out of cities and into suburbs along these cities’ outskirts. We spent most of our time at home in 2020, so more than ever there was a focus on living in comfort. As people started to see home as a main location to exist within, there was a pivot from the “less is more” attitude about housing to a desire for fully amenitized living areas where people can relax, cook, eat, sleep, and entertain.
As a result of the shift to working from home, many people no longer needed to live in the cities their businesses are in. Therefore, those people started to move from cramped apartments to spacious suburban homes outside of cities. This can be evidenced beyond the effects of COVID by looking at Apple and Amazon employees in Seattle. Corporate workers at these companies have a lot of flexibility when it comes to where their work can be done, so the suburban towns outside (but in proximity to) Seattle have become more densely populated over time.
Additionally, there were substantially low mortgage rates throughout 2020, meaning that people could acquire these houses at an affordable price, and keep it affordable throughout their time living there. However, as 2020 has closed out and these houses have been sold, the market has switched. Now, there is far higher demand for property than there is supply of said property, which will only serve to increase listing prices.
- Stagnant Home Prices
Despite the numbers listed in section one supporting the claim that you can sell a single family home at nearly the price for which you list it, expensive homes remain difficult to sell. It probably comes as no surprise that, in large part, this is due to the scarcity of the job market throughout COVID. Businesses suffered heavy losses, and with that, many of their workers were laid off and left without other options. Therefore, many still cannot afford the premium prices of luxury real estate.
Additionally, as alluded to in section two, supply has decreased dramatically. In fact, there are about 50% less houses on the market now than there were a year ago, though demand has stayed about the same and the number of sales has increased. Despite the number of sales increasing throughout Q1 of 2021, the median sale price has not increased at the same rate of the median listing price. This means that, although people desire the luxury homes offered, they are not willing to pay more for them.
As COVID starts to turn around, we are seeing people become less keen on living far away from cities than they were at the height of the pandemic. However, we still have this sense of “home” as a central living area and work space. Despite this idea persisting, we are likely to see similar things happen to the market that were happening before COVID: there were many homes listed at luxury prices that did not sell. This is a result of the millennials these houses were marketed towards, who either didn’t have the money or felt that they would rather be within walking distance of retail and restaurant locations than isolated on the outskirts of the city.
- What Makes an Area Desirable?
Beyond the obvious necessities of a house being met, and the desired amenities being present, what is it that drives people to buy houses in a certain area? Naturally, everyone has their own preferences and criteria about what makes a town/city exciting to live in, but these are some of the top answers. Let’s take a particular look at how these facets are met in the Rhode Island luxury market.
4a. Proximity to Businesses
When deciding on an area to live in, people often consider how long it would take them to run errands, how far they are from the nearest restaurant, and how far the nearest hospital is. The great thing about choosing a home in Rhode Island is that, no matter where you look, you’re never more than a few minutes from all the businesses you likely frequent.
4b. School Systems
All families should be concerned with the public schools offered in the area they are considering moving to. After all, this can be the difference between your kids being prepared for college and not. Rhode Island has some top notch public schools, particularly in areas like Barrington, East Greenwich, South Kingstown, and North Kingstown, which are areas we’ll cover a bit more in depth later.
4c. Views
What can you see from your house? Are you within driving distance to a place that offers great views? Is your ability to properly enjoy sunsets hindered by towering buildings? These are all questions to consider when looking for a new area to live in. Of course, with the luxury real estate market in Rhode Island, most of the views will be centered around water and beaches (after all, it’s the Ocean State!). However, there are plenty of beautiful landscape views available on the East Side of Providence as well, as you overlook a bustling skyline from the quiet of your suburban estate.
4b. Weather
Weather is often a dealbreaker for people when moving somewhere new. Southerners cannot withstand Northeast winters, while Northeasterners would surely miss the vibrant autumn foliage should they move south. While the Rhode Island weather can be unpredictable and sometimes flat out uncomfortable, the summer months are rife with opportunity for beach days (Newport, Narragansett), evening ice cream runs (Brickely’s, Sundae’s), and outdoor dining (Capital Grille, Caffe Itri). Meanwhile, the autumn months bring with them a spectacle of color unique to the northeastern climate.
- Best Luxury Markets in Rhode Island
While there are many great places to live in Rhode Island that offer top-notch versions of the above, there are a few places that cater to the luxury market in a way that other areas do not. These areas attract people from all over because they offer quiet, safe spaces to raise a family, proximity to businesses, and easy beach access. In fact, 53% of the people who bought houses for over $1M dollars in Rhode Island in 2020 were from a different state, up from 44% in 2019.
5a. Newport
Newport is famous for its beaches, multi-million dollar mansions, and Tennis Hall of Fame. With the Newport Cliff Walk offering ocean and mansion views, main street providing a variety of retail and upscale dining options, and places to watch elite tennis and baseball, there’s something for everyone in Newport.
5b. Narragansett
If you’re looking for a less crowded, but equally as enjoyable beach town experience, check out the living situations in Narragansett. In Narragansett, you are sure to find beach access, live music, and quiet dining experiences as well as some good hiking spots as well. Also, it never hurts to have a quality, locally crafted beer named after you.
5c. East Greenwich
As outlined previously, East Greenwich offers some great public schools. In addition to that, it also strikes a great balance between living in Providence and living in Newport as you are always about 25 minutes from either place. That way, you could spend half your weekend galivanting through the capital city, while the other half you could spend relaxing at the beach.
- Up-and-Coming RI Real Estate Markets
While the aforementioned Rhode Island real estate markets are tried and true, there are a few places receiving attention that you may not see advertised elsewhere, so we at Engel and Völkers want to give you the inside scoop. Keep an eye out for the areas of West Greenwich, North Kingstown, Lincoln, and Cumberland in the coming years as they are likely to see an increase in listing prices as people discover these gems!
If you have any questions, want to chat about these markets with the experts on our team, or need help finding a home that best suits your family’s needs, reach out to us at:
[email protected] – 401-359-2338 – Eastgreenwich.evrealestate.com
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Emilio DiSpirito
If you would have asked me what I wanted to be growing up, little Emilio would have told you “an archeologist” or “an architect” despite the fact that at age 8 I had my first lemonade stand, landscaping business and was recording my first “news show” on my boombox! Well, I never was much good at trigonometry and did could not see myself traveling for months and possibly years at a time, so becoming an architect or archaeologist clearly did not happen!
Fast forward 26 years later and I’m running a team of the finest residential real estate professionals, own a media company and host my very own radio news show about real estate!
In September of 2017, I married my best friend, Jaclynn, and we have two wonderful children, Destinee and Emilio, V. We have 3 dogs, one of which is a rescue and live in lovely Rhode Island. Jaclynn owns a high-end hair salon in addition to an on-location hair and makeup business!
For 7 years straight it seemed that I had put in more hours than the day had to give on my real estate business. 7 days a week, 14 to 16 hour days, without a break! Why? My friends and family did not understand the sheer magnitude of moving parts and services we offer to our clients during a transaction! One slip up or one missed call could mean make or break for someone’s dream home or even a lost deposit!
Running a team of like-minded, highly qualified and capable professionals has allowed me to offer a very streamlined, simplified and efficient approach to the sales process for our clients and allowed me to earn personal time again with my family while not missing a beat for my clients!
When I’m not working, I’m with my family, riding my mountain bike, eating at a number of local restaurants, enjoying live entertainment, hiking, skiing or reading!