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Second Homes on the Rise in Rhode Island

Wednesday, February 05, 2014

 

Following the recent recession, vacation and second home purchases dropped dramatically as buyers became more conservative and shifted to wealth preservation. Ironically the values for these properties in Rhode Island fared far better than most of the vacation destinations in the United States despite poor sales volume for several years. Now house hunters are flocking back into this segment and sales have been brisk.

Rhode Island is, and has been for a very long time, a relative bargain for vacation homes. This becomes very evident simply by driving an hour South into coastal Connecticut or North and East out on to the Cape. Pricing in these areas is dramatically higher. A little further out to the Hamptons or Nantucket and vacation homes become attainable only for the super wealthy.

Sale of luxury homes increased

The National Association of Realtors has stated that Nationwide the sale of luxury homes costing more than $1 million increased almost 47 percent from July 2012 to July 2013 and locally we have seen inventory scarce in our most popular second home and vacation areas. Fortunately, we have loads of options in Rhode Island at far lower prices. Even waterfront properties can be purchased in desirable areas for as little as $250,000 dollars.

According to the National Association of Realtors, Nationwide the typical vacation-home buyer was 50 years old, had a median household income of $88,600 and purchased a property that was a median distance of 305 miles from the primary residence; 35 percent of vacation homes were within 100 miles and 37 percent were more than 500 miles

Rhode Island Rediscovered

Rhode Islanders have famously purchased vacation homes just a few short miles from their primary residences, due in short, to over 380 miles of beautiful coastline. Whole communities moved south in June from Cranston, Johnston, and other Northern Rhode Island communities to Bonnet Shores, Charlestown, Green Hill and other south shore meccas. Now driving thru these areas you will see more cars in the driveways with plates from New York, Connecticut, and Massachusetts than Rhode Island plates. Rhode Island is being discovered again.

There have been many notable high-end sales in our State in recent months. Not the least of these was the purchase in Watch Hill by pop star Taylor Swift. Newport is a contractors dreamland as the uber affluent snap up bargains on mansions and vacation homes while investing millions into renovations and improvements. The handwriting is on the wall... and the bargains are drying up.

Still, there are opportunities all over the Ocean State for everyone. Interest rates have been at historic lows and many Rhode Islanders have taken the opportunity to invest in vacation and second homes. Narragansett and South Kingstown offer investment opportunities in moderate price ranges that have the added benefit of winter rental income from URI students. Affordability here is the key to the brisk sales.

NAR Chief Economist Lawrence Yun said favorable conditions are driving second-home sales.

“We had a strong stock market recovery, which helps more people in the prime ages for buying vacation homes. Attractively priced recreational property is also a big draw,” Yun said in a news release.

Rhode Island offers the one of the best vacation home markets anywhere. Steadfast values and a broad range of options and pricing in the marketplace will continue to draw new buyers. If you're on the hedge trying to determine if now is the right time. Well, I'm writing to tell you... Pull the trigger.

 

This column is part of an ongoing sponsored content series with Prudential Gammons Realty.

 

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