Housing Prices

[AriPVD]

Everyone is so quick to doubt this luxury housing! I assure you, the market will sort it out. The half dozen experienced national developers making $100 million investments can't all be wrong! This skepticism is frustrating.

[runawayjim]

Everyone is so quick to doubt this luxury housing!  I assure you, the market will sort it out.  The half dozen experienced national developers making $100 million investments can't all be wrong!  This skepticism is frustrating.

<{POST_SNAPBACK}>

the reason is that there are a lot of residents who are having a hard time finding decent relatively affordable housing (me included). i don't need affordability of a low cost housing project, but i certainly cannot afford any of the newer developments either (jefferson place, rising sun, and now the ones they're going to be building in parcel 2). i think the majority of those moving in are young professionals who are just starting out. and those that rent are either lower class families and young professionals. you generally don't find families who can afford to buy a home renting a luxury apartment or condo. one of the beauties of providence for me was that it was pretty affordable. now i'm having a hard time finding a decent 1 bedroom apartment in a decent area for a decent price. i don't want to move out of the city, but it's beginning to seem like i may have to consider north prov or east prov or even as far as warwick (which i really don't want to do).

[AriPVD]

Those are very separate issues. I agree, affordable housing MUST be addressed if Providence is to continue to grow...but, the addition of luxury housing 1) expands the market supply, thus reducing prices overall (simple supply/demand model), and 2) adds much-needed revenue to the city's tax coffers, allowing for non-profit and government development of affordable housing.

[Jenkins]

...but, the addition of luxury housing 1) expands the market supply, thus reducing prices overall (simple supply/demand model)

<{POST_SNAPBACK}>

There is another very real possiblity. The luxury dwellings are quite successful, downcity turns the corner into becomming the hippest city 'hood to live in, and prices rise even further, as demand outstrips supply once again. The building of luxury condo's in Boston certainly has not resulted in lower overall housing prices. I know I am comparing apples and oranges to some extent, but...

[runawayjim]

There is another very real possiblity. The luxury dwellings are quite successful, downcity turns the corner into becomming the hippest city 'hood to live in, and prices rise even further, as demand outstrips supply once again. The building of luxury condo's in Boston certainly has not resulted in lower overall housing prices. I know I am comparing apples and oranges to some extent, but...

<{POST_SNAPBACK}>

my thought, and this is also a real possibility, is that they flood the luxury housing market and there's all these buildings that just remain there vacant. i really don't see the market there, at least not in providence. there's not enough going on downtown for people to really want to live there. there's very little street life after 6pm, unless you count the 2-3 nights a month that waterfire is going on (and waterfire is kind of getting old for people who have already seen it multiple times). other than the bars and nightclubs, what is there that someone who could afford one of these luxury apartments would want to do?

but yes, it's possible we could run into the problems of boston. i find it funny that boston is more expensive than new york, but it's much less of a city.

[AriPVD]

As we've discussed on here ad nauseum, the market is not as constrained as you think! Providence is 45 minutes from Boston. The two metropolitan areas blend together almost indistinguishably. You refer to Providence as if its isolated in Montana...it's wedged between Boston and New York!

[eltron]

As we've discussed on here ad nauseum, the market is not as constrained as you think!  Providence is 45 minutes from Boston.  The two metropolitan areas blend together almost indistinguishably.  You refer to Providence as if its isolated in Montana...it's wedged between Boston and New York!

<{POST_SNAPBACK}>

no, I think you misinterpreted that....I'm saying that demand is outstripping supply, not the other way around. the market is constrained by the supply, not the demand. what I was agreeing to is that building more housing is not simply going to moderate the prices, as the supply is already so far exceeded by demand, which as Jenkins noted we have seen in Boston (and is indeed discussed in an article in the globe today).

despite all the construction, we are far from meeting the housing demand and building more at the current rates will not catch us up. To get moderately priced housing is going to take something much more innovative than simply building more upper-end housing to up the supply....

[ruchele]

despite all the construction, we are far from meeting the housing demand and building more at the current rates will not catch us up. To get moderately priced housing is going to take something much more innovative than simply building more upper-end housing to up the supply....

<{POST_SNAPBACK}>

I agree with eltron that the need for housing of all kinds throughout the state FAR outstrips the current production rates. I recently saw a presentation by RI Housing that said we need to produce thousands and thousands more units a year throughout RI to even come close to meeting the needs in the next few years. I wish I could remember the exact figures, but it was something totally unattainable. The thing is, to have a real effect, housing at all levels of affordability needs to be majorly increased. It seems to me that the balance is completely off with the number of "luxury" units being produced compared to units for those of us in the non-luxury category.

I also agree that there is not enough going on downtown to make it feel like a "real" city center, especially at night. Where are all these people going to go for beer and coffee? Where do you get pizza at 1:00 am? Restaurants close at 9:30 or 10:00, and there's hardly even any takeout! If I had the money, I would open three cafes, three neighborhood bars, two corner groceries (NOT another 7-11), three great, cheap restaurants with late-night delivery and a hardware store downtown (The cultural opportunities already exist.) Then it will start to feel like the "city living" everyone is going on about.

[KRC]

Everyone is so quick to doubt this luxury housing!  I assure you, the market will sort it out.  The half dozen experienced national developers making $100 million investments can't all be wrong!  This skepticism is frustrating.

<{POST_SNAPBACK}>

Excellent point! I agree whole heartedly. The companies investing now are the smart ones. You know they did a ton of research on the market prior to even making their intentions known. I know a many who works for JPI. They built the Jefferson, behind the mall. Prior to one shovel hitting the ground on that project, they researched the Providence market to death. They knew the building would occupy way before they started the project. Everyone was so sure they would never make it. Now, try getting into that building.

We don't normally see eye to eye on many things, but on this topic I've got your back, Buddy! I'm with you, these projects will make it.

[gregw]

Exactly. And Struever Bros out of Baltimore didn't get to be what they are, a multimillion dollar development company with a national profile, by being dewey eyed sentimentalists. I'm sure they and the other big players who are responsible for about $2 billion in private development investment in Providence have done the math and know the market better than some naysayers who haven't done any research.

It's important to recognize that Providence is a node within the larger Boston metro whether it is officially counted that way by the Federal govt or not. The area extends south to Providence, west to Worcester, and north to Manchester. Think of it like greater LA or NY and you get the picture. In other words, Providence is not some isolated backwater.

Also I think it's counterproductive to get into this whole "my city is better than yours" debate. Putting down Providence does not enhance Connecticut's cities nor does trashing Connecticut's cities do anything to help Providence.

Excellent point!  I agree whole heartedly.  The companies investing now are the smart ones.  You know they did a ton of research on the market prior to even making their intentions known.  I know a many who works for JPI.  They built the Jefferson, behind the mall.  Prior to one shovel hitting the ground on that project, they researched the Providence market to death.  They knew the building would occupy way before they started the project.  Everyone was so sure they would never make it.  Now, try getting into that building.

We don't normally see eye to eye on many things, but on this topic I've got your back, Buddy!  I'm with you, these projects will make it.

<{POST_SNAPBACK}>

[gregw]

as for the luxury apartments... i never said they wouldn't be filled (although i do think they're flooding the market with these things).  i do know that the housing market in providence and much of RI is starting to get pretty tight.  i don't see how adding apartments that cost twice as much as a moderately priced place improves the market for those of us who cannot afford these places.  that has not been addressed except by saying "these multi-million dollar investments were well researched".  that's does not address my concerns.  i do not, by any means, want providence to turn into boston where it's nearly impossible to find an affordable apartment unless you move farther outside the city.

<{POST_SNAPBACK}>

You have to keep in mind that the developments in Providence come at very different price levels and cater to different segments of the market. It's not all luxury. Consider Rising Sun or The Plant by SBER: mostly market rate; or Monohasset Mill or Westfield lofts (former Rau Fastener): actually affordable or even the new Stand condos (under $200 K). Yes, there is a lot of high end stuff but even there you find tiers ranging from horrendoulsy expensive to the upper range of the median (say $1200/m.)

[runawayjim]

You have to keep in mind that the developments in Providence come at very different price levels and cater to different segments of the market. It's not all luxury. Consider Rising Sun or The Plant by SBER: mostly market rate; or Monohasset Mill or Westfield lofts (former Rau Fastener): actually affordable or even the new Stand condos (under $200 K). Yes, there is a lot of high end stuff but even there you find tiers ranging from horrendoulsy expensive to the upper range of the median (say $1200/m.)

<{POST_SNAPBACK}>

i've actually looked into renting at rising sun. the studios start at 650. i have a nice 1br with electricity included for $700. the 1br at rising sun has 1.5 baths, who needs that with a 1br? and those start at $925. hardly what i'd call market rate. and it's not in the most wonderful of neighborhoods either. however, they do have a lot of amenities that most places do not, which i guess increases the rent...

[Garris]

You have to keep in mind that the developments in Providence come at very different price levels and cater to different segments of the market. It's not all luxury. Consider Rising Sun or The Plant by SBER: mostly market rate; or Monohasset Mill or Westfield lofts (former Rau Fastener): actually affordable or even the new Stand condos (under $200 K). Yes, there is a lot of high end stuff but even there you find tiers ranging from horrendoulsy expensive to the upper range of the median (say $1200/m.)

<{POST_SNAPBACK}>

Quite true... I find this "luxury housing" issue very frustrating for several reasons...

1) The assumption Providence can't support this luxury housing...

I consider this totally false. Someone show me one "luxury" (whatever that means) development that has failed outright. In fact, show me one that has been anything less than a success... Going down the list off the top of my head...

- Cosmopolitan: I think it's filled or near filled

- East Side Commons: This large development isn't close to being done with construction, and it's near sold out

- Pratt Condos: Still building it, and there's apparently only 2 units left. $750,000 each...

- Wayland Sq homes: 3 "luxury" homes built right on top of one another, 1.4 million each. The first was just sold, and they just stopped building them...

- Waterman/Butler Condos: 400-650K, and I think they're selling...

- Avalon Apts downtown: Expensive, and my understanding is the place has usually filled

- Jefferson: As far as I know, it's filled or near so...

- Chase lofts: Ari could probably tell us, but it seems to be doing well

- Jewlery District lofts: From what I've heard, they've sold well...

2) The assumption that building "luxury housing" is somehow preventing affordable housing from being built...

I don't understand this argument at all. How does OTW or Waterplace being built or Peerless being renovated equal less affordable housing stock? Many of these downtown buildings have been there since the 1800's, and the property has been there for ages. If there's been such a huge demand for affordable housing downtown, why has it been empty for 60 years? This is pure market forces. There's a supply of people who can afford these places (especially retiring baby boomers, who are a huge demographic and financial force) and the demand is responding.

I still maintain that as downtown develops, other builders will recognize the demand for more affordable housing and they'll respond. I actually believe the presence of the Westin condos, OTW, Waterplace, etc will separate the "true luxury" from everyone else. Someone with an old building downtown won't think they can just slap some housing floors together and call it "luxury" and get top dollar. That's when we'll see more affordable stuff.

Rather than attacking luxury development that, in my opinion, isn't preventing more affordable housing, we need to look at the social forces, economic forces, and political forces preventing affordable housing. It's not the fault of the people with money to spend...

To be continued... (need to work now...)

- Garris

[eltron]

Quite true...  I find this "luxury housing" issue very frustrating for several reasons... 

1) The assumption Providence can't support this luxury housing...

I consider this totally false.  Someone show me one "luxury" (whatever that means) development that has failed outright.  In fact, show me one that has been anything less than a success...  Going down the list off the top of my head...

- Cosmopolitan: I think it's filled or near filled

- East Side Commons: This large development isn't close to being done with construction, and it's near sold out

- Pratt Condos: Still building it, and there's apparently only 2 units left.  $750,000 each...

- Wayland Sq homes: 3 "luxury" homes built right on top of one another, 1.4 million each.  The first was just sold, and they just stopped building them...

- Waterman/Butler Condos: 400-650K, and I think they're selling...

- Avalon Apts downtown: Expensive, and my understanding is the place has usually filled

- Jefferson: As far as I know, it's filled or near so...

- Chase lofts: Ari could probably tell us, but it seems to be doing well

- Jewlery District lofts: From what I've heard, they've sold well...

2) The assumption that building "luxury housing" is somehow preventing affordable housing from being built...

I don't understand this argument at all.  How does OTW or Waterplace being built or Peerless being renovated equal less affordable housing stock?  Many of these downtown buildings have been there since the 1800's, and the property has been there for ages.  If there's been such a huge demand for affordable housing downtown, why has it been empty for 60 years?  This is pure market forces.  There's a supply of people who can afford these places (especially retiring baby boomers, who are a huge demographic and financial force) and the demand is responding. 

I still maintain that as downtown develops, other builders will recognize the demand for more affordable housing and they'll respond.  I actually believe the presence of the Westin condos, OTW, Waterplace, etc will separate the "true luxury" from everyone else.  Someone with an old building downtown won't think they can just slap some housing floors together and call it "luxury" and get top dollar.  That's when we'll see more affordable stuff.

Rather than attacking luxury development that, in my opinion, isn't preventing more affordable housing, we need to look at the social forces, economic forces, and political forces preventing affordable housing.  It's not the fault of the people with money to spend...

To be continued...  (need to work now...)

- Garris

<{POST_SNAPBACK}>

Can we start a seperate thread outside of "Providence v. Hartford" to talk about the affordable housing issue?

this is getting out of control...

[eltron]

Quite true...

[eltron]

oops, and I just created a new one. Cotuit, please rearrange accordingly!

Thanks!

[ruchele]

Now, a couple of issues:

While developers may recognize a huge demand for more moderately priced housing downtown, I doubt much is going to be built without intervention. The market is not going to do it. First of all, as others have alluded to, many of the long-time owners of these buildings are pretty clueless as to properly treat their buildings in the current marketplace (ie. Paolino and their unhealthy obsession with parking lots). They may sell to more visionary folk, but they will sell at exhorbitant prices. In fact, in less its free, acquisition of these buildings is probably prohibitively expensive in order to build moderate priced units.  Converting these buildings to housing ain't cheap. These days, we're talking 200k and up PER UNIT to produce. Obviously, no-one is going to build a unit at 200k and sell it at 150k. Not without subsidy to make up the difference, of which there is extremely little of. So even if there was a market, nobody is going to lose money on it. And the private market is not going to do it.

So NOW, we MUST make developers pay for the priveledge of making money. They have to set-aside 10-20% of their units at the market and below, or pay into a housing trust fund so organizations like AS220 and others can do the innovative housing that we need to keep the city vibrant.

Now I'm a good capitalist and all (albeit with a socialist bent), but I'm telling you this - the market is not the answer.

<{POST_SNAPBACK}>

Here, here, eltron! (but you knew I was on your side)

[KRC]

Now I'm a good capitalist and all (albeit with a socialist bent), but I'm telling you this - the market is not the answer.

<{POST_SNAPBACK}>

I think I just fell in love with you.

[Cotuit]

Now I'm a good capitalist and all (albeit with a socialist bent), but I'm telling you this - the market is not the answer.

<{POST_SNAPBACK}>

The problem with the market right now is that it is far too is easy for a landlord to slap in some granite countertops and some low end stainless appliances, jack the rent, and brand a unit "luxury." There's no true qualifier for that word. Once Waterford, Waterplace, OTW, and Capital Cove come on the market we'll have some real luxury units and these luxury posers will either have to put up or shut up (obviously we have Westminster Lofts already, but they are too few right now).

Hopefully we'll see some more development like the Strand. I don't know if these guys are just stupid or tragically honest. The description of the units in the Journal sounded like they could totally hijack the term luxury based on what the market is currently calling luxury.

[Garris]

The problem with the market right now is that it is far too is easy for a landlord to slap in some granite countertops and some low end stainless appliances, jack the rent, and brand a unit "luxury." There's no true qualifier for that word.

You just repeated my point exactly. The problem, in my mind, isn't that market forces per se are broken, it's the fact that there has been pent up demand for downtown living for a while and absolutely no supply has existed. This lets the granite countertop "slapping" happen, and people will still pay for it, because they want to live downtown, on the East Side, etc. and there aren't any alternatives.

Once Waterford, Waterplace, OTW, and Capital Cove come on the market we'll have some real luxury units and these luxury posers will either have to put up or shut up (obviously we have Westminster Lofts already, but they are too few right now).

Exactly, 100% correct. Once the market has some definition and boundries, that's when we'll see affordable housing. It'll be harder for something like the People's Bank building conversion or that silly little house conversion next to the PP parking garage to happen and them be sold as "luxury" when you've got these truly high-end, gleaming new towers down the street.

I give all these slapdash condo conversions being done all over the city (especially on the East Side) about 10-12 months to get their pie-in-the-sky prices until reality will set in once the entry level luxury tower condos hit the market. It'll be much harder to sell that $490K two bedroom, 1,300 sq foot condo conversion on Benefit, Prospect, or Wayland when you can spend nearly the same and live in a brand spanking new, truly luxury condo downtown.

The affordable housing revolution won't be the inability to sell the new housing downtown (it'll sell), it'll be in the price adjustments and reality setting in all over the rest of the city.

- Garris

PS: I also think some formal policy decisions to promote more affordable housing can't hurt either...

[Garris]

One more thing, BTW... About many Providence neighborhoods lacking essential retail and services (which I think is true), I've asked real estate folks and developers about this, and the answer I get every time is that zoning is the problem. To a man and woman, everyone says that even the city's existing commerical areas (Thayer, Wayland, Wickenden, Broadway, Atwells, etc), if imagined anew today, would not be buildable because of how Providence's zoning is set up, and such zoning prevents the expansion or addition of anything new. For example, one developer told us that most of what we consider "Wayland Sq" (the retail, apartments, shops, markets, etc) would not be allowable under today's city zoning, and that if not for the buildings already here, "Wayland Sq would only be able to be a suburb."

And the problem, in their view, actually isn't so much the NIMBY's, but what they see as the city not desiring density over the last several years, which is fascinating. Our current mayor seems to desire density, so maybe, if you want your neighborhood to allow for more retail and services, you should harrass your local reps to put pressure on Prov's new zoning codes in development to allow for it.

- Garris

[Frankie811]

http://www.rgb.net/portfolio/index.html

[Recchia]

http://www.projo.com/business/content/proj...x.17c2e674.html

Single family/multi-family housing sales down, condo sales up, housing costs up. Seems to go good with all the condos being proposed for downcity.

[Cotuit]

There was something on the news this morning (I was half paying attention to it) about Boston and Providence being the two riskiest residential markets in the country.

[Garris]

There was something on the news this morning (I was half paying attention to it) about Boston and Providence being the two riskiest residential markets in the country.

<{POST_SNAPBACK}>

Wow, housing costs just up 12% in the last quarter alone! Amazing.

I recently mentioned that I read that Providence has one of the lowest percentages of "risky" mortgage lending (for ex, interest only) in the nation, in the top 5 of the lowest percentages. The article indicated that this may show that the increases in those markets might be the "most real" and durable of the "bubble."

- Garris