Reduced prices aimed at luring buyers to R.I.’s high-end real estate market
By Christine Dunn
Providence Journal Staff Writer
3/27/10
Article
Earl and Susan Sampson, the owners of Sakonnet Vineyards, had Broadlawn, their English-style farmhouse in Little Compton, on the market for $4.5 million in 2008.
Two years later, they have cut the price to $3.45 million, changed their real-estate agent, and become flexible about their wish to sell the 19-acre property all in one piece.
The Sampsons’ plans to sell were caught in a downturn in Rhode Island’s luxury home market, the last segment to decline when the recession hit, and now the last to emerge.
While there was a 16-percent increase in house sales in Rhode Island in 2009, compared with 2008, there was a 40-percent decline in sales of houses priced at $1 million and above during the same period. The Warren Group reported only 76 high-end sales in 2009, compared with 128 in 2008.
The slowdown in sales can be attributed in part to the reluctance of buyers to pay the list prices that some houses commanded in 2006 and 2007, the peak of the bubble in the luxury market.
Now that sellers are finally adjusting their prices downward, buyers are returning to the market.
Buyers “may have changed their price range, from two million to one million, they may have changed their dream house from huge to smaller, but there are many more people out there today as buyers than there were this quarter last year when there was so much paralysis,” said Sally Lapides, president and CEO of Residential Properties Ltd.
“We had some very unrealistic price points between 2006 and 2007,” Lapides said.
But “there are more people that now feel that our market is, if not at the bottom, is close to the bottom,” she said, and this makes buyers feel more “confident.” 
One example of a major price cut is Gray Craig, the Middletown mansion purchased in August 2007 by actor Nicolas Cage for $15.7 million. It is now on the market for just under $10 million, after starting at $15.9 million in October 2008. Gray Craig is an extreme example, the case of “an emotional impulse buyer” who bought at a market peak, said John Hodnett, a principal broker with Lila Delman Real Estate.
In January, Middletown’s finance director reported that Cage owes roughly $128,000 in unpaid taxes on Gray Craig, and in October 2009, the Oscar-winning actor sued his former business manager, claiming the man’s advice led Cage toward financial ruin.
But Gray Craig is not the only marked-down mansion in Rhode Island.
Wrentham House, an 1891 stone mansion on Ocean Avenue in Newport, was sold last summer for $6.51 million. The historic property, designed by renowned Newport architect Richard Morris Hunt and landscape designer Frederick Law Olmsted, had been on the market for more than four years, and had been earlier priced at $14.4 million.
Oakwood, a historic mansion on Narragansett Avenue in Newport, recently went under contract, according to Hodnett. The house, restored by owner Brian O’Neill, the developer of the Carnegie Abbey Club in Portsmouth, was most recently priced at $7.9 million, but it went on the market in 2008 with an asking price of $10.75 million.
Oakwood sold for $2 million in 2000, $3.5 million in 2002, and $4 million in 2005, according to Hodnett.
Ray Mott, broker/owner of Properties Unlimited, in Charlestown, said he typically withdraws unsold houses from the market in the winter and reintroduces them in the spring.
He said that in late 2009, in conversations with clients whose properties had failed to sell in 2009, 16 of 18 clients told him that they “really want or need to sell” in 2010.
“Almost to a person,” those properties are being re-listed with lower prices this spring, Mott said.
In Jamestown, a waterfront house at 716 East Shore Rd., priced at nearly $5.8 million in 2006, was sold on Nov. 2, 2009, for $4.6 million.
Judy Chace, of Residential Properties Ltd., who was the listing agent at the time of the sale, said the property at last “was priced correctly.”
Chace said it sometimes takes time for a seller to accept that the market has changed. Chace was not the first agent to list 716 East Shore Rd.
“It’s better to be the first born, the second wife and the third Realtor,” she said.
Dr. Lucia Matthews, a therapist, said potential buyers who looked at her waterfront contemporary house in the Rumstick section of Barrington in 2009 “were resisting the concept of negotiation.”
She said she and her husband, Paul Matthews, who is an international business consultant, had priced their house at $3,995,000 –– 20 percent above the assessment –– because that “traditionally has always been the starting point.”
But buyers “thought we were pricing the house high above the going rate,” she said.
The couple have withdrawn their house from the market, but they plan to re-list it in 2010. They also are exploring creative marketing strategies, including the use of social media.
Dr. Matthews said they haven’t settled on a new listing price for their house, but one thing is certain: It will be lower than before.
BY THE NUMBERSLuxury home sales
The number of single-family houses sold in Rhode Island at prices of $1 million and above
2009: 128
2008: 177
2007: 154
2006: 145
2005: 76
SOURCE: THE WARREN GROUP