Why You Should Invest in Providence in 2021

TikTak Houses
April 14, 2020
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Providence is the state capital of Rhode Island and one of the oldest cities in the United States. While it is often overshadowed by the nearby cities of New York City and Boston, Providence is an attractive and vibrant city in its own right. Its universities are among the best in the world, it boasts beautiful historic architecture and it has a thriving arts and tourism scene. 

For real estate investors, these factors help make Providence an enticing market, especially given that house prices in the city have been rising rapidly and still have plenty of room to grow. Here are a few of the reasons Providence makes a good investment opportunity in 2020.

Providence City
Providence | en.wikipedia.org / Kenneth C. Zirkel

A Large Student Population

Providence is perhaps best known for being the home of Brown University, one of the most prestigious universities in the United States and a member of the Ivy League. Brown University alone is the second largest employer in the city and exerts considerable influence on Providence’s culture, society and economy.

In addition, Johnson & Wales University, Providence College, the Rhode Island School of Design, Rhode Island College, Roger Williams University, the University of Rhode Island, and the Community College of Rhode Island are all located or have satellite campuses in the city. 

As a result, the student population is very large, at about 44,000. For real estate investors, that means there is a substantial market for student rentals in Providence, which can provide a stable form of rental income. It should also be noted that nearly half of the city rents—a rate that is well above the national average—showing that for anybody looking into rental properties, Providence is an excellent market.

A Healthy Real Estate Market

The real estate market in Providence is looking very good. The average sale price of a home in the city is currently $258,000, a bit under the $293,689 national average. However, prices are increasing at a rapid rate. The median sale price went up by 9.9% in Providence over the past year, compared to 6.6% nationally. On a square-foot basis, Providence’s sales numbers are even more impressive. 

Property in the city costs on average $118 per square foot, which is a remarkable 18% increase from last year. However, while those gains are impressive, there is still plenty of room to grow. It wasn’t until very recently that home prices had gotten back to levels that had been seen over a decade ago prior to the Great Recession. That suggests that Providence housing values are at an appropriate level and are not overheated, meaning there is still lots of potential for upward momentum.

Providence City by Night
Providence | Nicholas Millard / pcma.org

A Diversified Economy

Providence has a highly diverse and service-oriented economy. As mentioned, education is a major part of the economy of Providence and among the largest employers. Healthcare also accounts for a large portion of the economy, as does the public sector given that Providence is the capital of Rhode Island. 

The importance of education, healthcare and government jobs to the local economy means that Providence’s employment rate remains relatively stable even in the midst of national economic downturns. The city is also an important center for the financial, technology, and manufacturing industries. 

Citizens Bank, which is the 15th largest bank in the country, is headquartered here, as is the Fortune 500 company Textron, an industrial conglomerate. Thanks to the Rhode Island Convention Center, located in Downtown Providence, the city hosts many important business conferences every year. For investors, Providence’s strong economy is reassuring and it also means there is a good market for short-term rental properties that appeal to business travelers. 

Providence Magical Sunset
Providence | seastreak.com

Strong Tourism Numbers

While Providence may get overshadowed in the national conversation by nearby Boston and New York City, the small state capital is actually a minor tourism mecca. As one of the oldest cities in the US, Providence attracts tourists with its beautiful colonial architecture and history. The riverfront has been developed into an attractive urban park that hosts WaterFire, a remarkable public art event whereby 86 small fires are lit on top of the river each summer. 

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Providence also has a thriving arts scene, largely thanks to the presence of the Rhode Island School of Design, one of the most prestigious art schools in the country. In 2016, Providence was named one of the best cities to visit by the New York Times. The result is that tourism has boomed in the city. 

Hotel occupancy rates outpace the national average and Rhode Island as a whole welcomed 24.8 million visitors in 2017. In fact, between 2012 and 2017 the tourism sector of Rhode Island grew by an amazing 23%. For investors, that means Providence holds plenty of potential for short-term rentals catering to tourists.