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In Rhode Island, ‘pent-up demand’ fuels home price hikes
Sales dropped 17% in November amid a lack of inventory. High mortgage interest rates have sellers sitting on the sidelines.
“A shortage of inventory and high mortgage rates have been the main factors hampering the housing market,” the Rhode Island Association of Realtors reported Thursday.
It’s the same irritating song that has been ringing in ears throughout New England in 2023.
And the chorus is all about rising home prices.
Rhode Island has been no exception, particularly given the number of Massachusetts residents who have been looking to its southernly neighbor for housing that’s more affordable.
The good news is that the inventory of single-family homes in the state rose from 1.5 months to 1.9 months year over year in November, according to the association. This doesn’t move the needle that much, but you have to take the wins where you can.
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Speaking of wins … Rhode Island home sellers have a something to cheer about. The median price of a single-family home increased 4.75% year over year in November to $431,000. In the condo market, the median price jumped by much more: 8.33% year over year to $357,500.
With the state’s low inventory, homes are being snapped up like Barbie Dreamhouses. Condos are spending 27 days on the market, a 12.9% decrease over November 2022, and single-family homes are taking 31 days on average to sell, a drop of nearly 14%.
In the multifamily market, costs climbed a whopping 23% to a median price of $492,000, properties spent 23 days on the market before getting an offer, and sales were down 3.91%. The condo market saw a roughly 25% decline in sales year over year in November. For the single-family home market, that number was about 14%.
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“With mortgage rates falling below seven percent recently, and sales data showing slightly more supply, we’re seeing some optimistic signs for 2024,” Sally Hersey, 2024 president of the Rhode Island Association of Realtors, said in a news release. “The housing shortage is our biggest issue to tackle right now but as rates fall, we’re hoping to see more homeowners willing to give up their current low mortgage interest rate and list their home for sale.
“Potential sellers should also be aware that while we don’t expect to see significant price drops, the amount of year-over-year price appreciation has definitely slowed this year,” Hersey said. “If they have been thinking of selling, 2024 may be the optimal time.”
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