RI Housing Market Showed Signs of Solid Economic Recovery in 2013
Wednesday, January 08, 2014
'2013 was absolutely gangbusters,' said Karl Martone, a Sales Associate with RE/MAX Properties in Smithfield.
Significant growth in 2013
Rhode Island Multiple Listing Service (RIMLS) data shows Rhode Island experienced significant growth in single-family, condominium and multi-family transactions. In 2013, single-family home sales increased 10.7% compared to 2012. Condominium sales increased 32.5% – the largest increase in New England, and multi-family transactions rose 2.1% year-over-year.
“2013 was absolutely gangbusters,” said Karl Martone, a Sales Associate with RE/MAX Properties in Smithfield. “We had a very robust November when it’s traditionally slow in the market. This is due to very low inventory and a wealth of buyers who are in the market trying to find a home and beat the interest rate rise.”
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Average median price also demonstrated similar growth. Single-family home prices increased 7.4% to $206,870, the second largest jump in the region. Condominium prices increased 17.0% to $191,559 year-over-year, the highest price increase in this category in New England. Multi-family pricing increased 6.9% to $128,327.
First-time buyers
Martone is seeing a lot of first-time buyers looking to move from rental situations and take advantage of good rates and pricing in the Ocean State, as well as consumers looking to build their retirement portfolios. “In addition to those buyers who are just starting to enter the market, we’re also seeing folks who are taking advantage of affordable pricing for investment purposes down the road. These two segments are absolutely driving the condominium market in Rhode Island.”
While first-time home buyers continue to largely fuel Rhode Island’s housing market, Martone added that move-up buyers are back in the mix. “Move-up buyers are finally realizing some equity in their homes again and can afford to sell and purchase the larger home that their growing families need. The number of buyers versus sellers is also becoming more balanced."
Outlook for 2014
“I expect to continue to see a more balanced market in 2014,” said Martone. “Key factors that could affect the industry include new flood insurance laws, interest rates and qualified mortgages.”
The one segment of the market that has seen a decline according to Martone is the luxury market. “2012 was a great year for luxury real estate in Rhode Island. But, with the exception of Taylor Swift’s $18 million home in Watch Hill in the spring of 2013, we have seen stagnation in this segment of the market.”
Martone added that the majority of homes on the market in the Ocean State do not fall into the luxury real estate category and expects 2014 to be on par with 2013.
“I expect Rhode Island’s 2014 real estate market to return to a traditional, balanced market,” Martone concluded. “The realtor is key to the transaction and needs to educate and guide clients to make the best possible decisions.”
The rest of New England
Housing transactions in Connecticut, Massachusetts, New Hampshire, Rhode Island and Vermont regularly tracked double-digit increases month-over-month as serious buyers clamored to purchase a home before interest rates ticked up. With foreclosure and short-sale inventory diminishing across New England and median prices increasing, investor activity slowed as the competition with homebuyers piqued in the summer months. Despite interest rates that rose more than a point in a few short weeks in August, averaging close to 5.0% – the highest since 2011 – consumers battled to get deals done, fearing rates would continue to rise based on renewed consumer confidence and solid employment statistics, according to the report.
RE/MAX of New England data shows significant year-over- year growth in most regions leading into the winter months. “The traditionally slower fall/winter months showed very strong activity in key markets across the region,” said Dan Breault, Executive Vice President and Regional Director of RE/MAX of New England. “This is an excellent bellwether of how we can expect the first quarter of 2014 to shape up.”
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