Here is Why Massachusetts Residents Are Going to Keep Buying RI Houses
Tuesday, July 05, 2022
The push by the Federal Reserve to increase interest rates was supposed to slow inflation — and the velocity of the real estate market.
Interest rates have jumped from less than 3% for a 30-year mortgage to just under 6% in a year.
While the number of buyers stacked up at open houses in Rhode Island has decreased and the number of offers over the asking price has declined, prices continue to stay at a record level.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTOne of the biggest factors for the high prices in Rhode Island? The prices in neighboring Massachusetts.
According to the Massachusetts Association of Realtors (MAR), housing prices in the Commonwealth continue to spike and make Rhode Island prices look discounted.
The median price for a single-family home in Rhode Island is a blistering $419,000, but that is a Filene's Basement bargain discount compared to Massachusetts prices.
In Massachusetts, the median price for single-family homes increased by 12.3% to $617,750 and the median price for condominiums rose by 5.1% to $531,501, when compared to the same time period last year.
The median price in Massachusetts is 47% higher than in Rhode Island.
“The biggest issue we are facing in this market is a shortage of houses,” said Dawn Ruffini, 2022 President of MAR. “Until we are able to increase supply, more households are going to continue to be priced out of the market. We need to act now to expand housing access as it will, in turn, reduce home prices and allow more people to enter the market.”
That relief for more affordable housing is Massachusetts residents coming across the border to buy in Rhode Island and work from home or travel to Massachusetts just multiple times a week.
“Despite the continued rise in homeownership costs, including rising mortgage interest rates and high listing prices, Massachusetts is experiencing a third consecutive month of increased closed sales for both single-family homes and condominiums,” said MAR.
Rhode Island Home Being Consumed By Out-of-State Buyers
Some areas of the state — coastal areas, Barrington, East Greenwich, and the East Side of Providence — see no let-up in demand from out-of-state buyers, especially Massachusetts residents.
According to the Rhode Island Association of Realtors, out-of-state buyers have gotten as high as 26% of the buyers in a month.
In 2021, 24% of all Rhode Island residential real estate transactions included an out-of-state buyer. And over $1 million homes — the number jumps to nearly 50%.
Among $1 million-plus sales, only 48% were bought by Rhode Islanders, according to data from the RI Association of Realtors in its end-of-year report.
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