Out-of-Staters Buying Up RI, Median Price of a Single-Family Home Hits $390,000

Thursday, September 16, 2021

GoLocalProv Business Team

 

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RI is headed to a median household price of $400,000

A new month, a new record.

The median price of single-family homes sold in Rhode Island reached a record $390,000 in August, according to data released Thursday by the Rhode Island Association of Realtors.

The August data is a 17.1% increase year-over-year.

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Monthly, prices have not decreased from the prior year since January 2017. 

The blistering price increases are making homes less and less affordable for working-class and middle-class Rhode Islanders. 

 

Out-of-State Buyers Are Buying Up Rhode Island

An analysis of out-of-state buyers during the months of June through August shows a steady increase in buyers from other states. Historically, the coastal communities of Newport, Washington, and Bristol counties attract the most buyers from other states. This year, they accounted for 39.9% of total sales in Newport County, 35.5% in Washington County, and 31.5% in Bristol County. Providence County attracted 23.7% of its buyers from other states and 17.2% of Kent County buyers hailed from outside of Rhode Island.

In the luxury market, 59.2% of Washington County sales of high-end properties - those that sold for $1 million or more - came from outside of Rhode Island, while 55% of Newport County’s and 47.2% of Bristol County’s luxury sales involved out-of-state buyers.

“Rhode Island home prices have gone up, but properties are still a bargain compared to other resort areas. Our cities and towns are also more affordable than larger urban centers like New York and Boston. Outside of our borders, we’ve become known for coastal and cultural amenities that, fortunately, don’t come with a big-ticket cost compared to other locations. With prices rising everywhere and remote work now more available, we’re poised to see even more people moving to the Ocean State,” said Leann D’Ettore, President of the Rhode Island Association of Realtors.

 

Less Closings

Closed transactions, however, fell in August, marking the second consecutive month that activity in the housing market has showed signs of moderating. Sales fell by 5.3% year-over-year, helping to slightly alleviate the shortage of inventory, though the market still clearly favors sellers.

The number of homes available for sale was 16.9% less than in August of 2020 but while still lower than last year, slowing sales has helped lessen the impact. Earlier this year, inventory fell as much as 64% from the prior year, but that deficit started to significantly drop in June. As of May, there was less than a one-month supply of single-family homes for sale. That number rose to 1.8 months in August. A six-month supply is considered to be a market balanced between buyer demand and listing supply.

“We haven’t seen any sign of moderation in sales activity in quite some time, but it appears that a severe lack of inventory in the spring left many buyers unable or unwilling to compete in the frenzied market. We’re seeing more people list their homes now and more buyers are pursuing their home search again, spurred on by the continued low-interest rates,” said D’Ettore.

The median sales price of multifamily homes also saw an all-time high last month, rising to $382,500, a 23.4% increase from the prior year. Sales also continued at a feverish pace, increasing 26.9%.  Annual increases in both median price and sales have reached well into the double-digits each month since February.

“Multifamily homes have been extremely popular for both first-time buyers looking to use rental income to lower their monthly obligation and for investors looking to capitalize on rising rents.  Investors know that the availability of rentals is scarce and there’s not going to be an abundant supply of them anytime soon.  That’s why they’re such an attractive commodity,” said D’Ettore.

More tempered growth was seen in the condominium market last month. The median sales price of all condo sales rose 6.6% to $271,800 and the number of closed transactions increased 7.2% from August 2020.  The number of listings fell by 35.6%.

 

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