Report: RI Real Estate Gobbled up by Out-of-Staters at Record Pace, Nearly 50% of Homes Over $1M
Thursday, February 03, 2022
The numbers are in — 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%.
Rhode Island's real estate is being consumed by out-of-staters — many of them are cash buyers who see Rhode Island as a bargain.
The majority of these buyers are from Massachusetts.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTMoreover, the buying binge from outside of the state is taking place at the luxury price point.
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.
“Homes flew off the market last year. Multiple offers and sales prices well over the asking price were commonplace. That made it tough for buyers, particularly prospective, first-time homeowners who found it hard to compete with a limited pool of choices. Buyers from other states increased the already pent-up demand, which added to their struggles,” said Agueda Del Borgo, 2022 President of the Rhode Island Association of Realtors.
Last year, Rhode Island Realtors transacted nearly $7.9 billion in residential sales through State-Wide Multiple Listing Service, the listing data exchange owned by the Rhode Island Association of Realtors.
The total of last year’s sales, which include single-family and multifamily homes, along with condominiums and land, were up from $6.5 billion in 2020, a 22 percent increase. While sales of single-family homes fell slightly in 2021, sales of condominiums and multifamily homes made up the difference, as buyers pivoted to more available options.
In the single-family home market, sales fell by 1.3%, compared to 2020, but the median sales price of those transactions rose 14.3% to $365,000. Despite the spike in median price, Rhode Island seemed a bargain compared to neighboring Massachusetts, where the monthly median price of single-family homes topped the $500,000 since last May.
Condominium Prices Rose 11%
Condominium sales saw a significant increase last year, after showing little to no growth in the past three years. The number of condos sold in 2021 rose 19% from the prior year. The median sales price of those condominiums sold rose 11.1% to $275,000.
“In the face of fewer choices among single-family homes, many buyers expanded their options. While also in short supply, condo options were a bit more plentiful than single-family homes and they often offered a more affordable entry price,” Del Borgo explained.
Multifamily Home Prices Spiked
With rising rents, multifamily homes became a hot commodity across the country and in Rhode Island, sales in this category rose by more than any other. Last year, multifamily home closings rose by 35.4% compared to 2020 and the median sales price of those sales equaled that of single-family homes, at $365,000, a 17.7% increase from 2020.
“Multifamily homes are typically a good option for both investors and first-time buyers who can rely on rental income from one or more of the units to help offset their mortgage costs. They can be a terrific way to build wealth because you can capitalize on future values without having to pay all or any of the monthly mortgage expenses. With rents rising as quickly as they are, along with other costs, a lot of people took advantage of that incentive last year,” said Del Borgo.
Fourth-quarter Show Lack of Inventory
While 2021 year-end data showed little change in residential sales volume from 2020 overall, fourth-quarter statistics showed a 13% year-over-year decline in sales at the end of the year of single-family homes. Condominium sales also fell, decreasing by 5.6% while only multifamily homes sales showed an increase. Sales in that investor-driven sector rose by 3.4% from the previous year. All three property types showed double-digit increases in median price.
“The lack of inventory, the resulting increase in prices, and likely, buyer fatigue, contributed to tempered activity in the fourth quarter. Overall, the housing market could likely continue to moderate a little in the year ahead, but due to overwhelming pent-up demand, sales should remain strong. We don’t expect prices to drop due to the short supply of properties for sale but rising interest rates may also ease the demand side a little bit, which could slow the price acceleration,” Del Borgo added.
