Rhode Island Rent Prices Likely To Increase

Rhode Island Rent Prices Likely To Increase

To rent an average-priced three-bedroom apartment in Rhode Island, a household would need to earn nearly $63,000-a-year for the rent to be considered affordable. And prices could be on the rise, according to Rhode Island Housing.

If that is the case, the state, which has seen its rental rates skyrocket higher than every state in the country other than Hawaii since 2000, could face an unprecedented housing shortage.

“Rents are likely to go even higher as the economy starts to improve,” said Rhode Island Housing Executive Director Richard Godfrey. “Even though Providence rents are below Boston and other high cost metro areas, wages in Rhode Island are relatively even lower. In terms of the gap between what it costs to rent and what people earn, Rhode Island is one of the most challenging places in the country, even with unemployment still above 10 percent. “

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Rhode Island Families Struggling

The news comes just a day after a Boston Globe report which stated Boston’s rental prices had reached an all-time high. But as Massachusetts’ economy has continued to improve over the last 18 months, the Ocean State’s recovery hasn’t come as quickly.

In Providence alone, more than 1,600 multi-family units were lost to foreclosure in 2009 and 2010.

According to a National Low-Income Housing Coalition report released in May, more than half of all American renters lived in housing that was considered unaffordable (above 30 percent of their gross income) in 2009. In Rhode Island, the average two-bedroom rent increased by 68 percent in just over a decade.

“This report verifies what we are seeing day to day here in our state,” said Brenda Clement, Executive Director for Housing Action Coalition of RI. “Despite the national trumpeting of a recovery, what we see on the frontlines is more and more Rhode Island families struggling to remain in their home or find an adequate, safe and affordable place to live.”

High-end Rents Doing Well

But while the average Rhode Island resident may be struggling to find affordable rent, the high-end units in downtown Providence can’t move fast enough, according to rentprov.com owner Gabe Francis.

Francis says Providence is a “tricky” place because some neighborhoods are stable, others continue to struggle. He said the city’s enormous tax rates make the city an unaffordable place to own property and acknowledged that plenty of low-income residents are being priced out of the market or forced to settle for undesirable locations.

But when it comes to luxury apartments, Francis said people love Providence. He said he recently sold a unit at the 903 that attracted 200 potential renters. It sold in three hours.

“Providence is ridiculously hot,” Francis said. “It’s never been this hot. Downtown is getting close to Boston. Most places are 100-percent occupied right now. It’s crazy”

Severe Housing Shortage Is Possible

Still, the majority of Rhode Islanders don’t appear to be in the market for luxury housing.

And with the state cutting funding to affordable housing programs, it could be increasingly difficult to find an inexpensive place to live. Godfrey confirmed that the housing shortage could take a turn for the worse.

“We have seen lots of apartments become abandoned due to the foreclosure crisis and the cost to bring these properties back into service will be high,” he said. “Therefore our housing shortage is likely even more severe now than it was in 2004. As the local economy gets better, demand will drive rents further upward.”

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