RI Real Estate Continues to Rocket While Growing Concerns About Global Housing Bubble Emerge
Thursday, June 17, 2021
There are growing concerns across the United States and the globe that the housing market is beginning to show signs of overheating. On Wednesday, the RI Realtors Association announced that the median sales price of single-family homes rose to $365,000, an 18% gain since May 2020.
Not surprising is that transactions also increased by 19 percent year-over-year as many closings in the spring of 2020 were curtailed by the pandemic.
Compared to pre-pandemic numbers in May of 2019, last month’s closing activity was down 17.8 percent.
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Bubble Concerns
According to Bloomberg, "Real estate prices around the world are flashing the kind of bubble warnings that haven’t been seen since the run-up to the 2008 financial crisis, according to Bloomberg Economics. New Zealand, Canada and Sweden rank as the world’s frothiest housing markets, based on the key indicators used in the Bloomberg Economics dashboard. The U.K. and the U.S. are also near the top of the risk rankings."
With just 863 single-family homes for sale in May, Rhode Island’s available housing inventory fell by 64 percent since May of 2020 and by 76 percent in May of 2019 when there were 3583 single-family homes on the market. At the current rate of sales, Rhode Island’s inventory would be depleted in less than one month.
Limited Inventory in RI
“The demand for Ocean State real estate remains searing hot. Sellers are seeing multiple offers and all but the most qualified and prepared buyers are having a tough time getting into a home. We’re hopeful that as we come out of the pandemic and the economy continues to improve, we’ll see more people willing to put their home up for sale. Even if that occurs, Rhode Island needs more new construction to accommodate the growing demand,” said Leann D’Ettore, President of the Rhode Island Association of Realtors.
The condominium sector saw the largest gains last month with the median sales price rising 43.7% to $350,000. Sales activity also jumped 33.1% since May 2020, though they fell by 18.3% since May 2019 when sales were not impacted by COVID-19.
The number of condos listed for sale continued to decline significantly. Last month’s 280 available condos palled in comparison to the 639 units available in May 2020 and the 830 for sale in May 2019.
The $350,000 median price for May’s multifamily home sales represented a 14.75% gain from the prior year. Closing activity, which nearly ceased altogether during the height of last year’s shutdown, increased by 111.8% year-over-year and by 21.6% since May 2019.
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