RI Real Estate: Median Price $405K, Little Inventory and Average Mortgage Payment Up 53% in a Year

Thursday, September 22, 2022

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Kim Marion of Mott & Chace Sotheby's International on GoLocal LIVE

Homeownership is shifting from the American dream to the golden ticket — wealth for some but not all.

The numbers are staggering. For homebuyers, especially first-time buyers, the obstacles are piling up.

Top Rhode Island realtor Kim Marion discussed the impact of rising interest rates on the cost of monthly mortgage payments in an interview on GoLocal LIVE on Wednesday.

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“This time last year, the average mortgage was around $1,265. This year's average mortgage is $1,944. That's a 53% increase. It's like like you added a luxury vehicle to your payments, but you didn't get the car. It's $674 difference every month -- think about that for a minute,” said Marion of Mott & Chace Sotheby’s International.

Marion’s data is based on mortgage rates jumping from less than 3% last year for a 30-year fixed to now more than 6%.

This does not take into account Wednesday’s announcement by the Federal Reserve of another 75-point basis point increase. That is expected to drive the cost of borrowing even higher.

In much of the country, home prices are falling. But, in Rhode Island, there is no relief for homebuyers. The median price of a single-family home remains at $405,000, according to data released

 

Little Inventory

"Sales activity continued to fall for the seventh consecutive month, dropping 11.4% from 12 months earlier. The number of days a home stayed on the market remained unchanged at 29 days, as did the 1.8-month supply of inventory – which remained well below that of a balanced market indicated by a six-month supply of homes available for sale," said the RI Association of Realtors on Wednesday.

“Though inventory is increasing slightly, options are still extremely sparse. That, and the increase in mortgage rates, is reducing the number of buyers in the market. However, there may be options, even with increased rates, to lock into stable housing payments through home ownership and in doing so, gain the chance to build wealth through equity. They should also be aware, if they’re waiting for prices to fall substantially, that likely won’t happen any time soon given the housing shortage that still exists,” said Agueda Del Borgo, President of the Rhode Island Association of Realtors.

Though condominiums sold in August saw a 15.6% increase in median price from 12 months earlier, at $313,338, they proved to be a much more affordable entry point for those struggling to own their own home. The days a condominium remained on the market fell to 27 from 32 in August 2021, and sales dropped by 17.7%.

At $424,500, the median price of multifamily homes continued to be the highest of the three sectors, largely driven by demand from investors seeking to capitalize on rising rents. Days on market fell to 25 from 29 in August 2021, a 13.8% drop and closed sales fell by 10.8%.

“In the past five years, the median cost of multifamily homes has increased 93%, compared to 56% for single-family homes and 42% for condominiums. Clearly, they’ve been viewed as a good investment and as long as rents continue to rise and outweigh the costs of ownership, they will continue to be,” said Del Borgo.

 

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