The Perfect Storm: Rhode Island Is In a Massive Housing Crisis and It Could Get Worse
Thursday, August 20, 2020
Rhode Island had a housing crisis before the coronavirus pandemic and now it is getting much worse. Tens of thousands are seeking help and a significant number of out-of-staters are looking at Rhode Island to relocate.
The impact is driving housing prices to record levels and now rents are beginning to creep upwards -- not the behavior you would expect when a record number of Rhode Islanders are out of work.
The x-factor is that now clear data shows that a significant number of out-of-staters are looking to move into Rhode Island from locations like Boston and New York City.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTHousing prices during the pandemic are exploding in Rhode Island. The lack of inventory and out-of-state buyers are, in part, driving the increase in prices. The Rhode Island Association of Realtors released second-quarter sales data showing the median price of a single-family home rose to $303,750, marking for the first time over $300,000.
The price increased by 4.2 percent from the second quarter of 2019. Demand is up and supply is down -- single-family home closing activity dropped 19.7 percent.
On the East Side of Providence, prices increased year over year to a median price of $682,500 from $650,000 in the second quarter in 2019, on 44 transactions.
Tens of thousands of Rhode Islanders Seeking Help
From March to July, the United Way of Rhode Island’s 211 helpline received a total of 112,336 calls for assistance and nearly a third of those calls were for housing issues — a total of 35,381.
The calls were for rental assistance, shelter inquiries, foreclosure and eviction prevention, and other housing issues, according to the agency.
“In truth, these numbers really aren’t all that surprising – we knew Rhode Island had a housing crisis on its hands even before COVID. So once you factor in the pandemic’s unprecedented impact on our economy and the tens of thousands who lost their jobs during a short amount of time, you have a perfect storm that’s created need among individuals and families who previously had stable homes, and for who the existing housing crisis was not impacting at the time,” said Cortney Nicolato, president and CEO of United Way.
Nationally, in July a record number of Americans failed to make their housing payments on time, according to Apartmentlist.com
- 32 percent of Americans did not make a full on-time housing payment in July, up slightly from 30 percent in June.
- Missed payments continue to concentrate among renters, young and low-income households, and residents of dense urban areas.
- Compared to last month more Americans are concerned about evictions and foreclosures, even as federal and certain local displacement protections are extended.
- Coronavirus continues to simultaneously encourage and discourage moving. Many are likely to move because of declining affordability, while others are staying put because of the health risks associated with moving during a pandemic.
Migration from Boston and New York to Providence
Of those looking to rent in Providence, 31.2% of those outside the market are in Boston and another 12.2% are from New York City, according to Apartmentlist.com
“Boston saw the biggest increase in the share of renters looking to leave the metro, with relative outbound migration increasing from 21.1 percent to 28.7 percent. The combination of these changes could mean that Boston is poised for more churn in its renter population in the near future,” according to Apartmentlist.com.
Fifty-nine New Yorkers, for example, purchased a Rhode Island property in the second-quarter -- despite the shut-down that curtailed the housing market for much of the quarter -- compared to 60 during the same time last year.
Massachusetts buyers totaled 367 this year, versus 392 last year. That figure represents a 6.4 drop in Massachusetts buyers compared to the overall 19.7 percent drop in sales from single-family home buyers overall. By all appearances, these out-of-state buyers may have helped Rhode Island’s housing market avoid even sharper drops in activity associated with the onset of the pandemic.
When asked how bad could this housing crisis get, Nicolato said, "This is certainly a difficult question, and for someone who likes to consider themselves an optimist, I want to say we’re approaching the peak. That said, I think that there are still so many signs that we could be in this for the long haul."
"As an example, many of the job losses initially assumed as temporary losses have transitioned to permanent losses. Wall Street is doing okay, Main Street is not. I do feel we’ll continue to see instability in the coming months; again, among those Rhode Islanders who find themselves in a position they never could have envisioned six months ago," said Nicolato.
"What I do know is there is tremendous work being done within our nonprofit community – including United Way – that is preventing the bottom from falling out. But at the same time, this is an issue that requires all hands on deck and creative problem-solving that also moves the needle long term on the crisis as a whole, not only in the short-term," she added.
Some New Help
RIHousing announced last week that $2 million is now available in mortgage payment assistance funding through the federally-funded Hardest Hit Fund Rhode Island (HHFRI) program. The program provides financial assistance to Rhode Island homeowners negatively impacted by the COVID-19 pandemic and struggling to make their mortgage payments. Borrowers must have experienced unemployment or underemployment due to the COVID-19 pandemic to be eligible.
The HHFRI program offers a five-year, zero-interest forgivable loan for eligible homeowners to pay up to six months of mortgage payments. This program helps qualified homeowners make monthly mortgage payments and/or catch up on their payments if they have fallen behind due to a recent involuntary loss of employment or reduction in employment income. Payments can also cover arrearages if the homeowner fell behind because he/she is unemployed or underemployed due to the pandemic. All borrowers must have been current on their mortgage payments as of March 1, 2020 and must meet certain income and eligibility criteria. Applicants currently in a forbearance agreement with their lenders are eligible for the program.
“The COVID pandemic has put many homeowners in a tight financial spot, making it hard to keep up with housing costs,” said Carol Ventura, Executive Director of RIHousing. “RIHousing is proud that we can offer this assistance to help Rhode Islanders remain in their homes. Since the start of the pandemic, RIHousing has been working to roll out new programs to provide relief for both renters and homeowners.”
Funds for the program are limited and will be reserved on a first-come, first-served basis. The program will be offered until full allocation is reached. Rhode Island homeowners struggling to make their mortgage payments due to a loss of income resulting from COVID-19 are encouraged to reach out today. Information and applications for assistance can be found online at: www.rihousing.com/HHFRI
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