Get Ready - Real Estate Prices Are Up in RI and If Rates Dip, Market May Explode

Get Ready - Real Estate Prices Are Up in RI and If Rates Dip, Market May Explode

There are growing indicators that the Rhode Island real estate market may see a number of factors come together to drive prices even higher in 2024.

In December, Rhode Island’s median sale price of single-family homes jumped 9.5% from 12 months earlier.

The median price of a single-family home in the state is now $427,000.

GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST

 

Lack of Inventory

Meanwhile, inventory continues to be at remarkably low levels.

Ben Scungio of Mott & Chace Sotheby’s International said one of the primary contributing factors in Rhode Island is interest rates. In Providence, as an example, for a city of approximately 190,000 residents, there are fewer than 50 single-family homes for sale.

“In Providence, there are only 45 single-family homes on the market,” said Scungio on GoLocal LIVE.

“Lack of housing, lack of affordable housing, lack of people being able to start to build wealth through housing,” said Scungio of the state of the market. 

 

 

 

Interest Rates - Decline May Fuel More Inventory and Price Increases

Due to high interest rates, many who might be looking to sell have held off because they would give up their existing lower interest rate to purchase a new home with a much higher rate mortgage.

Scungio said there has been some improvement.

“Right now, it depends on the lender. It depends on your qualifications, but if you're qualified for a 30-year fix, you're somewhere in the low to mid-sixes right now,” he said.

“We’re seeing some promising signs for 2024. Interest rates have recently fallen to the lowest level since May and there are indications that some homeowners are ready to make a move,” said Sally Hersey, 2024 President of the Rhode Island Association of Realtors.

Many national economists expect the Federal Reserve to cut lending rates in 2024 — when and by how much is an unknown.

“At [this] week’s meeting we expect the [Fed] will turn to a neutral stance, conveying no bias to either tighten or ease at the subsequent meeting,” Michael Feroli, JPMorgan’s chief U.S. economist, wrote in a note Friday. “We expect the forward guidance will be the main event next week, but there is also the rest of the statement to consider as well as the press conference.”

A Fed cut could come as early as March, but it is an unknown as to the “when.”

While the trend of declining sales and rising prices continued in the condominium market, December was the second consecutive month to see a year-over-year hike in pending sales.

With the lowest median price of all residential property types - $360,000 – condominiums have become the most affordable option for many who are looking to gain access to homeownership at the lowest possible price point. The rise in contract signings in November and December bodes well for a rise in sales activity in the first quarter of 2024, reported the Rhode Island Association of Realtors.

The multifamily home market once again marked the highest median price, and though the ability to offset the higher costs with rental income is enticing to many, competition in the investor-laden multifamily home market can be difficult for those without cash or excellent financing options. At $480,000, last month the median price of multifamily home sales rose 11.7% from 12 months earlier.

Sales activity also rose by eight percent, bucking the trend seen in the single-family home and condominium sectors. Pending sales however, dropped 19.5% from the previous year indicating a lull in activity in that market in the first months of the New Year.