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Home Prices Continue to Rise in Rhode Island!

Spring has sprung in Rhode Island! The daffodils are popping up and so is the Spring Home Buying Season!  Buyers and Sellers are pouring into the market, and mortgage rates continue to trend down.  But what’s happening with home prices?

Let’s talk about the Rhode Island spring market. The most common remark I get from people who are looking to purchase homes in Rhode Island is “They’re waiting for home prices to go down”.  Why does everyone think this? It’s s easy to understand. Look at the headlines that were all over the internet  in the news last fall and you’ll see lots of experts saying home prices would fall significantly.For example, CBS news quoted the Dallas Fed saying US housing prices could plunge 20%. Fortune Magazine had an article quoting Moody’s data saying there were  210 US markets at risk of a 15 to 20% price drop. And again, CBS news was quoting probably that same Moody article saying that US home prices could fall as much as 20%.

There’s a reason we think this way. There’s a concept called “Narrative Circuitry”, and it’s the idea humans narrate what’s happening around them instead of just observing what’s happening. In other words, we spend 90% of our times telling ourselves what is happening instead of actually seeing what’s happening.

So let’s look at what the housing market is actually doing. January’s Year over Year Housing Numbers showed that most of the tracked metropolitan markets had at least single digit increases in home values.  In Florida at least two markets, Miami and Tampa, showed double digit growth between January of 2022 and January of 2023.  Miami, went up 13.8% and  Tampa went up 10.5%.

Several of the tracked markets showed decreases:   Portland, San Diego, San Francisco, and Seattle.  The Pacific Market experienced several decades of explosive growth and that market appears to be slowing, maybe normalizing right now.

What about Rhode Island’s numbers?
According to the Rhode Island Association of Realtors the median sale price of a Single Family Home was $384,000 in February of 2023. That is an increase of 4.4% over February of 2022.

It’s interesting to note that the number of sales decreased overall. Why? That’s related to Inventory, or rather the lack of inventory. For more info on how Inventory affects Prices, check out this other post:

The Number of Sales is tracking how many transactions actually took place; how many sellers listed and sold their home to a buyer. The number of transactions is driven by how many homes are on the market and how many people buy those homes. Rhode Island continues to experience significantly low inventory. According to the Rhode Island Association of Realtors® there is 1.2 months of inventory, making Rhode Island a Seller’s Market, along with many parts of the country.

As of March 10th there were were 880 pending sales, and that was down 21.2% from January of 2022. Again, what we’re looking at is the total number of transactions because there wasn’t as much inventory. When there is less inventory and more demand, that means demand is greater than supply, and that forces prices up.

In December of 2022, 634 homes sold in Rhode Island, then in January of 202 that number drops to 462 homes. This is most likely a seasonal issue.  I know that when I’m working with a seller, they don’t want their home on the market over Thanksgiving and Christmas. Fewer sellers put their homes on the market during the holidays. Fewer homes for sale mean less options for buyers, and that results in fewer transactions.

But the median sale price, I think this is the interesting number here. . Even in a month-over-month analysis, the median sale price in December was $389,950, and in February of 2023, it was $384,000, a very nominal difference. The number of listings was 1017 in December of 2022 and down to 864.

Ultimately, what we’re seeing here is not a big drop in home prices in Rhode Island month over month and not year over year. For year over year in Rhode Island, we are seeing an increase of 4.4%.

So let’s talk about what that means to you as a seller. If you’re thinking about putting your home on the market right now, here’s a couple things you want to think about. Some sellers are hesitating because they have interest rates down around 3%, which is so amazing. I mean that that’s historic and those are going to be stories you tell your family. And you might be thinking that, oh, I can’t get that mortgage rate again on a new property.

And that if that is your sole consideration, you’re probably right on that. However, there’s a couple other things you might want to take into account. Number one, we are probably seeing the market level out a little bit. We are not seeing the double digit appreciation in home values that we saw for the last two to three years. We are instead seeing low single digit. So your home’s going to continue to increase in value, but if you’re thinking about cashing out, this might be a good time. You may have double digit appreciation right now.

If you’re in Rhode Island, the chances of a well maintained home that’s had at least all of its annual maintenance done and maybe even a little bit of updating done, you’re not going to go backward in value. So this could be the time to capture that equity.

If you’re worried that you won’t get the same interest rate, you’re probably right, but interest rates are back down in the low to mid sixes and projected to go down further. Don’t let it stop you from taking advantage of the strong buyer market right now, which gives you the greater opportunity of collecting higher equity because those buyers are experiencing a lower interest rate than they would in the past.

So if you’re thinking about selling, now is a good time. Let’s have a chat. I’m Sandy Warner with Warner Realty Group. Subscribe to our channel. Give us a thumbs up if this was interesting content, and hit that Bell. Warner Realty Group, making the complex simple.