2013 Closed Out with Year-over-year Growth across New England – RI Expected to “return to a traditional, balanced market”
According to the RE/MAX of New England 2014 Housing Forecast, New England will continue to experience a significant shortage of inventory and consumers should expect to see higher interest rates as we head into the second half of the year.
RE/MAX of New England cites low interest rates and rising consumer confidence in propelling the New England housing market into solid recovery throughout 2013. An ebbing supply of inventory coupled with low interest rates and pent-up demand fueled the market and drove-up pricing throughout the region.
Rhode Island demonstrated signs of solid economic recovery in 2013, despite an unemployment rate that hovered above 9% in 2013, once again placing it amongst the nation’s most unemployed states.
RIMLS data shows Rhode Island experienced significant growth in single-family, condominium and multi-family transactions. In 2013, single-family home sales increased 10.7% compared to 2012. Condominium sales increased 32.5% - the largest increase in New England, and multi-family transactions rose 2.1% year-over-year.
“2013 was absolutely gangbusters,” said Karl Martone, a Sales Associate with RE/MAX Properties in Smithfield. “We had a very robust November when it’s traditionally slow in the market. This is due to very low inventory and a wealth of buyers who are in the market trying to find a home and beat the interest rate rise.”
Martone commented that sellers are more hesitant to put their homes on the market right now, fearing that they will not get the best price on their property. However, those who do are in a pool of very serious buyers.
Average median price also demonstrated similar growth. Single-family home prices increased 7.4% to $206,870, the second largest jump in the region. Condominium prices increased 17.0% to $191,559 year-over-year, the highest price increase in this category in New England. Multi-family pricing increased 6.9% to $128,327.
Martone is seeing a lot of first-time buyers looking to move from rental situations and take advantage of good rates and pricing in the Ocean State, as well as consumers looking to build their retirement portfolios. “In addition to those buyers who are just starting to enter the market, we’re also seeing folks who are taking advantage of affordable pricing for investment purposes down the road. These two segments are absolutely driving the condominium market in Rhode Island.”
While first-time home buyers continue to largely fuel Rhode Island’s housing market, Martone adds that move-up buyers are back in the mix. “Move –up buyers are finally realizing some equity in their homes again and can afford to sell and purchase the larger home that their growing families need. The number of buyers versus sellers is also becoming more balanced.
“I expect to continue to see a more balanced market in 2014,” said Martone. “Key factors that could affect the industry include new flood insurance laws, interest rates and qualified mortgages.”
The one segment of the market that has seen a decline according to Martone is the luxury market. “2012 was a great year for luxury real estate in Rhode Island. But, with the exception of Taylor Swift’s $18 million home in Watch Hill in the spring of 2013, we have seen stagnation in this segment of the market.”
Martone adds that the majority of homes on the market in the Ocean State do not fall into the luxury real estate category and expects 2014 to be on par with 2013.
“I expect Rhode Island’s 2014 real estate market to return to a traditional, balanced market,” Martone concluded. “The realtor is key to the transaction and needs to educate and guide clients to make the best possible decisions.”
To read the entire RE/MAX of New England 2014 Housing Forecast, visit www.remax-newengland.com.