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Housing sales in R.I. move upward

By Paul Edward Parker

01:00 AM EST on Thursday, January 28, 2010

 

Journal Staff Writer

The Rhode Island residential real estate market may be recovering after a three-year slump, part of a nationwide housing market collapse that dragged the country into recession.

In December 2009, the number of single-family houses sold in Rhode Island and the median price for those houses rose when compared with December 2008, according to figures tabulated by the Rhode Island Association of Realtors. That followed a November that also saw prices and numbers sold increase from the same month a year ago, which broke a 39-month streak of lower prices.

December sales rose 19 percent, from 492 houses in 2008 to 583 houses in 2009, according to the Realtors Association. At the same time, the median sales price rose 5 percent, from $190,000 to $200,001.

Those numbers are in line with a report from the Warren Group, a Boston real estate consulting firm that tracks sales by a slightly different method from the Realtors. The Warren Group reported sales prices rose 4 percent, from $190,000 to $197,200, while sales rose 30 percent, from 500 to 650.

Massachusetts saw similar increases in December, when price and sales each rose 11 percent. Nationally, sales rose 13 percent and price 1 percent, according to the National Association of Realtors.

The December rise in Rhode Island followed November increases of 61 percent in sales and 1 percent in price, according to the Realtors.

The November numbers came with an asterisk, though, because a federal tax credit for first-time homebuyers had been set to expire at the end of that month, prompting a frenzy of sales activity. Congress has since extended that credit, and the strong December numbers raise the question of whether the tax credit had artificially propped up the market or whether housing had regained its footing.

“We’re just experiencing healthy growth, which does tell us that we’re on the road to recovery,” said Karl A. Martone, president of the Realtors Association.

“I think it’s real,” said Frederick W. Reinhardt III, senior vice president and chief lending officer at Navigant Credit Union. “There is definitely a firming up of the market. A bottom was set, and we have clearly started to go up from there.”

He said the $8,000 tax credit, which is available through the beginning of summer, is creating interest from house hunters, but is not the main factor in buying decisions. “Is it really driving the market? I’m not 100 percent certain,” he said. “What’s really driving the market is prices. The resetting of prices and values has created opportunity for people who were priced out of the market.”

Since July 2006, the last time before November that sales prices rose compared with the same month a year earlier, prices dropped 31 percent, from $291,000 to the December level of $200,001.

The dramatic decline was triggered by a crisis in the mortgage industry. That crisis began when sub-prime borrowers — those whose credit wouldn’t qualify for a conventional mortgage — found themselves unable to afford rising adjustable-rate payments and unable to refinance. That led to widespread foreclosures that dragged down the banking industry and pulled the economy into recession. As foreclosures skyrocketed, the real estate market found itself with a glut of houses for sale, driving down prices and trapping more people in mortgages they couldn’t afford — when they went to refinance, they found their houses were worth less than what they owed on the mortgage.

But now, those foreclosed properties are not as big an influence on the market, Reinhardt said. “The inventory that was on the market related to foreclosures is starting to come off the market.”

Martone agreed.

“They’re not as prevalent,” he said. “We have a healthy supply of inventory right now. We’re not oversupplied.”

He also agreed with Reinhardt’s assessment of the tax credit’s effect on the market.

He said he has talked to buyers about the federal incentive, who have told him, “Yeah, we’re happy to get a tax credit, but it’s not the main reason we’re buying.”

The main reason, according to buyers, he said, is that prices are down to the point where they seem affordable.

Reinhardt and Martone said that purchasing activity in January seems to remain strong.

“As long as our stars stay aligned, I think we’ll have a little bit more healthy growth in 2010,” said Martone. “The buyers are out there. The phones are ringing.”

Rhode Island’s housing market in the fourth quarter
Rhode Island’s single-family housing market showed encouraging signs in the fourth quarter of 2009 as sales increased from 2008, and the time it took to sell a house decreased. Although the prime indicator of market strength — median sales price — was down overall, prices rose toward the end of the quarter, with November and December posting increases over the same months in 2008.
  Sales Median price Days on the market
  2008 2009 Change 2008 2009 Change 2008 2009 Change
Barrington 26 35 34.6% $370,000 $285,000 -23.0% 130 122 -6.2%
Bristol 25 30 20.0% $260,000 $269,200 3.5% 95 111 16.8%
Burrillville 24 38 58.3% $239,000 $217,500 -9.0% 98 102 4.1%
Central Falls 3 6 100.0% $52,000 $89,500 72.1% 143 132 -7.7%
Charlestown 18 23 27.8% $400,000 $349,900 -12.5% 146 90 -38.4%
Coventry 76 119 56.6% $195,000 $165,000 -15.4% 77 90 16.9%
Cranston 138 205 48.6% $186,650 $179,900 -3.6% 84 76 -9.5%
Cumberland 65 80 23.1% $239,000 $237,450 -0.7% 81 58 -28.4%
E. Greenwich 27 36 33.3% $355,000 $440,500 24.1% 94 106 12.8%
E. Providence 56 97 73.2% $213,200 $194,750 -8.7% 94 75 -20.2%
Exeter 22 11 -50.0% $347,500 $293,200 -15.6% 106 113 6.6%
Foster 10 12 20.0% $272,500 $244,000 -10.5% 68 73 7.4%
Glocester 15 29 93.3% $260,000 $236,000 -9.2% 122 58 -52.5%
Hopkinton 15 22 46.7% $207,000 $257,500 24.4% 123 105 -14.6%
Jamestown 8 25 212.5% $477,500 $580,000 21.5% 160 140 -12.5%
Johnston 71 78 9.9% $184,900 $180,000 -2.7% 92 68 -26.1%
Lincoln 26 47 80.8% $282,450 $224,000 -20.7% 102 97 -4.9%
Little Compton 4 9 125.0% $1,057,500 $370,000 -65.0% 143 141 -1.4%
Middletown 19 26 36.8% $395,000 $287,000 -27.3% 134 103 -23.1%
Narragansett 34 42 23.5% $392,500 $374,000 -4.7% 101 143 41.6%
New Shoreham 0 0 0.0% 0.0% 0.0%
Newport 27 43 59.3% $400,000 $390,000 -2.5% 139 116 -16.6%
N. Kingstown 50 70 40.0% $337,500 $308,500 -8.6% 102 79 -22.6%
N. Providence 62 67 8.1% $185,000 $180,000 -2.7% 75 63 -16.0%
N. Smithfield 17 21 23.5% $260,000 $245,000 -5.8% 100 106 6.0%
Pawtucket 81 111 37.0% $160,500 $145,000 -9.7% 90 71 -21.1%
Portsmouth 22 24 9.1% $298,500 $297,500 -0.3% 80 125 56.3%
Providence 165 148 -10.3% $105,000 $110,000 4.8% 89 67 -24.7%
East Side 16 30 87.5% $605,000 $424,300 -29.9% 101 58 -42.6%
Richmond 18 12 -33.3% $228,200 $270,000 18.3% 71 126 77.5%
Scituate 8 17 112.5% $217,500 $290,000 33.3% 90 76 -15.6%
Smithfield 25 31 24.0% $225,000 $220,000 -2.2% 77 90 16.9%
S. Kingstown 41 61 48.8% $310,000 $285,000 -8.1% 108 92 -14.8%
Tiverton 21 26 23.8% $223,500 $238,500 6.7% 165 180 9.1%
Warren 12 14 16.7% $257,500 $233,000 -9.5% 100 156 56.0%
Warwick 207 276 33.3% $163,000 $172,700 6.0% 88 63 -28.4%
W. Greenwich 8 17 112.5% $215,000 $260,000 20.9% 149 58 -61.1%
W. Warwick 45 56 24.4% $160,000 $168,750 5.5% 92 54 -41.3%
Westerly 37 59 59.5% $271,500 $265,000 -2.4% 125 127 1.6%
Woonsocket 32 55 71.9% $180,000 $152,500 -15.3% 87 170 95.4%
                   
Statewide 1,576 2,108 33.8% $204,500 $202,500 -1.0% 95 86 -9.5%
                   
SOURCE: R.I. Association of Realtors

pparker@projo.com

http://www.projo.com/news/content/RI_HOUSING_PRICES_01-28-10_RRH8P33_v45.3eabb71.html

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