Realtors report 6-percent drop in R.I. house prices

Wednesday, October 7, 2009
By Paul Edward Parker
Journal Staff Writer

The median sales price of single-family houses in Rhode Island fell 6 percent in August compared with a year ago, the first time this year the decline has been only single digits.

The Rhode Island Association of Realtors calculated the August 2009 median price at $220,000 and the August 2008 price at $235,000.

The number of houses sold in August rose sharply. In 2008, 596 houses sold during the month; this year, that number climbed 29 percent to 768.

The increase was fueled partly by an inventory of “distressed” houses, those sold either through foreclosure or at a price that is less than what was due on a mortgage. But, according to Paul Leys, president of the Realtors association, the influence of distressed sales is waning. In January, 48 percent of single-family house sales were distressed, he said. That has now dropped to 29 percent.

Leys also credited the $8,000 federal tax break — which is set to expire Nov. 30 — with spurring sales as the deadline nears.

Another key indicator, the average number of days that houses remain on the market, dropped 6 percent in August, down from 93 last year to 87 this year. In the past, sustained falls in the number of days on the market have foreshadowed a rise in prices.

“By all accounts, we’re headed in the right direction,” said Leys. “Supply and demand has come back into a more normal range of balance in recent months. That’s the best indicator of market stability.”

The Realtors track the median price rather than the mean price — often called an average — because it is a better measure of what a typical house sells for in a market with a broad range of prices. The median is the price exactly in the middle of a list of prices from highest to lowest. Generally, half the houses sell for more than the median and half sell for less. The mean price can be skewed by a relatively few number of houses selling for extremely high prices.

That stability of the single-family housing market is coming slower in the multi-unit and condominium markets.

Leys reported that 77 percent of multi-unit house sales were distressed in August. Prices plummeted in August compared with last year, dropping 38 percent from $128,250 in 2008 to $80,000 in 2009. With prices still in the bargain range, sales climbed 37 percent during the same period, from 132 last year to 181 this year. The days on the market rose 2 percent, from 92 last year to 94 this year.

The situation was not as bleak in the condo market, where prices fell 20 percent, from $232,500 last year to $187,000 this year. The number of sales was off 6 percent, from 129 last year to 121 this year, and days on the market rose 13 percent, from 111 last year to 125 this year.

“Though the supply is dropping, the condo market continues to have too much inventory,” Leys said. “Statistically speaking, there’s still an 11-month supply out there.”