The Rhode Island Association of Realtors is calling the spring housing market one of the strongest since the 2008 price bust that triggered the nation’s foreclosure crisis.
Sales of single-family homes rose seven percent in April 2013 compared to the same month a year ago, and the median sales price of $180,000 was also three percent higher, the trade group said in a report released yesterday.
“This is the best spring selling season we’ve seen in year,” said Victoria Doran, president of the realtors association. “The rebound has been slow but the important thing is, the economy and the housing market are improving. That’s good news for all Rhode Islanders.”
Even Woonsocket, nearly bankrupt and floating a fiscal recovery plan that could cause property taxes to skyrocket in 2014, is showing signs of strength, realtors say.
Only four single-family homes were sold in April compared to 15 during the same month last year. But the median sales price of a home in Woonsocket also rose by 4.6 percent.
Bob Martin of Century 21 Crossroads Agency in Woonsocket said rising prices are a positive sign that the demand for housing is catching up with the supply.
“Prices in Woonsocket have absolutely solidified and bottomed out,” he said. “Actually I think we reached the bottom last summer.”
While statistics suggest a 73 percent slide in sales numbers for April, which is usually a strong month, Martin said those numbers can be misleading. Most people shopping for single-family homes are looking for property that’s move-in ready or that requires no more than some cosmetic work, and there simply aren’t enough houses like that in the city to push sales rates close to the statewide average.
Duane Boucher of Boucher Real Estate in Woonsocket stopped short of saying demand is exceeding the supply, but some houses are drawing multiple bids.
“We’re flat-out right now and doing everything we can to keep up with the requests for showings,” said Boucher. “We’re seeing bidding wars and multiple-offer situations.”
The market is hottest for properties that are priced right and in good condition. Buyers sense the favorable interest rate climate and low prices might be fleeting, so they’re “scrambling to scoop up the best properties,” according to Boucher.
Martin says the lingering uncertainty over tax rates and the vitality of the city’s economy in general are probably keeping some buyers out of the Woonsocket market, especially out-of-towners. Indeed, he says, the majority of the activity in the Woonsocket market is being driven by residents who already own property here.
Home prices in Woonsocket have always been low compared to other parts of the state, says Martin. With the economy on the rebound and 30-year mortgage rates “at what is probably a generational low,” city residents see this as a good time to buy, whether they’re downsizing, up-sizing or making a lateral move to a nicer neighborhood.
“I don’t want to say they’re immune to the situation the city’s going through, but they’re already living in it,” says Martin.
RIAR doesn’t break out figures for multifamily homes by community, but it says they also rose, with sales up 11 percent last month statewide, reversing a downturn in sales reported in the previous month. The median price of $107,000 however, was 16 percent below the previous year's price as the number of distressed sales rose four percent.
Foreclosure and short sales continue to account for nearly 50 percent of all multi-family sales.
The strongest month-over-month sales figures for single-family homes anywhere in northern Rhode Island were clocked in Pawtucket, where 39 single-family homes changed hands last month, an increase of 50 percent since the previous year.
In Lincoln and Cumberland, sales were virtually flat. Lincoln had just 13 sales in April, one more than last year, and Cumberland had 26 during both this April and last.
Other positive indicators of a housing rebound cited by RIAR:
• Sales under contract but not yet closed also rose four percent.
• Single-family homes spent an average of 103 days on the market before they were sold, a decline of 7.2 percent.
• The number of sales involving foreclosures or distressed properties dropped 22 percent, an indication that the surfeit of homes dumped on the market as a result of the housing crisis is beginning to dissipate.
Kerry Park, a spokeswoman for RIAR, said the availability of homes for sale in relation to demand is now pegged at a 7.5 month supply
The rule of thumb is that a six-month supply is the perfect balance between buyers and sellers.
The current inventory still favors buyers, but the conditions are nudging closer to something not seen in the region for awhile – a seller’s market.
“We’re leaning toward a buyer’s market slightly, but that’s starting to balance out,” she said.
Doran, the president of the association, says sellers still have to be realistic about what they can ask for their property if they’re serious about moving it.
“I’ve seen a lot of sellers who think they can get astronomical prices now because they’re hearing about a shortage of inventory,” she said. “Those are national reports. Rhode Island still has a good amount of homes for sale so it’s important to price competitively.”
She said the indicators are that the state is “firmly planted in a recovery,” but it’s still lagging a bit behind the rest of the country in moving excess inventory off the market.
“We’re almost there, but we still have a way to go to restore a balance of supply and demand,” she said.