March 20, 2012

Eighth Consecutive Month of Sales Growth in Rhode Island Home Sales

Warwick, RI, March 20, 2012…Single family home sales were up from the prior year for the eighth consecutive month in February. Sales increased 28 percent last month, from 340 single family homes sold in February, 2011 to 434 this year, according to statistics released by the Rhode Island Association of Realtors (RIAR). A lower median price of $170,000, down from $205,000 last year, indicates that sales are increasing due to closings on distressed sales, which are typically in the lower priced sales bracket.  Median price has not been this low since April, 2002 and is indicative of a market in which one in three sales has been sold through short sale or foreclosure.

While RIAR, which reports sold properties, noted that the number of distressed sales increased 37 percent from a year ago, industry researcher, RealtyTrac, recently reported that foreclosure filings in Rhode Island were down 39 percent in February.  These statistics, which show a decreasing number of properties entering foreclosure with an increasing number of such properties sold and therefore exiting foreclosure, could indicate that the inventory of distressed properties on the market is being depleted.

Pending sales which refer to properties under contract, not closings, were also up by 27 percent. Pending sales are considered to be the most current indicator of the market. The number of single family homes on the market rose one percent from a year ago, the smallest increase in inventory since last March. The key to market stability is a reduction in the supply of homes for sale.

The increased sales correlate to a release by the National Association of Realtors which noted that its Housing Affordability Index rose to a record high in January. The index is based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power. This is the first time since record keeping began ( in 1970) that the national Housing Affordability Index has broken the two hundred mark.  An index of 200 means that the typical family has roughly double the income needed to purchase a median-priced home.

Condominium sales followed the same trends as single family homes with sales up 12 percent and median price down 26 percent to $125,000.  The number of distressed sales among condominiums increased from 14 in February, 2011 to 22 last month. 

Multi-family sales were the only property type with increases in both sales and median price. Seventy-seven multi-family homes sold last month, up 20 percent from the same time last year. The median sales price of $104,000 was eight percent higher than a year ago.

"Rents are rising so investors and first time buyers are taking advantage of fantastic affordability for home ownership. The low price point, low interest rates and indications of a good return on investment is enticing buyers to get off the fence," commented RIAR president, Jamie Moore.

Pending sales rose nine percent among condos and multi-family homes, and the number of condos and multi-family properties for sale fell, down nine and 13 percent respectively. Diminishing inventory in the multi-family sector has led to rising prices and the condominium market appears poised to follow the same trend.

"Many of the major trends are going in the right direction, or if they're not now, it appears that they soon will be. Extended periods of increased sales are typically followed by rising prices. It seems that we are definitely in a period of market correction and will move further along in the recovery as financially distressed homes are removed from the market," said Moore.

Source: http://www.riliving.com/News/NewsDetail.aspx?News=1353 

  MESSAGE FROM THE PRINCIPAL BROKER: 

THESE ARE DEFINING REAL ESTATE TIMES WE ARE IN. I’ve been asked on several occasions for my view point on what is happening in the Rhode Island real estate market.  My audience is often surprised to learn that, contrary to what they had assumed, real estate sales are NOT down, and that inventory is quickly being picked up by nimble buyers.

The fact is that real estate cycles of peaks and valleys come once every 10-12 years.  We are in one such valley.  If you aren’t buying real estate in Rhode Island right now, then what are you waiting for?  Even in some demanded areas of Cranston and Warwick, single unit dwellings with 3 bedrooms and 1 bath can be found with an asking price of around $135,000 or lower.  Two unit dwellings are conceivably selling for around $175,000 or lower in these areas.  That was unheard of 2 years ago.  Interest rates are still historically low despite the economic conditions.  At what point in time has such an opportunity present itself in which you can buy real estate at low prices and also take advantage of low cost financing?  Opportunities like these do not come often.  If you miss the chance now, it is likely that such an unparalleled opportunity will not arise for close to another decade.

At Mastermind Realty Corp, we consider this an exciting chapter in real estate history.  We have quickly adapted to the changes in the real estate market, and as a result, we have been very busy in a good way.  A great number of financial institutions have engaged us to divest their under performing real estate holdings in conjunction with the surge in foreclosures in the area.  To accommodate this real estate trend, we have developed the necessary systems and task force to handle such types of real estate and to properly guide buyers seeking to purchase bank owned inventory.

Ending on that note, Are you READY to take action and get into real estate…….?  We are READY to make it happen.

Mani Khamsyvoravong - Principal Broker

Knowledge gives you the Edge

We are at your service for your real estate needs.