Too few affordable homes and incomes that haven't kept pace with the fast rising cost of housing have pretty much taken the hope out of Rhode Island's housing market.
The median price of single-family homes rose by 3.2 percent in July, even as sales of single-family homes fell big in Little Rhody, plunging 17.7 percent, in both cases compared to July of last year, according to The Warren Group, a Providence-based publisher that tracks housing markets in New England.
The group said 843 single-family homes sold in July 2006, down from 1,024 in July 2005 as the median sale price of homes increased to $278,000 from $269,500 a year ago.
Condo prices also continued rising by 4.6 percent to $230,000 as sales for the more affordable higher density homes dropped 16.9 percent.
Some markets are much more expensive.
"The 2006 median price of a home on the east side of Providence is $575,000 compared to $505,000 in 2005, a 13.86 percent change. Muli-family and condominiums are also strong markets. The median price for a condo is $277,500," said Janis Cappello, an agent with Coldwell Banker in East Greenwich, reporting to RealtyTimes.com's Market Conditions.
Capello and two other real estate agents reporting to Market Conditions for Providence average the Current Market Rating at 2.3 on a scale of 1 to 5 where 1 is a strong buyers' market, 5 is a strong sellers' market and 3 is a balanced market. The three averaged the Current Price Trend with a 2.3 rating on a scale of 1 to 5, with 1 indicating prices are falling hard, 5 indicating prices are rising fast and 3 is a flat market.
"Prices are higher (in Providence's east side) compared to other areas of the city due to its proximity to the universities, cultural events, historical sites, and wonderful architecture. Commuters to and from the Boston area seek permanent housing in Providence due to its central location, commuter trains, airport access, and pricing. Rentals are strong and housing demand is high," Capello reported.
Timothy M. Warren Jr., CEO of The Warren Group, said the numbers reflect an ongoing "modest correction" in the housing market.
"The market is going through a correction right now where sellers are resisting price adjustments and buyers are seeking to wait them out, leading to slower sales," Warren said.
A much bigger correction could be in store for the nation's smallest state.
Of the seven states in the nation with housing that saw a more than 80 percent rate of appreciation over the 2001-2005 period, Rhode Island, which enjoyed a 94 percent rate during the period, is the last hold out. The remaining markets have experienced rapid appreciation deceleration, according to the second quarter Home Price Index by the Office of Federal Housing Enterprise Oversight.
During the period from 1998 to 2003, while home prices soared 88 percent, personal income rose 25 percent, according to , the Rhode Island Builders Association.
Unemployment in the state was 5.6 percent in August, nearly a full percentage higher than the national average of 4.7 percent according to the U.S. Department of Labor.
While the state's tourism, financial and construction industries are largely in the black, the trade-transportation-utilities, information and manufacturing sectors have taken hits in the year-over-year analysis by the federal labor department.
The need for affordable housing is so dire both gubernatorial candidates -- incumbent Republican Donald L. Carcieri and his challenger Democrat Lt. Gov. Charles Fogarty -- both support Question 9, a measure for the November election that would allocate $50 million to leverage some $450 million in federal housing subsidies and private loans and create up to 2,000 affordable houses, condominiums and apartments over four years.
"As we've seen with Massachusetts and Connecticut, the regional market is continuing to soften," said Warren.
