For RI's housing market, it's 2022 all over again – high prices, low inventory, big competition
Over the weekend, real estate agent Jill Sweetman hosted three open houses.
Despite occurring on some of the coldest days of the winter so far, each open house pulled in 20 to 25 people, which came as a surprise.
"It was biting cold, it was miserable, and normally when the weather is terrible, no one comes out to see houses," Sweetman said.
What Sweetman saw goes a long way to describe the current state of the housing market as the Rhode Island Association of Realtors released the housing sales data for December 2023.
In December, the median price of a single-family home dipped slightly to $427,000, down $4,000 from November. The median house price is up 10% from December 2022 and 50% from December 2019.
"People are getting desperate for houses again, because all these people braved temperatures in the teens to come and see these houses," said Sweetman, who is with Nathan Clark and Associates.
In December, the number of houses listed on the market continued a downward slide, with 917, down from 1,152 in November. The number of houses sold fell from 569 in November to 532 in December.
When Sweetman checked the number of listings on Monday morning, the number of houses listed had sunk even lower, to 708.
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Interest rates keep sales depressed, lack of inventory keeps prices high
"We're in a weird limbo area where sellers aren't putting their homes onto the market, and for buyers there are no homes, so when there is a really good house, people are competing for it, even though interest rates aren't fantastic," Sweetman said.
Interest rates have been climbing, mostly, since record lows in 2021 and 2022, dropping below 3%, peaking at 7.8% in October 2023 and then easing back down to 6.6% as of Jan. 18, according to data from the mortgage lender Freddie Mac.
Higher interest rates normally depress prices as demand slows, but when there is little supply, prices stay the same or barely decrease.
"This is like it was at the start of 2022, when there were like 680 single-family homes on the market," Sweetman said. "It seems like we're getting back to that."
With the market so tight, prices so high and increased mortgage rates reducing buying power, Sweetman said, it's difficult to make offers stand out, and it isn't always the highest bidder that wins. Often, it's the person who offers the smoothest or most secure house sale.
Sweetman recently helped her clients buy a house that was being sold by the former owner's estate, including all of the furniture, knick-knacks, all of the things that accumulate over a lifetime. To win the bid, they offered to take the house as-is and deal with cleaning out the stuff themselves.
"Junk removal costs $1,000 to $1,500. They take everything out of the old house and you've spent $1,500 and were picked over five other people – versus tacking $50,000 on to a mortgage," Sweetman said.
What the multi-family markets look like
While single-family homes get most of the attention and make up most of the housing stock, condos and multi-family homes are hot commodities.
The median price of a multi-family house dipped slightly to $480,000 in December, down from $492,000 in November and $482,000 in October, but still below the all-time high of $500,000 in June and July 2023.
The number of listings was down slightly in December to 214, from 220 in November.
Multi-family house prices have seen the biggest percentage increase since the pandemic, with December's median price 68% higher than it was in December 2019. Multi-family houses have been relatively quick to sell, with an average of 23 days on the market for the last three months of 2023.
In all, there were 214 multi-family listings in December, which has dropped to 176 as of this week.
What the RI condo market looks like
With condos, the median price was up slightly, to $360,000, up $3,500 over November. The cost of condos is up 60% compared with December 2019.
Condos are spending longer on the market, 37 days in December compared to 27 days in November. The number of condos listed on the market decreased slightly to 214 in December. As of this week, it's even lower, at 197.
Houses priced correctly will bring lines, competing offers
When a house is right in that sweet spot, near the new median price, $350,000 to $450,000, appears to be worth it and is in decent shape, it will go fast and there will be competing offers, Sweetman said.
For her buyers, that means going to the first open house scheduled, even if it's a bitterly cold weeknight, and either offering more than the asking price or figuring out what the seller wants and making that part of the offer.
"Sometimes it's offering nice terms to a seller, like you're willing to pay some of their closing costs," Sweetman said. "Again, it's a nice way to spend a small amount of money and get a big result."
While some sellers want top dollar, others just want to move on.
"A smooth transaction where nothing falls apart is often worth more than an extra $20,000," Sweetman said.
Onslaught of natural disasters affects buyers and sellers
The recent bouts of flooding and tornado-inducing storms have been hitting many of Sweetman's would-be buyers and sellers.
One couple who own a multi-family house and was looking to move into a single-family is spending the money they had saved for a down payment replacing a roof after it was torn off during a recent wind storm.
RI's September floods were a disaster. What help is available for victims?
Others are calling Sweetman to ask what to do as their basements flood for the first time since they've owned the houses they are now looking to sell.
"They're spending all their money on mitigation," she said. "It's like a perfect storm."
South County and Newport housing numbers
In Newport County, a total of 41 houses were sold in December, 7% of the total for the state. Jamestown, with six sales, saw the biggest swing in median price over last year, hitting $1.6 million across those six sales, compared with $725,000 across seven sales in December 2022.
Jamestown had the highest median price in the entire state, followed by Block Island, where one house sold for $1.3 million, and then Newport, with $1.1 million over six sales.
Little Compton saw the biggest decrease in single-family home sales, from five in December 2022 to none last month, followed by Newport, down to six last month compared with 16 a year ago. Little Compton was the only municipality in the state to register no sales last month, while Block Island and Hopkinton both registered a single sale.
Portsmouth was the only town in Newport County to see an increase in sales, 14, two more than in November.
Tiverton was the most affordable Newport County town, with a median price of $448,000 across 11 sales, down from 14 a year ago. The median price in Tiverton was up 23% from $357,000.
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Reach reporter Wheeler Cowperthwaite at wcowperthwaite@providencejournal.com or follow him on Twitter @WheelerReporter.
This article originally appeared on The Providence Journal: RI's housing market - low inventory, high prices bring back the 2022 feel
