May 18, 2021 — Once again, the Rhode Island Association of Realtors reported an all-time high in Rhode Island’s monthly median sales price of single-family homes. April’s median price was $349,000, an 18.1 percent gain from April of 2020.
Despite the extremely low inventory of homes for sale, closing activity rose 15.9 percent last month. At the current rate of sales, the supply of homes on the market would be depleted within 1.2 months, far below the five- to six-month supply which typically signifies a market balanced between supply and demand.
Homes placed under contract in April but not yet closed rose 48.6 percent from a year ago, during which time the number of single-family homes on the market fell 50.9 percent. This combination bodes for an even further erosion of supply.
“It’s hard to believe the appreciation that we’ve seen in the housing market in the past few years. In April 2015, our median sales price didn’t even hit $200,000. Now just six years later, we’re seeing more than a 75 percent gain. That’s great news for homeowners but for those trying to buy their first home, the scarcity of homes for sale and accompanying rising prices, are making for a difficult home search,” said Leann D’Ettore, President of the Rhode Island Association of Realtors.
Multifamily homes see largest price gains
The median sales price of multifamily home sales also continued to skyrocket. At $355,000, April’s median price represented a 24.6 percent gain from the prior year. Apart from June of last year – a month in which closings were significantly impacted by the pandemic shutdown – the multifamily home sector has seen double-digit, year-over-year increases every month for the past 15 months. Appreciation in this sector has grown even more than the gains seen in the single-family home market in recent months.
“Multifamily homes are popular because they provide a means to home ownership which provides income through rentals for those needing the extra infusion of monthly cash. But those properties are also attractive to cash investor buyers looking to capitalize on rising rents and escalating real estate values. With incentives for multifamily homes at both ends of the spectrum, it’s not surprising to see prices rising so rapidly,” said D’Ettore.
Closing activity rose 74.4 percent, though gains were facilitated by the fact that multifamily home sales in April of 2020 were stalled by the pandemic shutdown. Though listings were up slightly, just 3.6 percent, from 12 months earlier, they remained historically low with just 342 multifamily homes for sale in all of Rhode Island.
Condo owners begin to see higher gains
Though the condominium market saw more tempered price appreciation than other sectors of the market in recent months, April’s median sales price jumped 15.6 percent to $288,000. Closing activity rose by 95.7 percent from the prior year, as those shut out of the competitive single-family and multifamily markets, turned their attention to condo alternatives.
“We need more housing stock of all types in Rhode Island and until we get it, supply and demand are going to be unbalanced. It’s so important that we remember that real estate drives the economy and that younger generations need the chance to build wealth through home ownership. This issue deserves the attention of our legislators and regulators,” commented D’Ettore.
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