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Increasing First Time Buyer Market Lowers Median Price
Warwick, RI, May 6, 2009….An analysis of home sales statistics for the first quarter shows virtually all sales activity occurring in the lower priced market, according to the Rhode Island Association of Realtors. The majority of existing single family home sales, 83 percent, involved properties valued at less than $300,000. By comparison, 62 percent homes valued in that price range sold in the first quarter of 2005. Homes under $150,000 accounted for 3.6 percent of the market three years ago; they now account for 37 percent of all single family sales. Condominium sales were similar, with 80 percent of first quarter sales occurring in the under $300,000 price bracket. Forty-two (42) percent sold for $150,000 or less.
The analysis helps to explain the dramatically lower median prices of single family and condominium sales in recent months. Median price represents the mid-point of sales, where half the properties sold for more and half the properties sold for less. It does not represent spikes or drops in value in the same property over time, but reflects the mix of properties (price and size) on the market.
Four hundred and seventy-four (474) single family homes sold for less than $150,000 from January to March; 559 sold in the 150,001 to $299,999 price band; and 158 sold priced at $300,000 to $499,999. Seventy-seven (77) condos sold for less than $150,000 and 71 sold between $150,001 and $299,000. Twenty-four (24) sold from $300,000 to $499,999.
“Conventional mortgage rates and first time homebuyer incentives have improved substantially, and housing affordability has reached 1998 levels. That’s really impacted the growth of the lower end market,” explained Paul Leys, President of the Rhode Island Association of Realtors. Rates on conventional rate mortgages – loans for less than $417,000 – averaged around five percent in the first quarter.
The percentage of foreclosures and short sales for single family homes sold for more than $500,000 in the first quarter was only three percent compared to a 45 percent rate of distressed sales overall. “As you move into the higher priced home markets, our statistics tell us that home owners don’t have to sell so they can ride out the market,” said Leys. The smaller percentage of high end inventory and sales is lowering the median price, giving consumers a false sense of real estate values overall he further explained.
According to Lawrence Yun, Chief Economist of the National Association of Realtors, the bulk of the effects of the $8000 home buyer tax credit which was passed in late February should begin to become apparent in June and July, encouraging movement in the first time homebuyer market. That is expected to raise the median sales price as sellers of first time homes begin to trade up.
Multi Family Home Sales Double in First Quarter
Warwick, RI, May 5, 2009….Sales statistics released today by the Rhode Island Association of Realtors (RIAR) show sales booming in the multi-family market, up more than 106 percent during the first quarter of 2009 compared to the same time period a year earlier. The surge in sales is sparked by falling prices fueled by distressed sales. Distressed sales – sales marked by foreclosure or short sales – accounted for 81.4 percent of all multi-family sales in the first quarter. The median multi-family price fell to $80,000 from $161,000 the year prior.
“First-time home buyers and investors are seeing clearance sale prices,” said Paul Leys, President of the Rhode Island Association of Realtors. Leys warned however, that distressed properties often need extensive repair which can add to the final cost of the property. “Median price statistics for most multi-family homes today don’t represent the true cost of an inhabitable property,” he said.
More than half (281) of the multi-family properties sold in the first quarter are located in Providence. Pawtucket followed with 77 of the total 538 sales.
Single family homes, now more affordable, have become stiff competition for the condo market, helping to drive condominium sales down by 25.2 percent in the first quarter. Prices also fell 15.1 percent from $205,950 in the first three months of 2008 to $174,950 in the first quarter of this year. Thirty percent of condo sales were distressed sales. The median price of non-distressed condos sold during the first quarter was $218,000.
At a recent Rhode Island Real Estate Housing Summit hosted by the Rhode Island Association of Realtors, noted URI Economist and publisher of the Rhode Island Current Conditions Index, Len Lardaro, told members of the audience that Rhode Island was in the process of recovery and should see a stronger housing market toward the end of the year. Lawrence Yun, Chief Economist of the National Association of Realtors agreed and predicted that Rhode Island would lead New England out of the housing downturn. Last week, RIAR reported that sales in the condo, single and multi-family sectors increased from February to March and were well ahead of the national average.
Single Family Home Sales Increase in First Quarter
Warwick, RI, May 1, 2009….Existing single family home statistics released today by the Rhode Island Association of Realtors show sales increasing from first quarter 2008 to first quarter 2009 by .40 percent. Overall, median price dropped from $245,000 last year to $180,000. Forty-five percent of the sales were distressed sales, sold through short sale or foreclosure. The price of non-distressed sales was $225,000.
“We’re continuing to see two markets with distressed sales selling for roughly 20 percent less than non-distressed sales,” said Paul Leys, President of the Rhode Island Association of Realtors. “We’re encouraged that we continue to see increasing sales and decreasing inventory which tells us that we’re moving through the downturn,” he added. Rhode Island has been ahead of the national curve in terms of sales volume.
Sales in Providence nearly doubled (up 93.8 percent) due to the substantial number of foreclosures and short sales in the city. Providence’s first quarter median price fell to $75,000 from $150,500 during the first quarter 2008. Central Falls, Foster and North Kingstown saw a price increase.
“Real estate has always been local but never more so than today. It’s critical that buyers understand the market they’re looking in when negotiating price,” said Leys.