Warwick, RI – July 20, 2018 – The median price of single-family home sales continued to climb in June, rising to $290,000 according to the latest monthly sales report from the Rhode Island Association of Realtors. The price reflects the highest monthly median price since July of 2006 and is just 2.8 percent less than the highest monthly median price on record. The median sales price has risen steadily since December of 2017. June’s median represents a 5.5 percent increase since June of last year.
In other sectors of the market, the median sales price of multifamily properties shot up 19.1 percent year-over-year, landing at $250,000 last month. The median price of condominium sales rose 8.2 percent to $230,000.
Supply of Homes Remains Unchanged Year-Over-Year
There’s no question that a shortage in inventory is hiking prices and hampering closing activity which fell 3.6 percent last month compared to June of 2017. There were 70 fewer single-family homes on the market in June than there were 12 months prior and 1278 fewer than there were five years earlier. According to the latest Realtor data, Rhode Island’s housing market had a 4.2-month supply of single-family home inventory last month, a number which was unchanged from the prior year. A six-month supply is needed for a market to be evenly weighted between supply and demand.
“There’s no doubt that our biggest problem right now is that we can’t meet the pent-up demand for housing. People aren’t selling. They’re staying in their homes longer for a number of reasons – fewer people are being forced to sell due to distressed sales, some people refinanced to extremely low rates that they don’t want to give up, others don’t want to sell because they’re scared they won’t be able to find a home to move to in this market. On top of all that, Rhode Island remains last in the country in construction starts and the few new builds that we do have aren’t at a price point that first-time homeowners or most of the middle class can afford. Housing drives the economy so we need to start attacking this issue on multiple levels,” said Joe Luca, 2018 President of the Rhode Island Association of Realtors.
Like the single-family home market, closing activity declined, falling 7.4 percent compared to 12 months earlier. The supply of condos for sale continued to fall for the 16th consecutive month.
Multifamily Properties Seen as Solid Investment
With the cost of rents skyrocketing, multifamily properties have become an attractive investment and sales have seen a meteoric rise in prices as a result. The median price of the investor-driven multifamily market increased by double digits for the past 14 months and sales activity has remained above last year for all but one of the past 18 months. The number of properties for sale was up 13.7 percent over June 2017, the third month of positive annual increases following 34 consecutive months of year-over-year decline.
“There’s a big demand for rental housing and investors are more than happy to meet that demand. Plus, multifamily homes are a great option for first-time buyers who need a little help with the mortgage and as home prices and interest rates rise, that population is growing. We’ll begin to see prices of multifamily homes begin to moderate if inventory continues to grow. That’s not going to happen overnight but it’s a step in the right direction,” commented Luca.
The Rhode Island Association of Realtors will be releasing second quarter sales statistics on Wednesday, June 25th.