Housing Market Pointed in Right Direction for 2013
Friday, February 01, 2013
Warwick, RI, February 1, 2013…..While the median price of all 2012 single family home sales fell slightly from the prior year in 2012, the year closed on a positive note with both median price and sales activity on the upswing in December. The price gains are a result of diminishing inventory which has led to a market balanced between buyers and sellers for the first time since the housing downturn began. The supply of single family homes for sale dropped 18 percent in December, ending the year with a six-month supply of properties for sale, the typical measure of a balanced market.
In 2012, distressed sales dropped markedly. In January, the year began with distressed sales accounting for 35 percent of all single family sales. By December, that number dropped to just under 27 percent.
For 2012 overall, single family median price fell three percent from 2011 to $190,000, though December alone showed an uptick in median price of three percent from December, 2011. Sales activity jumped 20 percent in 2012 but began to move toward more normal levels by the end of the year, rising nine percent in December. Pending sales – sales under contract but not yet closed - also increased six percent in December, pointing to continued sales activity in the first quarter of 2013.
“The number of homes sold increased consistently throughout 2012 but we didn’t see price gains until the fourth quarter. Median price has been up from the prior year for three consecutive months now. That’s a strong indication that we’re heading out of the woods,” said Victoria Doran, 2013 President of the Rhode Island Association of Realtors.
The median price of condominium sales fell just one percent in 2012 to $175,000 while sales activity increased 11 percent. At the end of the year however, December showed a significant jump in the condo market, with sales up 14 percent and median price up 23 percent to $200,000. The sharp rise in sales left a 7.6 month supply of condos for sale at the end of the year. Though inventory fell nearly 16 percent in December, the condo market appears to be tapering off as indicated by an increase in pending sales of just one percent in December.
The distressed market accounted for 17 percent of all condominium sales in December, down from 28 percent at the end of 2011, again a major factor in the rising median price.
“Fourth quarter condo sales could have been motivated by end-of-year tax incentives or tremendous values in price and mortgage rates. People are just beginning to realize that they can own just as cheaply as they can rent, if not more so. And, with condo ownership, many homeowner responsibilities are taken care of,” said Doran.
Since 2010, the median price of multi-family properties has hovered around 2012’s median price of $120,000, rising 33 percent from the market’s year end price of $90,000 in 2009, an annual low. Sales activity has been up and down in the multi-family market but ended up with a three percent gain in 2012 overall.
Though the year closed in December with a four percent drop in multi-family sales, pending sales increased seven percent from December, 2011 - an indication that increased sales are likely in the beginning of 2013. As in the single family home and condo markets, inventory is tightening, falling 27 percent in December and leaving just over a five month supply of multi-family properties for sale. Distressed sales fell as a percentage of total sales to 48 percent from 59 percent a year earlier.
“Pent up demand and great affordability are carrying into 2013. I think the spring selling season will be particularly robust, as long as Congress doesn’t derail the recovery with further changes to the tax code that erode homeowner benefits,” said Doran. “Any changes to the mortgage interest deduction, even if only to second homes, could derail the forward momentum we’re experiencing. I hope our Congressional delegation realizes that,” she said.