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The Rhode Island Real Estate Market: How Bad Is It?

There’s no doubt that the housing market here in Rhode Island and markets across the U.S. are in a serious slump. But despite what you’ve heard on the cable news shows and read in the press, the market in general, in Rhode Island and particularly in your community, may not be as bad as you think.

The Providence Journal reported on page one recently, “Housing market plunging in state.” The median price of a single-family house in Rhode Island fell 10% in the first quarter of the year to $245,000 from $272,000 a year earlier, according to statistics from the Rhode Island Association of Realtors. Home sales were off 23% for the same period.

But there is always another way to look at any situation.

The flip side is that 1,242 single-family homes did sell in the first quarter (versus 1,617 in the first quarter, 2007). In other words, more than 1,200 buyers and sellers reached an agreement even though today’s buyers want to buy at bargain prices and sellers want to hang onto every dollar their homes may have been worth a year of two ago.

Although the median home price declined in 24 markets, according to the Realtors Association, it rose in 14 others—as much as little as 1% in Cumberland and 5% in Hopkinton to more than 36% in Little Compton and a whopping 77% in Jamestown.

The reasons behind such large differences are both simple and complex.

For one thing, statistics can be misleading. Community statistics can be skewed by one or two “McMansion-size” sales with unusually high prices or because there were only a small number of sales from which to determine the statistics. The happenstance of what happened to sell when and for how much can also play a role.

Consumer psychology also plays a part. Just as the housing market highs of a few years ago were driven in part by the same spirit of “irrational exuberance” that former Federal Reserve Chairman Alan Greenspan said drove the stock market in the mid-1990’s, many of today’s lows are caused by irrational gloom.




	Headline News The Rhode Island Real Estate Market: How Bad Is It? There’s no doubt that the housing market here in Rhode Island and markets across the U.S. are in a serious slump. But despite what you’ve heard on the cable news shows and read in the press, the market in general, in Rhode Island and particularly in your community, may not be as bad as you think. The Providence Journal reported on page one recently, “Housing market plunging in state.” The median price of a single-family house in Rhode Island fell 10% in the first quarter of the year to $245,000 from $272,000 a year earlier, according to statistics from the Rhode Island Association of Realtors. Home sales were off 23% for the same period. But there is always another way to look at any situation. The flip side is that 1,242 single-family homes did sell in the first quarter (versus 1,617 in the first quarter, 2007). In other words, more than 1,200 buyers and sellers reached an agreement even though today’s buyers want to buy at bargain prices and sellers want to hang onto every dollar their homes may have been worth a year of two ago. Although the median home price declined in 24 markets, according to the Realtors Association, it rose in 14 others—as much as little as 1% in Cumberland and 5% in Hopkinton to more than 36% in Little Compton and a whopping 77% in Jamestown. The reasons behind such large differences are both simple and complex. For one thing, statistics can be misleading. Community statistics can be skewed by one or two “McMansion-size” sales with unusually high prices or because there were only a small number of sales from which to determine the statistics. The happenstance of what happened to sell when and for how much can also play a role. Consumer psychology also plays a part. Just as the housing market highs of a few years ago were driven in part by the same spirit of “irrational exuberance” that former Federal Reserve Chairman Alan Greenspan said drove the stock market in the mid-1990’s, many of today’s lows are caused by irrational gloom.