Providence housing market ‘dangerous’ for investors
A REPORT from home buying company HomeVestors, said Providence is classified as "dangerous" for investors, bucking generally positive national trends for home buyers.
By Eli Okun PBN Staff Writer
DALLAS – A new report has shown that Providence is the only one of the country’s top 100 housing markets that is currently classified as “dangerous” for investors, bucking generally positive national trends for home buyers, HomeVestors of America Inc. and Local Market Monitor reported late last week.
The home buying company and real estate forecaster jointly analyzed national data and found that there is still space for prices to rise in most markets, despite major increases over the past year, making for a favorable climate for investors in single-family homes.
Their quarterly ratings, which categorize markets as “dangerous,” “speculative,” “medium risk” or “low risk,” take into account factors that affect housing demand and subsequent home prices and investment risk.
In contrast with the rest of the nation, Providence’s demand for rentals remains stagnant – largely due to its poor job market and high unemployment rate – even though home prices are 12 percent below its equilibrium home price, the level commensurate with average local incomes.
There were 13 markets ranked as “speculative,” all in the Northeast and the Midwest, which are higher-risk but “could provide more upside potential,” Ken Channell, HomeVestors co-president, said in a prepared release.
On the other end of the spectrum, a handful of housing markets — including several in California — have housing prices that now outpace incomes, which could make some investors wary. But those high prices are expected to be only short-term, Ingo Winzer, president and founder of Local Market Monitor, said in a statement.
California, Texas and Florida led the country with the highest numbers of low-risk markets, though there is considerable variation within that category.