‘There is no way to know if the banks are holding out.’
COMING HOME: A worker with Stand Corporation finishes a renovation at 61 Camden Ave. in Providence. For the first time in years, renovated homes outnumber newly abandoned ones in the neighborhood thanks in part to efforts to rehab foreclosed properties.
When he drives through his Providence neighborhood checking out buildings, Smith Hill Community Development Corp. Executive Director Francis Smith sees progress.
For the first time in years, freshly renovated homes outnumber newly abandoned ones, Smith said, partly thanks to nonprofits like his that turn foreclosed properties into new rental buildings. “During the height of the foreclosures, we would see four or five foreclosed houses on every block, now maybe there are two,” Smith said. “The foreclosures seem to be slowing.”
Along with a rise in sales starting late last year, anecdotal reports of stabilized neighborhoods like Smith’s represent hope for those waiting for Rhode Island’s beleaguered real estate market to finally turn around. But more than two years after the recession and with the national economy showing signs of life, many expected that by this point things would be better.
In 2011, the median single-family home price in Rhode Island dropped 7 percent and the number of sales dipped 2 percent despite plenty of bargains, low interest rates and new financing options.
Realtors say they see demand picking up, but the steady stream of foreclosures, auctions and short sales clogging the market have kept prices down and potential buyers holding out until they’re confident they’ve found the bottom.
Even when sales pick up, as some suggest they will soon, few can say with confidence how long it will take to make a dent in the inventory of deeply discounted properties on the market with so many mortgages underwater and foreclosures continuing unabated.
“We are working through the foreclosures and short sales we have had in the pipeline and the hope is that once we get [the distressed properties] out, we will start selling the better stuff,” said Rhode Island Association of Realtors President Jamie Moore about the state of the market. “My only concern is we don’t know what the so-called blind inventory is. We can’t see what the banks have. Without knowing what that is, it is tough to know how much we are accomplishing.”
That blind inventory – also referred to as the shadow inventory – represents homes lenders have either repossessed or are likely to repossess in the near future, but haven’t put on the market yet.