Joseph Luca is the president of the Rhode Island Association of Realtors. He spoke to the Providence Business News about recent trends in residential real estate sales, including a persistent decline in the number of listings available across much of the state.
PBN: The inventory of single-family houses is decreasing, compared with previous years. What are the ramifications of that on sales?
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LUCA: Ultimately, what will happen is if there aren’t enough houses on the market, the [number] of houses that go into “pending” will start to decline.
PBN: Hasn’t that already started to happen? Isn’t that going to start to depress the market?
LUCA: I wouldn’t say it depresses the market as much as it slows it down. When you don’t have enough houses to sell, it slows things down. If you have 100 people looking to buy houses but we only have 60 houses that they can buy, maybe all those houses get sold, [and] you have to wait until more come on the market. Those 100 people are still going to buy houses, it’s just going to take longer for them to find what they need.
PBN: The town-by-town breakdown of sales indicates some are really tight, with less than a month of supply, and others with more, such as West Greenwich. Only a few towns are considered buyer’s markets. What is the difference among towns?
LUCA: There are certain towns, certain parts of municipalities that are more desirous, more people want to live there. As you get into more-rural areas, the Burrillvilles, West Greenwich, the pool of buyers on the market today, there are a smaller percentage of them that want to live in rural areas like that. … You have fewer buyers chasing after those houses. Overall, we’re at 2.7 months of inventory.
PBN: Is the supply tight because demand has picked up? Are millennials starting to buy, for example?
LUCA: Millennials aren’t starting to buy; they have been buying and are going to continue buying. The age range at which most people historically buy their first home is the 30- to 34-year-old age range. The [number of] people in that age range is going to be increasing for the next several years. There is going to be continued pressure.
PBN: In terms of the sellers, it seems like people would have understood by now that prices have been increasing for the past year. But people aren’t willing to sell. Is this the new dynamic?
LUCA: It’s more a matter of them not having an alternative plan for housing. If I sell my house, where am I going to go? They can’t sell their $300,000 house to buy a $300,000 condo. It doesn’t make any sense at 75 years old. I think also something that is holding things back … people want to get into an assisted living facility but there is no room in the assisted living facility, so they can’t sell their house. That’s anecdotal. That’s not based on any … statistic.
Mary MacDonald is a staff writer for the PBN. Contact her at macdonald@pbn.com.
