Buyers seen weighing options more carefully
Figures released by the R.I. Association of Realtors for the first quarter of 2006 show that single-family home sales dropped 12.5 percent from the same period last year to 1,597, a pace of sales that was the lowest in the state since 2000.
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In the condominium market, unit sales dropped 17.7 percent to 373, while multi-family home sales dropped to 381 from 528.
Leonard Lardaro, an economist at the University of Rhode Island, said that the figures reflect a weakening housing market in the state, but he still expects sales to “mosey along.”
“I don’t see it picking up; I don’t see it resembling anything like it was,” Lardaro added. “But I think you’re going to see moderate activity.”
Michele Caprio, president of the Realtors association, said the sluggish first quarter may have been the result of higher prices – including a median single-family home sale price that jumped 16.2 percent to $280,000 from 2005’s first quarter – as well as an increased supply. At $230,000, the median price for a condominium was 21.2 percent higher than in the 2005 first quarter, while the median price for a multi-family house rose 3.2 percent to $289,000 for the period.
While January through March sales represent nearly 20 percent of the year’s total (1,825 of the state’s single-family home sales out of 2005 total of 9,711) Caprio noted that the first quarter is not necessarily a harbinger of the coming year. And besides, she said, the pace was still high compared with the past 20 years.
Homes sat on the market for an average of 82 days in January, February and March, up from an average of 74 days in the first quarter of 2005. Caprio said that was partly due to the larger supply as well. With more homes for sale, Caprio said that consumers have more options. “Buyers have the option to do what they want,” she said.
Cecile Cohen, associate broker and manager of Randall Realtors of Charlestown and president-elect of the association, said that the slower pace of sales is the result of consumers being more educated about their home purchases.
“It takes consumers longer to make a decision,” she said. “I think people are doing their homework and taking their time. I don’t see anything in the economy that’s precipitating some kind of crisis that’s going to set the clocks back.”
While the median sale price for the quarter jumped dramatically, especially when compared with the 2005 first-quarter increase of 10.7 percent, Cohen said that the figures may be slightly skewed because of the smaller sampling size.
For instance, the median price in Little Compton nearly doubled to $1.025 million in the first quarter. But there were only five sales – two less than the first quarter of 2005 – meaning one or two larger transactions could have increased the median.
Cohen warned that it is better to use year-end figures to determine what homes across the state are truly selling for. The first quarter, in particular, can be inaccurate because it falls in the winter months. “Statistically, the first quarter is never the most accurate,” Cohen said.
David Iannuccilli, a broker-owner for Re/Max Professionals in East Greenwich, said that while he doesn’t see a crisis on the horizon, a softening market could mean that the slew of new agents who flooded the market during the boom may start to leave the industry.
At the same time, he added, real estate veterans may see more demand of their services.
“I think that when things start tightening, you’re going to see people not trying to sell their homes on their own as much, and they’re going to need a professional,” Iannuccilli said.
Lardaro said the state has seen an “anemic” rate of new home construction, something that could put downward pressure on prices. And, the decrease in home sales, he said, may actually be a positive for Rhode Island’s economy, because historically, educated residents have sold their homes to relocate to states that have not experienced the same housing booms.
“That’s a problem because we tend to lose some skilled people, which we cannot afford to do,” Lardaro said.
