PROVIDENCE – Homes in Rhode Island were 10% to 14% overvalued in the third quarter of 2020, according to a new report from Fitch Ratings.
One year prior, Fitch found that Rhode Island homes were 5% to 9% overvalued. Prices in the state increased 9% year over year, the report said.
Home prices in Rhode Island were said to be sustainable in the third quarter of 2018.
Nationally, Fitch on Tuesday estimated that home prices were 5.5% overvalued in the third quarter of 2020, driven by accelerated home-price growth due to low mortgage rates and supply and demand imbalance.
“Working from home has caused more people to seek more space for home offices and families, leading to increased demand for larger homes,” according to Fitch Ratings senior director Suzanne Mistretta,
In addition, income and unemployment levels in the third quarter were not supportive of long-term sustainable price growth, the report said. The national overvaluation estimate was expected to increase into 2021, due to continued downward economic pressure and lack of housing supply.
“Slowing employment recovery and still-high unemployment levels are not supportive of long-term sustainable price growth,” said Mistretta.
Idaho was the state with the most overvalued home prices, estimated to be 30% to 34% overvalued, after increasing 14.5% year over year.
Rhode Island and Vermont were the two New England states where home prices were determined to be overvalued in the quarter.
Home price values in other New England states:
- Connecticut: Home prices were found to be undervalued in the third quarter of 2020 after increasing 7.9% year over year.
- Massachusetts: Home prices were found to be sustainable in the third quarter after rising 8% year over year.
- Maine: Home prices were found to be sustainable in the quarter, after rising 8.9% year over year.
- New Hampshire: Home prices were found to be sustainable after rising 9.9% year over year.
- Vermont: Home prices were found to be 5% to 9% overvalued in the quarter, after rising 5.3% year over year.
