There is still some ugliness lurking in the Providence housing market behind the good news that foreclosures have dropped in the first half of 2009, according to Vincent Valvo, group publisher for The Warren Group.
While foreclosures for all properties dipped by 30.5 percent through May compared with the same period in 2008, 429 compared with 618, the real telling number is selling prices for single-family homes, which he said are dangerously low.
“The big issue is the price of a single-family house in Providence is half what it was a year ago and that’s a very bad number in one year,” Valvo said. “I don’t know any other place in New England where it’s dropped that much. That just seems like the beginning of a very frightening horror story.”
Through May of this year, the median price of a single-family home in Providence was $82,000, a 52 percent drop from the $170,000 recorded for the same period the previous year, according to The Warren Group, a Boston-based tracker of real estate data.
“If you’re selling now and you’re coming into the market at that pricing, you’re going to be almost ruined,” he said. “You have to ask why Providence is so different, and the answer that jumps out to me is the market is so bad, lenders won’t even take the properties in foreclosure.”
Valvo said lenders will take a chance on recouping their investments in a better market, but “if median prices drop by half and I’m a lender and can’t even get close to getting back that outstanding mortgage, am I going to take the house, maintain it and be liable? No. … I think that’s what’s happening.”
Statewide, foreclosures have continued to rise, according to The Warren Group. Through May there were 1,361 foreclosures, compared with 1,120 in the same period in 2008.
For the month of May, however, foreclosures in Rhode Island dipped to 399 compared with 546 for the same month last year, according to RealtyTrac, which researches national foreclosure filings. According to the company’s “Foreclosure Rate Heat Map,” Providence’s foreclosure ratio is the highest in the state, with one in 519 housing units foreclosed on for May.
Most troubling to Jim Ryczek, executive director of the Rhode Island Coalition for the Homeless, is the lack of advice being given to tenants facing eviction over foreclosure. While state legislation is pending to impose moratoriums and other protective measures for homeowners and tenants, it is currently locked up in committee at the Statehouse, officials there said. The General Assembly is in recess and has finished most of its business for the year.
Groups are working together, he said, to canvas neediest neighborhoods and tell people what rights they do have, such as the national legislation signed into law by President Barack Obama in May that gives tenants a right to live in a foreclosed home for 90 days if they have no lease, and the term of the lease if they do have one.
“We want that sort of legislation on the state level,” he said.
Across the state, 34 percent of May’s single-family home sales were sold through short sale or foreclosure, said Paul Leys, president of the Rhode Island Association of Realtors. Providence, Warwick, Cranston and Pawtucket led the state in the number of distressed single-family sales, he said.
In June, a new report by Rhode Island Legal Services showed what the report’s author, Steven Fischbach, called the “devastating impact of evictions due to foreclosure,” the first time that state eviction data of any sort has been released to the public.
The report estimates that a total of 5,887 Rhode Islanders were forced to move in 2008 due to foreclosure and approximately 50 percent of all foreclosure evictions in the state were filed against Providence residents.
Tenants of the Rhode Island Bank Tenant & Homeowner Association pointed to the report as more evidence for the immediate need for renter protection. The agency was formed in the wake of the foreclosure crisis in Rhode Island and organizers said they’ve been active in creating a Tenant and Homeowner Bill of Rights, developing a Guide to Tenant Rights and Resources in Rhode Island, and working with local legislators to put a just-cause bill in the works at the Statehouse to protect tenants from eviction if they continue to pay rent in good faith.
“It has become painfully clear that the banks are not going to operate in good faith,” said association organizer Rosalina Collazo. “Therefore, we need the General Assembly to step in to protect the citizens of Rhode Island.” •
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