Separate reports released this week show that Rhode Island’s real estate market continues to decline, with both single-family home sales and new building permits down in the first half of 2007 – though the latter bumped up somewhat in the second quarter.
Taken together, the reports – released by The Warren Group and the Rhode Island Builders Association, respectively – show a market that is settling down after reaching historic heights in the past several years, said the heads of both organizations.
“The housing market continues to show signs of cooling in response to past overheated conditions,” Roger Warren, RIBA’s executive director, said in a news release. “Yet it is important to understand that this correction is leading us to a healthier market with greater choices of available stock and a better balance between buyers and sellers.”
The association reported that while the number of permits issued in the second quarter of 2007 increased 6.5 percent from the same period in 2006, the 409 permits were not enough to make up for a weak first quarter. In the first six months of the year, the number of permits issued fell to 752, 5.9 percent fewer than in the first half of 2006, RIBA found.
At the same time, the Boston-based Warren Group reported that sales of single-family Rhode Island homes are down 6.7 percent in the first half of the year from the same period in 2006.
Local sales of single-family homes dropped from 4,734 in 2006 to 4,418 this year. The decline in June was an even sharper 11.4 percent, to 962 sales from 1,086 in June 2006.
Timothy Warren Jr., CEO of The Warren Group, said the market for single-family homes seems to be stuck in the same slump that prevails across most of New England.
“We’ll probably see more of the same trend through the rest of this year, but we’ll have to keep an eye on foreclosure rates,” he said. “A glut of too many distressed properties on the market could cause prices to fall further.”
The Warren Group’s report did offer one bright spot for the Rhode Island market – an increase in condominium sales, a market that Timothy Warren said seemed to be on a “steady track.”
Condo sales rose 2.8 percent in the first half of the year to 1,241. However, the report noted that they fell in June almost as sharply as sales of single-family homes, plunging 11.2 percent to 239 in the same month last year.
Both condo and single-family home prices fell in the first half of 2007, with median condo prices dropping 4.3 percent to $225,000, and median prices for single-family homes falling 3.4 percent to $260,000.
The builders association reported that 23 of Rhode Island’s 39 cities and towns showed a decrease in building permits in the first half of 2007. The largest decreases occurred in Jamestown, Barrington, Richmond and Providence, while the major increases came in New Shoreham (Block Island), Newport, West Greenwich, North Kingstown and Middletown.
However, Roger Warren said that he views the state’s underlying economy as quite healthy, and he cited negative headlines as a possible factor in the continuing housing market slump. He also added that “Rhode Island’s market is performing quite well in comparison to other parts of the country.”
“Rhode Island inventories are now closer to historic levels, and interest rates are still near historic lows,” RIBA’s Warren said. “We are beginning to see a more normal market.” •
The Warren Group Inc., based in Boston, is a provider of New England real estate data and the publisher of Banker & Tradesman and other journals. Additional information is available at www.thewarrengroup.com.
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The Rhode Island Builders Association, with more than 1,400 member companies across the state, is one of the nation’s largest local trade associations serving the residential construction industry. For more information, including home improvement tips, visit www.ribuilders.org.
