R.I. house prices drop in 1Q<br> but brokers’ sales grow

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Two reports issued last week on first-quarter Rhode Island residential real estate sales painted contrasting pictures of the market, suggesting that while Realtors may be holding their own, sellers who don’t hire an agent may be having a particularly difficult time.
The Warren Group, which tracks all home sales, including direct sales by the owners and foreclosure sales as reported by cities and towns, reported a 3-percent drop in single-family home sales for the first quarter, to 1,873, compared with 1,932 a year ago.
The Rhode Island Association of Realtors, meanwhile, which tracks only transactions brokered by its members, reported a 1.25-percent increase in sales to 1,617 this year from 1,597 last year, which it saw as “a reversal in the sales slowdown that marked much of 2006.”
Both groups reported a drop in the median sale price: The Warren Group pegged the median at $255,000, down 2.67 percent from last year, while the Realtors reported a 2.86-percent drop to $272,000, describing it as a “market price adjustment.”
And that adjustment, the Realtors said, “appears to be luring buyers back into the market.”
“It’s a great time to be buying a home,” said Cecile Cohen, president of the Realtors association, in a news release. “Interest rates are still at historic lows; there’s more to choose from than there was a few years ago. Overall, the market is coming back into balance.”
The Boston-based Warren Group, however, painted a less definitive picture. Home sales were up in January and February, the company noted, but then March sales were down 17.7 percent, pushing down the quarterly figures.
“March’s decline in the number of sales may seem dramatic,” said Timothy Warren Jr., CEO of The Warren Group. But “given the two preceding months, which saw increases in sales, March’s decline could just be a blip. But we’ll have to wait and see what happens in coming months to determine that. The median sale price stayed relatively flat in the first quarter, which is a good sign for Rhode Island going ahead.”
The Warren Group also reported a drop in sales and median sale prices in the residential condominium market. Sales fell 4.3 percent to 516 units this year, while the median sale price fell 6.2 percent to $220,500, the company said.
Sales of condos in March, on the other hand, increased 3 percent to 206, while the median sale price fell 6.7 percent to $213,000 compared with March 2006, The Warren Group said.
The Realtors reported that properties spent an average of 93 days on the market, up from 82 last year, “as many buyers took a little longer monitoring the market before making purchase decisions.”
“Though we’ve experienced a minor price correction, we’re pleased that the market seems to be turning around,” said RIAR president Cohen. “Thankfully the negative economic factors like high unemployment and recession that typically precipitate a big decline don’t exist.”
Looking at individual markets, the Realtors found some doing far better than others. Providence and all but one community in northern Rhode Island (the exception was North Smithfield) saw a decline in the number of house sales, for example, while two-thirds of the towns in South County saw increases, and the East Bay and West Bay saw mixed results.
Prices declined in most communities, and they plummeted on the East Side of Providence – to a median of $422,500, down 26.52 percent from last year’s $575,000, the Realtors reported. The group attributed the drop to a dramatic change in the “marketing mix” of properties. While in the first quarter of 2006, six houses were sold that were originally priced above $1 million, in 2007, no such property was sold, and sales included “many lower-value homes.”
In Newport, by contrast, not only did the number of sales increase, from 27 to 39, but the median price rose by 15 percent to $460,000.
Looking at national trends, the association cited projections from the National Association of Realtors that 2007 will be the fourth-highest year on record for existing-home sales, with 6.34 million units expected to be sold, down slightly from 6.48 million in 2006.
“As home sales moderate, overall home prices will be essentially flat this year,” said David Lereah, chief economist of the national association, in the news release. “When you look at housing activity in 2007, especially during the first half of this year, the percentage change in median home price is being distorted as the composition of sales shifts geographically from high-cost markets to moderately priced areas, in contrast with the sales distribution a year earlier.”

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