Rhode Island ranked last out of all 50 states for housing growth between 2004 and 2005, according to U.S. Census Bureau estimates released last week.
The bureau said Rhode Island produced only 1,505 new homes during the sample period, for a growth rate of 0.3 percent. The total number of housing units in Rhode Island in 2005 was 447,810.
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Other states with low growth rates included Rhode Island’s neighbors, Massachusetts and Connecticut, each of which witnessed a 0.6-percent increase in housing stock between 2004 and 2005.
Leonard Lardaro, a professor of economics at the University of Rhode Island, said the slow growth in housing is a turnaround from the 1980s, when the construction of single-family homes boomed.
Back then, he said, about 5,500 building permits for new homes were being issued in the state each year. But now, he said, about 150 permits are issued during a strong month.
On the single-family side of the market, construction has slowed even more this year.
While the 414 multifamily unit permits issued in the first half of 2006 more than doubled 2005’s figures for the period, the Rhode Island Builders Association this month reported that single-family home permits had dipped 8.7 percent, dropping to 799 from 875.
Lardaro attributed some of that slowdown to constraints some municipalities have placed on annual growth and to the efforts of land trusts and nature conservancies to purchase large tracts of land and keep them undeveloped.
Confronted with lengthy permitting processes and high land costs, Lardaro added, many Rhode Island developers have opted to build larger, more profitable houses to extract more profit per unit.
Scott Wolf, executive director of Grow Smart Rhode Island, said communities such as Providence, Pawtucket and Woonsocket have taken positive steps by promoting the reuse of their old mill buildings.
But there is still stress on the market created by people who are discovering Rhode Island as a good place for a second home, as well as by people looking to commute from the state to Boston for work.
The Census Bureau statistics show there is a discrepancy between supply and demand, Wolf said. “It confirms that Rhode Island has not been producing [housing] at a fast enough pace to avoid major cost increase and to avoid supply shortages,” he said. “I don’t think it’s a coincidence that for the past several years, we’ve had one of the lowest if not the lowest increases in housing … and one of the fastest increases in housing prices in the country.”
Christopher Barnett, a spokesman for Rhode Island Housing, said the statistics highlight a need for affordable housing in the state.
“In a typical business model, suppliers would ramp up production to meet demand,” Barnett said. “This isn’t happening in Rhode Island because most communities have been wary of new housing development. And that has constricted supply to the choking point.”
Although the market is currently not easy to navigate, Barnett said several recent changes could create a change in that climate.
He pointed to the 29 towns that are required to create plans to encourage the development of housing their residents can afford, under the Rhode Island Low- and Moderate-Income Housing Act. Also, he noted, voters will find a $50 million bond on November’s ballot that would put significant funding toward the development of new, affordable housing.
R.I. Economic Development Corporation Executive Director Saul Kaplan said the creation of new housing across all classes is vital to the success of the state’s economic goals.
Affordable housing is key in attracting companies to the state, Kaplan said, but Rhode Island also needs to assure there is a blend of units available. Workers need to have the ability to move up as they become more skilled and take higher-wage jobs, he said.
“We need to make sure that there is a sufficient housing supply,” Kaplan said. “It’s not just the number of units; it’s the mix of units.”
Although several Northeastern states have seen their markets become stagnant, four of the five states that had the most rapid housing growth are the West. Nevada ranked first, with a growth rate of 4.4 percent, Arizona and Florida both saw increases of greater than 3 percent, and Idaho and Utah both reported 2.9-percent gains.
