Warwick continues to lead the state in the sale of single-family home sales, albeit by a slim margin over Cranston and despite extensive news coverage in the past four months on the city’s deteriorating infrastructure, condition of schools and unfunded liabilities.
According to the report released last week by the Rhode Island Association of Realtors, 114 single-family homes sold during the month of August, down from 129 last August. Cranston single-family home sales were up from August 2018 for a total of 112.
The statewide news from the perspective of the association is that low inventories have made this a seller’s market and is responsible for pushing up the median price of single-family homes to $295,000, up 7.2 percent from last August.
Philip Slocum, president of Slocum Real Estate who has been selling homes in Warwick for the past 41 years, concurs that inventory is down. As of Tuesday, he said 233 Warwick homes were on the market.
“That’s way down,” he said, adding that in a “balanced market” Warwick should have 500 to 600 homes listed. When talking about prices, Slocum compared the market to a funnel with lower priced homes at the top and narrowing as prices climb.
He said the most desirable properties at this time are in the range of $300,000 to $350,000. He did not see any one particular Warwick neighborhood as being in high demand. Because “they don’t make any more of it,” he said waterfront properties continue to demand a premium, although the cost of flood insurance can present “challenges.”
Low mortgage interest rates and high employment are fueling the market, too, he said.
Yet he does not see the lack of inventory pushing unreasonably high prices. In fact, the median price of Warwick homes fell from $240,000 to $238,450 for August year over year.
Might that be an indicator of an impact of negative Warwick news including student demands for the restoration of sports and other programs cut from the school budget in the spring (most of the programs were restored); a sewer line break on Sandy Lane that highlighted the deteriorating condition of the system; close to a maximum allowable tax increase and multiple stories over the increasing cost of pensions and retiree health benefits?
“News is short-lived,” said Slocum. He said he is not hearing any major concerns.
A Warwick cheerleader, Slocum is not surprised the city exceeds other municipalities in single-family home sales.
“It has so much to offer,” he said, citing beaches, parks, retail shopping areas, great food and its location in the center of the state and access to major highways. “By and large people want to live here. It’s a good place to live.”
A possible indicator of the market is the number of vacant houses due to a myriad of issues from foreclosures and tax saled to estate complications. Some of these properties have gone unoccupied for years to the annoyance of neighbors who complain to minimum housing and see nothing happening. According to the city, the number of vacant homes have dropped since the recession years from about 500 to about 300.
Slocum is not surprised.
“There’s a plethora of flippers [people looking to get a good deal on a house, make improvements and sell it at a profit] looking for properties in distress,” said Slocum. He also pointed out that gaining a clear title to many of these properties can be a long and arduous process.
Inventory is the key word being pushed by the real estate association. It reports inventory in all three sectors remains markedly low – hovering near a four-month supply for single-family homes and condominiums and a 3.5-month supply for multifamily properties. A six-month supply is considered a healthy balance between supply and demand by most industry experts.
Sales activity saw a jump in the condominium market last month, rising 13.7 percent from 12 months earlier but sales slowed in the single-family home and condo markets. Given the scarcity of single-family starter homes, condominiums have become an attractive option for first-time buyers.
Also, the association notes in a release, in August, the U.S. Department of Housing and Urban Development released updated guidance on FHA-insured condominium financing. The new rules, which are set to take effect in mid-October, should make it easier for more buyers to obtain low down-payment mortgages for condo purchases by eliminating financing barriers to that sector of the market.
“Overall, as our economy moves along, so too does our housing market. The only thing hindering us right now is the lack of properties available on the market. Regardless of what happens to interest rates over the next year, we can’t sell what we don’t have available for sale.
“If there’s anyone thinking about selling, now’s the time. The conditions to maximize your investment don’t get much better than this,” said Dean deTonnancourt, 2019 president of the Rhode Island Association of Realtors in a statement.