Warwick is the most affordable place to live in Rhode Island, at least according to a study recently released by SmartAsset.com, which assessed the most affordable places to live in America.
The study examined cities and towns of more than 5,000 people across multiple areas associated with being able to purchase and afford a home, including the median family income of the municipality, average annual property taxes, average annual mortgage payments, average closing costs for a home purchase and the average annual cost for homeowner’s insurance – when combined they attributed to an overall “affordability index” ranging from 1-100.
Warwick did not rank first in any of these categories statewide, but averaged less costly comparative to the average of other communities in the state across all of those metrics.
The average closing costs in Rhode Island, according to the study, is $3,689, while in Warwick it is $3,151; the annual property tax in the state is $4,533 while in Warwick it is $3,647; annual homeowner’s insurance costs $1,808 on average statewide while only $1,239 in Warwick; the average annual mortgage payment in Rhode Island is $13,576 but only $9,305 in Warwick; and the median household income statewide is $61,043 but higher in Warwick at $71,191.
However, despite ranking highest in the state, even the most affordable place to live in Rhode Island is in the bottom third of affordable housing in the country. Warwick achieved an affordability index of 33.12 out of a possible 100 (ranking 2,704th nationwide). For context, the most affordable municipality in the country (the only 100 rating) went to Pecos, Texas, which has an average annual mortgage payment of under $2,500 but a household median income of about $55,000.
Nationally, Rhode Island’s average annual mortgage payment of $13,576 is more than double the average nationwide, which is $6,529 per the study. Annual property taxes in Rhode Island on average are $4,533, which is nearly triple the cost of the national average at $1,526. Annual homeowner’s insurance in Rhode Island is nearly double the national average as well, at $1,808 compared to $985.
Phil Slocum, owner of Slocum Realty in Warwick, said that perspective was important when assessing affordability – and that just because certain costs may be higher in Rhode Island than elsewhere in the country, the income is also higher here. In fact, the study showed that the median family income in Warwick increased from $66,602 in 2018 to $71,191 in 2019 – which is $13,539 (23 percent) higher than the national median income of $57,652.
Slocum said that what homeowners get for their dollar is an especially important factor, particularly in Warwick.
“One of the things that Warwick can be so proud of is what you get for the affordability,” he said. “You get paid police, fire, trash removal, sewerage, public water. Often, we will have buyers looking at more rural communities, and they'll say look at the taxes and the lower mortgage payment – but there's no city sewers, a volunteer fire department, well water. You get what you pay for. The city of Warwick has wonderful amenities and structure for the community.”
Slocum said that the Warwick housing market has been consistently the most active market in the state, and that the state has seen a “very, very hot” housing market over the last six to seven years.
The stats back that up. As provided by Slocum and sourced to Statewide Multiple Listing Service, Inc., real estate sales in Rhode Island have been dominated by Warwick in 2017 and 2018, with Warwick’s 2,596 home sales coming in far above the second most popular community, Cranston, which had 1,775 sales the past two years. The median value of a home in Warwick increased from $215,000 in 2017 to $230,000 in 2018.
“The last six to seven years have been extremely strong, and the last two or three have been right at the top of the scale as well,” Slocum said. “Demand is very high. If we suffer from anything it's a lack of inventory.”
Slocum said that buyers have to be patient as houses go quickly, and often go for more than their assessed values – though he couldn’t say specifically how much higher they are going for on average, as every house and every community is different.
“I think there's a lot of factors, none the least of which is the economy overall and the unemployment rate,” he said. “In addition, it's supply and demand. The less properties there are on the market, the higher the value.”
Dean deTonnancourt, president of the Rhode Island Association of Realtors, added that while the market was still a seller’s market – houses in the state that normally last 180 days during an “even” market are only lasting 60 days on average – the market is “stabilizing” as inventory numbers of available houses are increasing.
“Now that more inventory is coming to the market, buyers have more of a say in the market,” he said, adding that such stabilization should result in more favorable prices for buyers than seen during the height of the buying frenzy.
Slocum and deTonnancourt warned about putting too much stock into property taxes as an accurate barometer for affordability, as some communities may not have performed an assessment on their properties in multiple years, while others may be more up to date.
According to the study, the least affordable community ranked in Rhode Island was Wakefield-Peacedale portion of South Kingstown, which had an affordability of 0.21 out of 100. Its average annual mortgage payments were $14,467 with a median income almost identical to Warwick at $71,071. Their annual property taxes came in at $4,243 and homeowner’s insurance at $1,927.