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Real estate markets can turn on a dime. We all saw that firsthand over the past two years. The pandemic brought about a feeding frenzy in the housing market, seemingly overnight. We were already in a strong sellers market due to low inventory in early 2020 but the pandemic took it to a whole other level, the likes of which no one was ready for or had predicted. I had clients whose property value increased by as much as 40% in one year! On average, there was a 20% increase year over year. When you look at historical data, annual appreciation for real estate hovers around 3-5% so that is a significant amount in just one year! Mortgage interest rates drive buyer demand & housing supply (inventory) drives housing prices. Millennial's account for 43% of buyers (estimated at 80 Million) and they are not going to stop buying homes. However, with interest rates in the mid 7%, and potentially hitting 8%, buyer demand has slowed--some buyers are priced out until rates (hopefully) go lower, some have chosen to wait for rates to go down---I think this is potentially a big mistake as I don't believe that prices are going to significantly go down & there is a unique opportunity for buyers right now. Inventory in Rhode Island has slightly ticked a bit higher but overall we still have extremely low inventory and only a 1.7 months supply as of RIAR's most recent data release. There isn't any reason to believe that inventory would increase significantly enough to tip the scales. We're not building new homes in Rhode Island (at least not enough to make much of a difference at all and new builds are primarily priced $500k+). And there's no reason to believe that a wave of foreclosures is on the horizon (more on that below). I'm seeing the current difference in the market from two perspectives: buyers and sellers. Buyers: with slightly more inventory comes more options. Nationally, days on market has increased 45% compared to this time last year. The "list today, sold by tomorrow" phenomena seems to be over for now & that is a relief for buyers. There also aren't as many competing offers which means buyers may have leverage for seller concessions such as repair credits, interest rate buy-downs, etc. Sellers: see above--realistic expectations about how long it's going to take is really important. Also, sellers have had to face the reality that their price expectation may not be a reality right now. And marketing matters! At the end of the day it all comes down to price but positioning the property in the best way possible is crucial. Let's talk some numbers & data to illustrate why I don't believe we are headed towards a significant price depreciation. I find these graphs super helpful:  The graph above represents national data. Rhode Island inventory is lower than the national data but this graph is still helpful as it's reflective of what we're seeing here in RI. The red spike is what happened in 2007-2010. The drastic influx of available properties is what caused such a steep decline in property values.  The graph above uses Mortgage Credit Availability Index (MCAI) data from the Mortgage Bankers Association (MBA) to help tell this story. In that index, the higher the number, the easier it is to get a mortgage. The lower the number, the harder it is. In the latest report, the index fell by 5.4%, indicating standards are tightening. During the lead-up to the housing crisis, it was much easier to get a home loan than it is today--I remember that from my personal experience when my ex-husband & I bought our first home. No credit check. No employment verification. As they say, if you could fog up a mirror you could get a loan back then. Back then, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and, as a result falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies.  Another difference is the number of homeowners that were facing foreclosure after the housing bubble burst. Foreclosure activity has been lower since the crash, largely because buyers today are more qualified and less likely to default on their loans. The graph above uses data from ATTOM Data Solutions to help paint the picture of how different things are this time.
Additionally, homeowners today have options they just didn’t have in the housing crisis when so many people owed more on their mortgages than their homes were worth. Today, many homeowners are equity rich. That equity comes, in large part, from the way home prices have appreciated over time. For those facing challenges today, many have the option to use their equity to sell their house and avoid the foreclosure process. A prediction: The median sale price for single family homes in Rhode Island, right now, is $416k. If the market had continued in the manner that it has the past two years we would have hit $499k sometime in 2023. With the way the market is currently moving I predict we will be around $425-430k this time next year. We'll see what happens....
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Coming Soon 71 Great Rd North Smithfield, RI: fall in love with this beautiful historic home!10/19/2022  Do you swoon over wide board plank floors, original moldings, post & beam structuring & fireplaces? Then this historic home may be the perfect home for you! Built in 1714, one of the earliest homes in North Smithfield's Union Village, this four bedroom Colonial-era home features richly detailed woodwork with modern amenities.
There are six fireplaces constructed around a center chimney, old growth hardwood flooring throughout, two stairways, & eat-in farmhouse style kitchen. Leading from the kitchen is a formal dining room with a large fireplace, from there you find two family rooms, an office area, half bathroom & laundry room. The second level provides four bedrooms encircling the center chimney & a full bath. There are two large walk in closets off the primary bedroom, one currently used as a nursery. The full bathroom has been tastefully updated. The yard is a gardener’s dream & has plenty of space for play or entertaining; a screened in porch, new play structure, stone patio, a firepit, & two car garage--there’s something for everyone! The yard is surrounded by established perennial flower gardens which have something blooming Spring through Fall. The yard also features two huge garden areas including a newly established orchard with ten dwarf fruit trees in the front yard. Modern amenities include a young gas heating system, Nest thermostats, central AC on the second level & more! Enjoy the full benefits of living in the country, with just a short commute to Providence or Worcester.  Take a look at this lovely, single level home located in the Eastward Look neighborhood of Narragansett & within walking distance to Scarborough Beach. Featuring three bedrooms and one full bathroom, this well maintained home is situated on a large lot and has newly installed hardwood flooring throughout, new windows installed in 2019, updated mechanicals and is connected to town utilities. The private backyard features a large deck and a storage shed. The curved driveway in the front offers easy & ample parking. This property can be sold with most furniture and is located in an ideal location for a rental property, just minutes to Narragansett Pier and downtown historic Wakefield. Make this your new home or your perfect vacation retreat!
 Take a look at this charming Two Unit property located in the Silverlake neighborhood of Providence. This property features two bedrooms in each unit, a brand new roof, plenty of off street parking, and lovely curb appeal! Upon entering the front entrance, the first floor unit opens up to a sun lit living room with tall ceilings and hardwood flooring throughout. The two bedrooms are spacious and feature large windows and decent closet space. The eat in kitchen has ample cabinet and counter space. The back entrance is off of the kitchen. The second floor unit also features two bedrooms, hardwood floors, lots of natural light, and tall ceilings. The primary bedroom also features a large walk in closet. The eat in kitchen has a gas stove with newer appliances. The basement has been fully parged and offers plenty of storage space. There are two electric panels, two forced hot air gas heating systems, and two hot water tanks. This property offers a small, fenced yard and ample parking for up to four cars. Don't miss your opportunity for this lovely property!
First Floor: Month to month lease; rented for $850 per month. Market rent would be $1200-1400 Second Floor: rented by a relative, month to month for $800 per month. Market rent would be $1200-1300 Roof: newly installed July 2022 Heating Systems: forced hot air, gas, age unknown Hot Water: two tanks, one dated 2014 the other dated 2017 both are gas fired Off Street parking for up to 4 cars |
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JESS POWERS
eXp Realty Associate Broker 401-559-7674 jesslpowers84@gmail.com |
eXp Realty
Serving communities throughout Rhode Island Southern MA & Eastern CT RI License #: REB.0018505 MA license #: CN237390 CT license #: RES.0823074 RI office: 101 Franklin St Westerly, RI 02891 |