Rhode Island Housing Market Update Report 2023
What’s the Rhode Island Housing Market Like?
Home prices in Rhode Island have appreciated slightly above the national level. Looking back at prices in Sept 2019 compared to Sept 2022, prices have increased by 46% in Rhode Island VS 36% nationwide.
As of Sept 2022, the median price for a home in the state was $428,600, which is up 6.3% above last year’s median price. Looking at the peak of the last three years, prices have decreased 4.2% from the peak of $447,300 in Sept 2022.
Sales volume has also dropped recently. In Sept 2022, there were 1,193 homes sold in the state of Rhode Island, a 12% decrease from the previous month. Comparing year-over-year, we saw a 23.2% decrease in sales from Sept 2021, when there were 1,553 home sales.
The sales peak was 1,746 in June 2021; compared to Sept 2022’s numbers, we are down 31.7% in the number of homes sold from the peak of the last three years.
It is clear that the recent steep rise in mortgage rates has curved sales activity and shrunk affordability, and the result has been a drop in home prices in Rhode Island.
How Does The Rhode Island Housing Market Compare to the National Housing Market?
The Rhode Island housing market is similar to other markets because supply and demand drive housing prices. Mortgage rates also impact Rhode Island as the rest of the nation.
Rhode Island’s home prices and sales numbers have begun to slow down along with the rest of the country. Differences in the regional economy of some of Rhode Island’s metro areas make those markets more vulnerable and others more resilient to the current economics.
The current median price of homes in Rhode Island is 7.2% lower than the national average. Over the past three years, the median price of homes has increased by 45.6%, which is about 25.60% higher than the national average of 36.3%
Rhode Island Metro Areas With the Hottest Housing Markets
The state of Rhode Island has seen explosive growth in housing demand in recent years. Due to the small population, there are not a huge number of sales statewide and citywide. We will look at the cities with the highest increase in the median price year over year.
The top with the highest appreciation rate:
- North Smithfield
- North Providence
Pawtucket is located in the northern part of Rhode Island. Pawtucket is a mid-size city of about 75,000 people, the fourth largest in the state. Pawtucket is known as the most art-friendly city in the nation.
Pawtucket home prices have been doing well over the last few years; For 2022, Pawtucket’s Sept median price was $350,000 which was an increase of 9.4% over last year. Prices in the city have gone up 45% over the last 36 months, which is about the national average. The market peak over the last 3 years was May 2022, when the median price hit $360,000.
In Sept of 2022, there were 56 homes sold in Pawtucket, a 50% drop in sales from the same period in 2021.
The median days on the market is 19, which indicates a seller’s market by today’s standards. Compared to Sept 2021, the median days on the market is about the same compared to Sept 2022.
Cumberland is located on the northeast border of the state of Rhode Island. The town was settled in 1635 as part of Massachusetts. Boundary disputes between Rhode Island and Massachusetts were settled and the town was transferred to Rhode Island.
The Cumberland Real Estate market is currently a very competitive seller’s market. In Sept 2022, there were 46 homes sold with a median price of $437,500. The median home price in Cumberland is up 5.4% from Sept of 2021, while the number of homes sold was down 19% compared to the same period.
The median days on the market is 28, and it’s up by twice the amount of days compared to Sept 2022.
North Smithfield is a small town in the northern part of the state. It was settled in 1666 and currently has a population of approximately 12,500 residents. The town’s size is just over 24 square miles.
North Smithfield is considered a somewhat competitive/hot market right now. In Sept 2022, there 16 homes were sold with a median price of $404,500. The median price in North Smithfield was up 4.8% over Sept of 2021, while the number of homes sold was down 45% compared to the same period.
The median number of days on the market for Sept was 17 days which is 26% lower than in Sept of 2021.
Cranston is a midsize town of approximately 81,000 residents located in the Southern part of the state. Cranston was officially created in 1754, making it a historic town in America. The small city vibe and quality of life overall have landed Cranston in the top 50 best cities to live in America according to a Wall st survey in 2014.
There were 86 homes sold in Sept 2022, with a median price of $347,500. The median price in Cranston was up 2.5% from Sept 2021, while the number of homes sold was down 33.9% compared to the same period.
North Providence is a small city with about 6 square miles, yet the population in town is 34,114, making it a rather densely populated city. The town was incorporated in 1765, 11 years prior to the US independence.
North Providence is currently a very competitive market. In Sept 2022, 51 homes were sold with a median price of $307,750.
The median price in North Providence is up 3.5 % from Sept 2021, while the number of homes sold was down 39.3% compared to the same period. The median days on the market is 26, up73.3% compared to Sept 2021.
Higher Mortgage Rates Could Slow Price Growth in Rhode Island
How will interest rates affect the housing market? We are already experiencing the impact of rising interest rates across the nation. Price growth in Rhode Island has been flattening or on a slight decline for several months in 2022.
As of mid-October 2022, the 30-year fixed rate mortgage is above 7% on average. That represents a 133% increase in mortgage rates in less than nine months. The Feds are on a “no holds barred” approach to curve inflation, and interest rate hikes have become the norm over the last several Fed meetings. Unfortunately, it seems that rate hikes are not done.. We anticipate at least another 2 or 3 rate increases before the year ends.
Key Market Stats for the Rhode Island Housing Market:
- As of the latest compiled housing report with data through Sept 2022.
- Median home price $428,600 - 6.3% up from 2021
- Existing home sales: 1,193 - a 23.2% decrease from 2021
- Months supply of inventory: 1- unchanged from 2021
- Mortgage rates as of Nov 2022 are at 6.63%, slightly down from last month.
Rhode Island Historic price changes & affordability
The Rhode Island housing market has seen explosive appreciation for years. The last 3 years have been particularly favorable to homeowners as they saw their homes appreciate by 45.6% in 36 months.
The steep rise in home prices and mortgage rates has shrunk affordability to record lows in the state. A 46% spike in home prices and a sharp increase in mortgage rates in the last 12 months does not spell good news for the Rhode Island Real Estate market.
We know that the average person’s wages do not increase by 46% in three years, so we can see why affordability is a problem. The gap between rising home prices and wages keeps getting wider.
- The housing market is clearly shifting, and Rhode Island housing market seem to follow the trend as the rest of the US. Due to Rhode Island’s accelerated price growth, some of the state’s metro areas are predicted to drop in home values.
The next 18 to 24 months will be an adjustment, especially for home sellers and Real Estate professionals. Adjusting to a normalized market that is not heavily skewed in favor of sellers will take time.
- Real Estate markets are highly local and even within the same state, there will be areas that are projected to be hit hard by the market shift and others will fare better.
- Timing the market for buying or selling is a big gamble. If it makes sense for you to buy, go ahead and buy a home. For sellers, if you have to sell in the next 12-24 months, you may want to consider doing it sooner than later, especially if you are in an area that may be considered overvalued and has a high potential for house prices to drop.