Checking in on single-family home sales across Rhode Island, as I did for July and 1Q12, reveals a mixed picture. Results for the state are mildly improving, but the “downward spiral index” worsened for 22 of the 38 listed cities and towns.
The downward spiral index is the sum of the three percentages given in Table 1. The idea is that an improving market will see an increase in sales, a decrease in inventory, and an increase in median sales price. If inventory is dropping, that indicates that houses are selling faster than new families can put them on the market, and if the median sales price is climbing, that suggests that the demand for homes in the area is increasing.
Conversely, a declining market will see sales dropping, more homeowners seeking to unload their properties, and the prices of houses that do sell dropping, as sellers become increasingly desperate.
Of the 38 Rhode Island cities and towns for which their is sufficient data (with New Shoreham as the lone omission), only Foster, Little Compton, and North Smithfield were positive on all three of these measures for August. On the downside, a drop in the number of sales led Woonsocket to join Smithfield on the list of municipalities that have undesirable results on all three counts.
Pink shading in a cell of the table indicates a number that points in an undesirable direction.
Rhode Island Cities and Towns Single-Family Home Sales, Twelve Months Ending in August, 2011 to 1012
|Sales||Sales change (%)||Inventory change (%)||Median sales price change (%)|
The communities in the five worst conditions, according to this index, have shuffled around a bit (last month’s rank is in parentheses):
- Woonsocket (3)
- Smithfield (2)
- West Greenwich (7)
- Lincoln (8)
- Middletown (4)
On the opposite end, the following cities and towns are improving most decisively:
- Little Compton (1)
- Foster (3)
- Warren (2)
- Newport (12)
- Richmond (9)
Once again, I also took a snapshot of each city and town’s condition for the single month, in this case August 2012.
Note that the “sale-list ratio,” in the table, is different from what realtors would refer to as a sales-list ratio. In their case, being client-focused, they’re more concerned with how much sellers are being negotiated down from their asking prices when they sell a specific house. But if a seller has adjusted his or her price down over time, the ratio might look better than it really is. To adjust for this, I thought comparing the overall average sales price with the overall average asking price currently on the market might give a better sense of how much buyers are willing to pay to live in a town versus how much sellers think they should get.
Roughly speaking, the ratio is the percentage of the average price that sellers are actually achieving. Market time is the average length of time that sold houses have been for sale.
Rhode Island Cities and Towns Single-Family Home Sales, Time on Market and Average Sales Price to Average List Price Ratio, August 2012
|Market time (days)||Sale-list ratio|
To summarize this data, I’ve compiled another index, the “disappointment index,” created by dividing the ratio by the days on the market. (Less time on the market and a greater average sale price will both lead to a higher score.) The following five are, by this measure, the most disappointing (last month’s rank in parentheses):
- Westerly (14)
- Narragansett (15)
- Hopkinton (10)
- Middletown (5)
- Lincoln (13)
On the other side, the five communities in which the combination of time-on-market and percentage of average sales price is most positive are:
- Central Falls (37)
- Scituate (36)
- Richmond (4)
- Smithfield (15)
- Exeter (24)
As the volatility of this list shows, the single-month numbers can vary significantly from month to month, and in some cases, there isn’t truly enough data to declare a trend. In August, for example, only one single-family home sold in Central Falls. The emergence of the city from bankruptcy may have had a positive effect, of course, but a single property based on inventory of 12 homes isn’t exactly a sea change.
Readers should view the “disappointment index” in concert with the “spiral index” and (especially) local circumstances that they know to be true from their own experience.1Q12ol-4.5