Election season and other contingencies led me to miss the single-family home sales data for September, but compared with August, Rhode Island’s real estate market appeared to near or perhaps finally to reach the bottom in October. For the state as a whole, median sales prices were lower in the last 12 months than in the 12 months prior, but the number of sales continues to increase, and inventory is finally decreasing.
Good news depends on one’s perspective, of course, but what October’s results indicate is that the market is equilibrating. In other words, enough people are willing to buy houses at prices for which Rhode Islanders are willing to sell them that they are selling more quickly than new houses are going on the market.
One could argue, of course, that the financial loss that comes with selling a house for less than is owed has become so large that homeowners are making the decision to stay put. Nonetheless, a shrinking inventory would typically be required for prices to begin going up.
As the following table shows, for the month of October, only four Rhode Island cities and towns continued to have negative Downward Spiral Index scores: Central Falls, Woonsocket, Tiverton, and West Greenwich. That means that the sales change minus the inventory change plus the sales price change results in a negative number.
Rhode Island Cities and Towns Single-Family Home Sales, Twelve Months Ending in October, 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 (August’s rank is in parentheses):
- Central Falls (6)
- Woonsocket (1)
- Tiverton (18)
- West Greenwich (3)
- Smithfield (2)
On the opposite end, the following cities and towns are improving most decisively:
- Foster (2)
- Narragansett (6)
- Newport (4)
- Coventry (12)
- Burrillville (11)
The other angle that I’ve been taking to present these numbers is an index of the time that houses have spent on the market before being sold and the ratio of average sales price to average asking price.
It’s important to note that this ratio isn’t the sales price compared with the asking price for the property sold. Rather, it’s the sales price compared with the asking prices of houses still on the market.
In August, the average time on the market was 89 days, with the sale-list ratio as 72%, so it continues to take longer to sell houses for less.
Rhode Island Cities and Towns Single-Family Home Sales, Time on Market and Average Sales Price to Average List Price Ratio, October 2012
|Market time (days)||Sale-list ratio|