Rhode Island may indeed be the smallest state in the country at approximately 1,050 square miles. But there's been nothing small about home buying in the Ocean State, which got even bigger during the penultimate month of 2016, newly released data reveals.
For the 19th straight month, single-family home sales increased on a year-over-year basis in Rhode Island, this time by nearly 30 percent in November, according to the most up-to-date purchase statistics from Massachusetts-based real estate information firm the Warren Group. Not only have single-family residences been snatched up swiftly in Rhode Island, but is growing by leaps and bounds, registering several double-digit percentage point gains during the 19 consecutive month sales boom.
Timothy Warren,CEO of The Warren Group, acknowledged as much in a press release.
"Sales in Rhode Island continue their strong run," Warren said. "The recovery of the Rhode Island real estate market for the past two years has been extraordinary, surpassing the gains seen in the neighboring states of Connecticut and Massachusetts."
And that's no small feat, as both the Constitution State and the Bay State saw a tremendous amount of sales activity in November, increasing 19 percent and 26 percent respectively, The Warren Group reported earlier.
Condo sales surge 45 percent
Not to be outdone were condominium sales in Rhode island. Even though there were fewer of them from a standpoint of sheer volume – 157 versus 910 – the increase compared to November 2015 was exceedingly higher at 45 percent growth, the report revealed.
Thus far, the amount of buying activity in the Ocean State hasn't been adversely affected by rising sales prices, as the median valued residence went for $235,000 during the 30-day period, up 4 percent from November 2015. That's just $100 shy of the national median which in November reached $234,900, according to the National Association of Realtors, marking the 57th consecutive month of year-over-year growth.
Unlike what's been going on in Rhode Island, however, the unabated pace at which home have been selling for higher values has had somewhat of a chilling effect, with completed transactions in November rising a mere 0.7 percent on a seasonally adjusted annual basis.
This trend could prove to be problematic for prospective buyers who are hoping to secure a new home in this the new year, warned Jonathan Smoke, Realtor.com chief economist.
"Last fall, we saw a large jump in the number of first timers planning home purchases, which was very encouraging because their market share is still well below pre-recession levels," Smoke explained. "But, as evidenced by their decline in share, first-time buyers are really dependent on financing and affordability is one of their largest barriers to homeownership. This number could continue to decline with anticipated increases in interest rates and home prices."
Higher mortgage rates may bring back first-time buyers
Climbing interest rates on home loans may seem like a bad turn of events for the housing industry, as some would-be buyers are choosing to sit on their hands for the time being until rates get back to under 4 percent, where they've resided for virtually all of 2016. In reality, though, it could have a net-positive impact on the industry, as decreased demand may force sellers to lower their asking prices, triggering increased buyer interest among budget-conscious Americans.
Smoke noted that the first phase of this market correction is bearing itself out in the numbers.
"The decline in the share of first-time buyers since October suggests that the move up in rates is discouraging new home buyers already," Smoke stressed.
Approximately 44 percent of borrowers who plan on purchasing a home in the early portion of 2017 are buying for the first time, Realtor.com found. That's down from 55 percent as recently as October.
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