With foreclosures and short sales down 5.26 percent from last year, Warwick may be the leader of a statewide real estate turnaround.
“It’s always good when larger cities like Warwick have positive trends, and make way for the smaller cities and towns,” said Jamie Moore, president of the Rhode Island Association of Realtors.
Moore said that sometimes trends in larger cities, like Warwick, a leader in the housing market, are benchmarks for future statewide trends.
“Warwick is a steady barometer,” she said.
According to data released by the Rhode Island Association of Realtors, statewide short sales and foreclosures, or “distressed” sales, are up nearly 16 percent from last year, but Warwick is showing promise of a reversal of that trend.
“I always find first quarter stats interesting,” said Sally Lapides, CEO of Residential Properties Ltd. “The numbers are always down for the number of houses sold. It’s generally a quiet quarter.”
But statewide and in Warwick, sales were up, a stat, among others, that Lapides found “very encouraging.”
Data shows single-family home sales in March of this year are up 25 percent from March 2011. The median prices of homes has decreased from $187,000 to $175,000, which Moore said is due to the increase in number of distressed sales. Lapides said with the removal of the 34 percent of distressed properties, the median price jumps from $175,000 to $213,000.
In Warwick, the median price of homes also took a dip, dropping from $155,000 to $130,000.
Lapides said foreclosures, though down, can also account for the dip in Warwick’s median price.
“The problem with the market is the number of people that have a house that’s underwater,” she said.
But Moore said the dip in Warwick prices isn’t necessarily negative. She said median prices in Warwick are lower because investors are buying foreclosed homes and re-selling them at a slightly higher, but still low, price. She also said the season might have had something to do with the price drop, as investors tried to sell homes more quickly to avoid potentially costly bills for heat and other utilities.
“The summer months are always better for sales,” said Moore.
She’s hoping that over the summer, more homeowners begin putting their houses on the market, especially those who might have larger or more expensive houses.
Moore said a lot of the homes on the market now are geared toward first-time buyers, not those looking to purchase a second home. The summer is the traditional time when families relocate and larger homes go on the market, said Moore, who thinks that once the abundance of smaller, less expensive homes are flushed from the market, there will be more demand for larger, pricier houses.
Lapides said there are currently 492 multiple listing homes on the market in Warwick, which is an eight-month supply. In other words, said Lapides, at current prices and with current demands, it would take eight months to sell all of the homes currently on the market.
“It’s a buyer’s market,” said Lapides.
A balanced market would have a six-month supply of homes listed. With 176 home sales pending as of March, a number Lapides called “healthy,” the pipeline of homes could be getting clearer.
According to March data, the supply of single-family homes statewide fell 4 percent, a step toward balancing supply and demand.
Although leveling the playing field and ensuring supply meets demand are part of the real estate recovery, Moore said the real crux of the solution lies in the hands of the banks.
“They key is that people can get financing,” said Moore.
Often she said she sees homes pending for months, waiting on the bank’s approval of the buyer. Now she said, the banks are beginning to finance people more readily.
“They’re moving things through the pipeline,” she said.
Lapides said financing is easy for those with good credit.
“I have not seen someone who wants to buy a home that has good credit denied,” she said.
What Lapides said is crucial to the real estate turnaround is bringing industry to the state.
“In the last five to 10 years we have not been competitive from a tax point of view,” she said, something that may be changing in the future.
“When unemployment gets reduced and the job demand increases, then I think the housing market will recover,” she said.
As for the foreclosures, Lapides said, “the worst is behind us.”
“I do think we’ve worked through a lot of them,” she said. “Although there is somewhat of a back log.”
Moore said the banks will determine the future rate of foreclosures, and from what she can see for now, there are still more on the horizon.
On the other end of the housing spectrum, condominium sales are down. Moore surmises this is a result of single-family home affordability – those that might traditionally buy a condo are able to afford a home. Because of the decreased sale of condos, developers are turning the space into rental units, which Moore said could be incentive for people to invest in multi-family units. In Warwick, the number of multi-units sold has doubled from five to nine in the year’s first quarter. The median price of the units has also increased from $124,000 to $142,000.
Despite uncertain economic times, Moore is hopeful people will “get off the fence” and either invest in a home or put theirs on the market. Prices now, she said, are the best they’ve been since 2004.
“Real estate is the best investment you can make,” said Moore. “It’s the only vehicle where you can consistently get a good return on your long-term investment.”
Moore said remembering that real estate is a “long-term” investment is crucial.
“In the past 10 years people looked at their real estate as a piggy bank,” she said. “If you keep refinancing over and over again, eventually that bubble is going to burst.”
Lapides said that things seem to be getting better, and the real estate market is on the upswing.
“I think the market is getting stronger,” she said. “It’s getting to be a little more fun. We’re seeing people happy again about the opportunity to buy a home.”