Realtors are seeing no end to the summer.
Of course, the days are shorter, kids are back in school and the first frost awaits us. But the single-family housing market shows little prospects of slowing down. Preliminary numbers indicate August sales will be in line with those in July.
What’s more, realtors don’t see the demand for single-family homes slowing down in September and October, although traditionally spring and early summer home sales are stronger as people are looking to make a move before the start of school.
“The consumer and institutional confidence seems to be at a high,” says Sean O’Leary, of Capital Real Estate and O’Leary Law Associates. O’Leary, who has been in real estate and brokerage business for 20 years, has ridden the ups and downs of the market. In the depths of the Great Recession, O’Leary said his business focused on mortgage refinancing with the rare home transaction. That’s changed.
“We’re dealing with more buyers than sellers,” he said.
It’s a reverse of the recession years when sellers outnumbered buyers five to one. During the recession years, O’Leary said he might have averaged 10 to 12 home sales a summer. This summer he expects close to 100. The issue now is a lack of inventory that has been the cause for some frenzy in the market and, in some cases, bidding wars over properties like the days leading up to the collapse of financial markets and the burst of the real estate bubble in 2008.
O’Leary notes a rejuvenation of new home construction as another indicator of the robust market.
The demand doesn’t make it easy for buyers.
“Buyers need to be pre-approved, qualified and ready to pull the trigger,” says Brenda L. Marchwicki, president of the Rhode Island Association of Realtors. Unless they are prepared and know what they are looking for, Marchwicki said buyers are more than likely to become frustrated as they see houses they wanted sold to someone else. At this point she said there is 4.2 months of inventory as compared to what is considered a balanced market at 6 months.
The lack of inventory is blamed for a drop of 4.2 percent in single-family home sales for July as compared to last year. Median price for the month reflected an increase statewide of 2.9 percent of $270,000. That was $5,000 below the median price for June but still the second highest monthly median sales price in single-family homes since 2007, according to the Association of Realtors.
July had the fewest number of single-family homes for sale at the start of the third quarter since 2004. Rhode Island’s July 2017 inventory was 15.6 percent below that of July 2016, the association reports.
Marchwicki is also seeing the return of investors that are prepared to pay cash, hence speeding up sales. She said foreclosures are “very low” and she is finding that homeowners who were previously “under water” with their homes worth less than what they owe on them in a positive position and looking to sell either with the thought of moving up or downsizing.
“Real estate has its cycles,” she said, “the data looks very strong [for the upward market to continue].” As for the local market, she said Warwick continues to be strong because of central location, proximity to shopping areas and amenities.
Warwick traditionally has more single-family home sales than any other municipality, often with more than 10 percent of state totals. In July the state total was 1,092, with Warwick according for 120 of those sales. Cranston had 88 single-family home sales for July and Johnston was at 25.
Marchwicki and O’Leary concur that the $250,000 to $300,000 single-family market is especially strong. As O’Leary puts it, the “magic number” is $300,000 in East Greenwich, which he feels is in demand because of its school system. Similarly, he feels the lack of a teachers contract has hurt the Warwick market, although he adds, “Warwick has great things to offer.”
Savvy young families, he said, “factor in” the cost of private schools, along with taxes and municipal services such as water and sewers when weighing where to buy a home. But overall the market has been strong.
“This summer trumped last summer…it was 10 to 12 percent higher,” said O’Leary.
Asked if his use of “trumped” had anything to do with a political commentary, O’Leary said, “His administration has been good news for the growth of our economy.”
Marchwicki likes the analogy of riding a wave. She has been riding the wave, likes it, and for the moment sees it continuing into the fall.