What’s RI’s housing forecast? It depends on us

By CHRIS WITTEN
Posted 1/23/25

If there’s anything certain about Rhode Island’s 2025 housing forecast, it’s that it’s impossible to predict. Certainly, we can’t look to national forecasts to draw upon. While most of the country is seeing housing supply grow, Rhode Island’s is shrinking...

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What’s RI’s housing forecast? It depends on us

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If there’s anything certain about Rhode Island’s 2025 housing forecast, it’s that it’s impossible to predict. Certainly, we can’t look to national forecasts to draw upon. While most of the country is seeing housing supply grow, Rhode Island’s is shrinking. It’s now down to a 1.6-month supply, far below the 5- to 6-month supply typical of a balanced market. And while home prices are stabilizing elsewhere, Rhode Island’s continue to climb.

Adding to the uncertainty, economic and political impacts are changing by the day, clouding the ability to predict the future for prospective homebuyers. December saw the biggest surge in Rhode Island’s housing market in more than a quarter-century, spurred in part by anticipation of further rate cuts by the Federal Reserve. Since the Fed began lowering its benchmark interest rate last fall, further cuts have been the norm and were widely expected to continue in 2025. While not directly linked, the targeted cuts to the Federal Fund Rate were expected to eventually lead to mortgage-rate declines. Then came the recent positive jobs report, which dashed those hopes, at least for the near future. Strong job growth means less pressure on the Fed to cut interest rates and now economists are wondering when it will resume more cuts, if at all.

On the national front, the second term of President Donald Trump creates even more questions. Will Trump initiatives like tariffs and deportation raise development costs? Will real estate-friendly programs lower them? And closer to home, how long before House Speaker K. Joseph Shekarchi’s 2024 housing initiatives begin to have impact?

The National Association of Realtors predicts that Boston will be one of the hottest markets of 2025. Drawn by the Ocean State’s close location to attractive but much-pricier Boston, thousands of Massachusetts residents have flocked here, a trend that seems destined to continue. Other economists have named Providence to their top spots based on price appreciation. It does appear that supersized demand will keep our inventory low and our prices elevated.

One thing we know for sure is that if Rhode Island doesn’t remove the barriers that face would-be homeowners, our housing market will continue to be a boon to current homeowners who are building wealth through epic equity gains, but a point of frustration for prospective buyers unable to get a foothold into building generational wealth. Though Rhode Island’s labor data is positive, it remains near the bottom tier of all the states. Housing starts remain there as well. Our younger generations deserve better.

According to an Economic Impact Study by the National Association of Realtors, the real estate industry accounted for $14.6 billion or 18.9% of Rhode Island’s Gross State Product in 2023, pushing roughly $134,000 back into our economy with each home sale. Homeownership is a strong economic driver, and barriers to it must be addressed swiftly. Jobs, infrastructure, taxes and legislative mandates that raise the cost of home purchases and ownership – all are critical issues facing Rhode Islanders. The Rhode Island Association of Realtors works to address the problems head-on to help others understand the unintended consequences of potential legislation. Ultimately, a positive housing forecast depends on all of us and the steps we take to reach out to our policymakers in the coming months.

Chris Whitten is president of the Rhode Island Association of Realtors

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