'Like '05,' realtors say of demand for single-family homes

Single-family home sales across the state dropped in February but not for a lack of buyers say local realtors. Rather, the decline is blamed on a lack of inventory which some realtors say they haven’t seen this low since the days of the real estate bubble and people desperate to enter the market were bidding up prices.

A couple of years ago at this time there were 600 single-family homes on the Warwick market says Mark McHugh of Clear Mark Real Estate. As of last Friday, McHugh put the number at 272.

To illustrate just how much of a sellers’ market it is, McHugh tells of a Wesleyan Avenue home he listed more than a year ago at $199,900. The two-bedroom, single-bath house was on the market for about eight months before McHugh recommended the sellers take it off the market. McHugh performed a market analysis and figured it could fetch $207,000. The owners felt comfortable at the original asking price, so McHugh listed it again.

In a matter of days, McHugh had shown the house 24 times and received five offers.

The first of those offers at the asking price was from a young couple. He had moved here from Connecticut to take a job and this was only the third house they’d seen. ‘McHugh called it a “clean offer” and sellers elected to go with it rather than asking the five prospective buyers to come back with their highest and best offer.

“This harkens back to the days of 2005 and 2006 when the market was so tight,” said McHugh. He is not fearful of another housing bubble and collapse. He feels financial institutions have done a good job on holding the reins on credit and pre-qualifying buyers entering the market.

Data for February shows that of the 554 single family homes sold statewide, a drop of 9.18 percent from February 2016 totals, 86 Warwick homes sold, actually an increase of four from February 2016. The statewide median price was $231,000 as compared to $215,500 for February 2016. In Warwick the median price climbed from $154,000 to $205,000.

Peter Izzi with HomeSmart and past president of the Kent Washington Board of Realtors, believes the decline in inventory is partially being fueled by higher rental costs, which has people thinking they would be better off building equity instead of paying rent. He also believes inventory will pick up with a change in weather.

While mortgage interest rates have crept upward, Izzi doesn’t believe they have dampened the market. If anything, he said, “rates are still aggressive.”

Izzi had 35 people show up for a recent open house in Greenwood. He said the sellers received eight offers on the property.

“If the price works, people are moving,” he said.

“It’s coming down to a better economy concludes Brenda Marchwicki, president of the Rhode Island Association of Realtors. She said that homes are on the market an average of 3.5 months, which she said heavy favors the “seller’s side.” An evenly balanced market, she said, would be six months. Marchwicki sees baby boomers downsizing while millennials “are getting settled into the neighborhoods.” She has seen some out of state buyers, especially from Massachusetts where housing costs are higher and people are willing to commute from Rhode Island to take advantage of the better values they can find here. She put the median single-family home price in Massachusetts at $340,000, more than $100,000 more than Rhode Island.

“It’s basic economics. When there’s a good deal of demand but supply is low, prices go up. That’s what we’re experiencing in Rhode Island’s housing market right now. That’s great news for homeowners whose equity is rising, but it’s not good for buyers who have limited choices and stiff competition when they do find a home that they like,” Marchwicki said in a statement released by the state association.

Marchwicki’s advice to those looking to buy, “is to know where you stand with everything” and be ready to act quickly when they find a property they like. She has seen potential buyers feel beaten back by the process and even giving up. She urges them to be patient.

She recommended sellers not to be surprised to find their properties are the subject of a bidding war if they properly price their home.