Rhode Island recorded a 25 percent increase in the number of homes sold during the last quarter of 2012, according to the most recent report from the Rhode Island Association of Realtors. The increase has led economists to suggest the state’s housing market will continue to improve this year.
The association reported that 2,137 houses were sold in the last quarter of 2012, an approximately 25 percent increase from the previous year’s sales.
Economists speculate this trend indicates the public is beginning to feel comfortable entering the housing market again.
Consumers needed time to accept that they will not be able to sell their houses for as much as they were worth prior to the 2007 burst of the U.S. housing market, said Nathaniel Baum-Snow, associate professor of economics, but they have now adjusted their expectations to the lower market prices.
Now that prices have begun to stabilize, people are more willing to sell their houses, Baum-Snow said. The period between 2008 and 2012 represented a transition, and “finally the market is getting back into a more long-run equilibrated state,” he said.
Despite the increase in sales, home prices are likely to remain relatively constant this year, Baum-Snow added.
RIAR recorded a 5 percent increase in the median price of housing between 2011 and 2012.
Low interest rates and lower unemployment rates — down to 10 percent from the 12 percent peak in 2008 — may have contributed to last year’s spike in home sales.
The drop in interest rates has encouraged buyers to enter the market, said Francis Dwyer, president and owner of Century 21 Dwyer Realtorsin North Kingstown. Interest rates best indicate how much buyers should budget toward housing payments each month, he added.
“I think the interest rates are pretty well stabilized for the first half of this year,” Dywer said, which will likely lead to further increases in home sales in 2013.
As more Rhode Islanders find work, they have both the funds and the security to enter the market, said Liam Malloy, assistant professor of economics at the University of Rhode Island. The state has created between 10,000 to 12,000 jobs in the last six months in a variety of industries, he added.
The growth of the Rhode Island housing market reflects national trends, said Fred Cooper, senior vice president of finance, international development and investor relations for Toll Brothers, one of the nation’s largest homebuilders. The housing market crash repressed consumer demand but, “now, customer confidence is stronger,” he said.