Sunny outlook for R.I. housing

TO PARAPHRASE Mark Twain, reports of the death of the real estate market are greatky exaggerated. In fact, economists around America cite the strength of the housing industry and the role that it is playing in buoying our economy during this recession -- a trend that runs contrary to the glass half-empty assessment by The Journal ("Lights may be dimming in housing market," Nov. 15, news). This has been a banner year for the housing industry in Rhode Island. Projections by the National Association of Realtors indicate that sales in 2001 will well exceed 9,195, the number of single-family homes sold in 2000. But housing-sales numbers aren't the only good news. The average price of a home sold in Rhode Island during September was $209,482, up 18.1 percent from the like four-week period last year. Despite higher prices, the demand for housing here continues to be hot. The average number of days on the market for homes sold in September also set a record -- 44 days -- bettering last year's record for the month by 17 percent. What is driving the price and demand? Anecdotal evidence from Realtors indicates that Rhode Island is a jewel slowly being discovered. Our quality of life is well known. But it has always been the quest for well-paying white-collar jobs that has driven our college graduates to other areas of the country. Not anymore! With increased rail service to Boston, Rhode Island is becoming a bedroom community of that city. Our nearness to that major metropolis lets people work in Boston and afford a house near the water (or in the country) on a middle manager's salary. Electronic commuting has also become a reality in 2001, paying off for Rhode Island. Individuals can work anywhere in the country and make a living from their home office. Rhode Island-based management consultants, software developers, and marketing executives are working for companies based in nearby states. And that means good news for families with deep roots in the Ocean State. Our sons and daughters who are recent college graduates now have the means to buy a house and establish their own families here. For these telecommuters, family and quality of life can be achieved without economic sacrifice. Historically low mortgage rates are also helping turn the dream of home ownership into a reality. With interest rates hovering around 7 percent for a 30-year, fixed-rate mortgage, renters find it feasible to own their own home and live in it while building equity. Homeownership has historically been a sound investment. A recent report in The Wall Street Journal cited a $5.4 trillion loss in wealth since March 2000 by stock-market investors. But simultaneously, home prices rose almost 10 percent from the first to the second quarter of 2001. More people than ever are now seeing with clarity how buying a home is a sound way to help balance an investment portfolio. Finally, demographics are buoying home sales. Members of the Baby Boomer Echo Generation are now buying their first homes while their slightly older counterparts, the Baby Boomers, are investing in vacation houses. And where better to vacation than in the Ocean State? Good news about the real estate industry abounds. Even though America is in a recession, real estate's growth has only slightly slowed. Record-setting sales, median price increases and days-on-market statistics for 2001 can't be disputed. And in coming months, the industry's good health will continue to buoy the local economy more than any other sector. Despite questions about the future of real estate in Rhode Island, our members are confident that time will demonstrate our industry's economic outlook to be accurate. The housing market in the Ocean State will continue to flourish in the coming year.

Sharon Steele is president of the Rhode Island Association of Realtors and Susan Arnold is its chief executive.

Published 11/26/2001

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