Real estate market still strong
By Patrick Healy, PBN Staff Writer

Even in what has been a slowing economy, one bright spot has remained: the residential real estate market, and, according to industry experts, the demand is expected to remain high. "We don't see any slackening in the demand for real estate," said Rhode Island Housing and Mortgage Finance Corp. spokesman, Chris Barnett. "It appears that the market will set another new record by the end of the year. Last year's real estate sales were at about $2 billion, and we could very likely see that record broken in 2001." "I think part of this is the very simple supply and demand economic theorem, where if the inventory is limited, people are clearly willing to pay more," said Sharon Steele, founder of the Providence real estate firm The Sharon Steele Group, and last year's Realtor of the Year. "I think the other part of this is the influence of the Boston market, because prices in Boston are so much higher than what they are here that many people who work in Boston are choosing to live in Providence. "Boston people are finally acknowledging that Providence is a great deal," Steele said. "It's a move-in market as well as a move-up market." Prices are also being driven because of demand. An average single-family house this year is $188,802, nearly 5 percent higher than last year. Barnett said this could be dangerous. "When prices begin to reach this level, employers have to be concerned about being able to attract and retain executives," he said, "let alone workers on the factory floor." Rhode Island is a move-up market, said Steele, in the sense that many homebuyers are moving up to bigger properties because their houses have appreciated, so they now have more equity, and more leverage. Steele said numbers of sales are down year to year, but attributed that to the limited inventory. The number of units sold this year in Rhode Island is 5,440, which is down almost 3 percent from last year. "If we had more product the unit numbers would be higher," she said. According to Steele the number of homes available is the lowest since MLS network began keeping track of full home sale statistics in the area in 1980. In 1980 the number of units on the market was 4,196, and the current number is 3,203. "Rhode Island is becoming a very desirable place to be and in my opinion it is now a true suburb of Boston," she said. "In terms of housing value here, it's unparalleled, and as they continue to add more commuter trains the trend will continue." "It's great for the real estate industry because sales are directly tied to revenue," he said. "They say a rising tide lifts all boats, but if you're not in the water to begin with you could get left behind."

Published 07/09/2001

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