The deteriorating economy in Rhode Island is driving up mortgage foreclosures in the worst economic crisis since the Great Depression. Increasing foreclosures are tied to the highest rate of unemployment in the country. Rhode Island's jobless numbers tie only that of Michigan, which has been in a housing depression for years.
Risky subprime and conventional adjustable rate mortgages expose a troubled economy with an implosion of foreclosures, decaying infrastructure and one of the highest rates of homes marketed for sale per capita in the nation. The stark reality of Rhode Island's grim economic picture is in contrast to other northern tier states, which had few subprime and adjustable rate mortgages.
In Rhode Island's largest city, Providence, it may be one of the most over-valued housing markets in the country, despite a drop in the median home price to be near the lowest in the state. Double-digit appreciation in the real estate boom is treating Providence poorly. Foreclosures are increasing and there seems to be little that can be done to halt the epidemic.
Fewer home sales and a sluggish marketplace are tough to overcome until prices drop further, which is what the Housing Predictor forecast calls for in 2009. Already one of the most severely impacted markets in the state, average housing deflation in Providence is forecast to hit 10.3% in 2009.
 |
| City |
Forecast |
| Providence |
− 10.3% |
| Newport |
− 11.7% |
| Warwick |
− 10.4% |
| Portsmouth |
− 11.2% |
In picturesque Newport, where yachting is some of the most challenging in the country the housing market first stalled after the bubble burst. Along the waterfront in Newport, some of the wealthiest families in the country own Estates, many of which are in the luxury high-end market topping $5-million with panoramic views of the gorgeous Atlantic Ocean.
After the credit crisis hit, home sales slowed amid a growing lack of consumer demand. Now the market's excessive inventory of property is weighing down sales in Newport, which has become one of the most dominate markets in the state to find a deal, many of which are foreclosures selling at bargain basement prices.
Slower home sales and a lack of motivation on behalf of buyers tied to growing worries over the economy will send housing prices lower in 2009 in Newport, forecast to average 11.7%.
In Warwick, the state's second most populous city it's transformed into a buyer's market, where foreclosures are selling like a half off sale at a bargain boutique. Prices have come down mainly on principal residences that have been owned by the bank for far too long. This mainly middle class community, however, has the full price range from modest $100,000 single-family homes to multi-million dollar waterfront estates.
One real estate agent calls the market "wild" for its frenzied differences in an economic climate that is anything but stable. Housing Predictor forecasts Warwick will see a sluggish housing market in 2009 on average deflation of 10.4%.
As one of the most scenic communities in all of New England, where anyone can feel at home, Portsmouth is a town caught in a maze of bewilderment in the credit crisis. Like so many other places, home sales are sluggish these days and prices are declining. Few homes are selling in Portsmouth as Housing Predictor forecasts average home deflation for the community of 11.2% in 2009.
