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Rhode Island
Rhode Island is in a housing recession and the sentiment is that it’s going to be that way for a long while.
Rhode Island may be the nation’s smallest geographical state, but it was anything but small in the real estate boom. The double digit days of appreciation are long over and now Rhode Island is seeing its’ housing markets deflate.
Having one of the highest average net worth indexes in the country per person, this little state is by no means a place that will be directly impacted by the subprime mortgage crisis. But it is beginning to feel the effects of an economy that has slowed, and may already be in a full blown recession.
The majority of home buyers who purchased real estate in Rhode Island bought with traditional mortgage products. Rhode Island has one of the lowest subprime purchase rates in the nation. But the virus that first infected the country through the subprime debacle has spread to conventional mortgages, damaging home values. Rhode Island is one of five states experiencing the steepest price declines.
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| City |
Forecast |
| Providence |
− 9.1% |
| Newport |
− 8.0% |
| Warwick |
− 6.9% |
| Portsmouth |
− 6.3% |
Foreclosures are on the rise in Providence, where the real estate market has slowed to the lowest level since the U.S. Savings and Loan scandal in the early 1990's. Home sales haven’t ground to an entire stop. They never do, but they have been slashed by half from the boom, and are forecast to slow further in 2008.
Double digit appreciation and over-financing have translated to fewer home sales. Housing Predictor forecasts that Providence will see fewer sales in 2008 than last year and deflate 9.1% on the average home for the year.
In Newport, where the wealthy flock from the east coast for yachting and to play on the Atlantic ocean home and condo sales have slowed. The market has transformed to favor buyers amid falling prices. But property owners are stubborn to realize that prices have come tumbling down and it will take at least another year for prices in Newport to come down to where the market will have more movement.
As a consequence of slower market conditions, more foreclosures and harder to find mortgages Housing Predictor forecasts Newport will see 8.0% in average home deflation in 2008.
Warwick is the second most populous city in the state, located in the heart of Rhode Island. Modest homes consume this New England community, where home sales are much slower on the water front of the Atlantic and else where. A growing inventory of homes to choose from at all price levels is taking its toll on the market place.
High end homes still provide an active market in Rhode Island. But Warwick will take at least a couple of years to become accustom to slower sales and is forecast to depreciate an average of 6.9% in 2008.
Portsmouth is on Aquidneck Island. It’s been a growing town with highly skilled and educated residents. Portsmouth offers 56 miles of shoreline, and many say it’s one of the most scenic towns in New England.
The housing market in Portsmouth has also slowed, but should not suffer as long as many other places in New England because of its rare beauty, and is forecast to depreciate 6.3% on average in 2008.
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