Is it becoming a buyer’s market today in Rhode Island? As experts in the Rhode Island real estate market, we get asked this question a lot recently.
The answer isn’t as simple as yes or no.
The State of the Market for Buyers in Rhode Island
I want to first start by saying, it really depends on the property type and specific location within the Ocean State.
For instance, single-family homes in great locations that are priced well have been flying off the shelves. Several times, competitively price properties are receiving multiple offers over asking price. However, keep in mind the market has shifted slightly over the course of 2023 and sellers are not receiving the elevated prices they were last year. Nonetheless, there is still a great deal of pent-up demand in the market for certain areas, while others have experienced net-negative migration patterns. Some buyers have been forced to the sidelines due to rising interest rates, meaning demand for home buying is being stifled by external market factors.
Buyers are often looking for the same thing – good neighborhoods, close access to transportation, shopping, good schools, close to work, etc. Properties that deliver all these aspects are definitely a hot commodity – and are the ones receiving multiple offers. Sellers with highly desirable properties are still in control of the market due to historically low inventory levels which means buyers must offer larger down payments and waive inspection contingencies to make their offers more attractive. Higher interest rates are causing affordability issues, and although first-time homebuyer properties are in great demand, several buyers have been forced to the sideline with the inability to save for a down payment. A reduction in interest rates could help solve the affordability issues we are experiencing in the current market and renew the willingness and ability of would-be buyers to purchase homes.
But for condos and townhouses – especially those a little off the beaten path, or with some funky features or layouts – it can be quite a different story. Prices were down in certain areas of Rhode Island, but seem to be rebounding as the rental market increases. With the shift to working remote, buyers have begun to place greater value on homes with a bit more space for a home office and also properties that do not share walls with neighbors.
Investment properties are in demand. Although higher interest rates have caused cash flow problems for landlords and investors, the rental market has remained strong and demand for rental units continues to increase as affordability issues persist. Investors who are able to buy with cash have an advantage of not dealing with interest rates and are eager to find valuable properties which can be renovated and rented. Demand for investment properties remains extremely high and the limited number of homes for sale has meant investment offers have become more competitive. Buyers from New York, Connecticut, and Massachusetts have begun showing up to Rhode Island in droves in hopes of finding a quieter suburb to escape to when the cities get crowded.
Overall, homebuyers in a position to pay cash for properties and avoid the higher interest rates have been picking up valuable properties all over the Ocean State.
Many sellers still believe they can receive the same price today that they would have a year ago, however the market has shifted and softened lately due to the affordability issues I mentioned above. Some sellers are asking for speculative prices just to see if anyone bites, however most investors are walking away from deals that don’t pencil out. There are several costs that go into rehabbing a property and getting it rented out, there are also several risks involved and for a deal to make sense for an investor it must produce a rate of return which is equivalent to the risk involved.
Financing is still a major obstacle for buyers. Banks are being incredibly strict with lending standards, requiring lots of money down and even changing their terms at the last minute. It’s not uncommon for approved buyers to get their loans pulled right before closing escrow due to the changing financial and market circumstances. Higher interest rates means buyers simply cannot afford as much as they were able to before rates started climbing, this has taken some of the demand out of the market and softened prices in certain areas.
Overall the markets remain incredibly polarized – there has been a lot of action at the very top and the bottom, with the biggest challenges to value and affordability occurring in the middle/median priced home price.
If this all sounds confusing…It is. But fear not, We Can Help!
There are several aspects of the US economy that are changing rapidly, and the markets seem to be moving unpredictably. Luckily we are experts in the local market that work with buyers and sellers on a daily basis and who stay up to date with Rhode Island Market trends so we like to think we won’t be surprised.
We’re investing in Rhode Island because we believe in the community and the people here! Also, regarding the New England area, RI has mostly gone unnoticed on the National level until recently.
If you need to sell a property near Rhode Island, we can help you. We leverage data and changing market trends to bring you the best offer we can. Our team is caring and passionate about helping homeowners navigate the real estate market.
We buy properties like yours from people who need to sell fast all over Rhode Island and would love to speak further with you about any of your Rhody real estate needs!