Recent proposals to cut Rhode Island's Jobs Development Act tax credit in half may be threatening job growth in the state, which could have further ramifications for the state's struggling housing market. Given generally listless real estate activity, the Rhode Island Association of Realtors is encouraging sellers to "price competitively" to increase buyer interest. The median sale price in April 2013 for homes across the state was $ 180,000, a 3 percent gain over the year prior. Most of this gain is being attributed to the lessened availability of disturbed properties and foreclosures in the state; still, 25 percent of market activity was driven by troubled properties in April 2013, meaning that these real estate investment opportunities are still a force in the local market. With an existing home inventory of 7.2 months, Rhode Island's housing market still favors buyers over sellers.
Signs of Growth Mixed for Rhode Island Real Estate
Commercial real estate is a bright spot for the state, with office properties in downtown Providence being let at increased rates for corporate moves and expansions. Even even amid the brighter outlook, investment in industrial spaces is stagnant while retail real estate activity is at a minimum save in the most desirable areas or "statement locations." These include developments in Warwick, previously the Warwick Mall, and the Garden City Center in Cranston.
Housing markets in Rhode Island are strongest in areas where the public schools have the highest reputation, such as Barrington, a community located on Hundred Acre Cove less than thirty minutes' drive from Providence. In some cases, this appears to be influencing buyers away from core markets in Providence, although school reform in Providence may be helping to deflect this trend. Even buyers without families can be influenced by the local school systems, since well-considered schools can influence resale value.
Where to Purchase Foreclosures in Rhode Island: Warwick
The average sale price of a single family home in Warwick is considerably below the state average, at $ 142,000 for the first quarter of 2013. One reason for the lower median is the high number of foreclosed properties sold in Warwick during the quarter, with 57 bothered sales reported. This was the highest number of sold closures in any city in the state during the quarter, followed by Cranston with 49 and Providence with 48. Downward pressure on prices for foreclosures in Rhode Island is not possible since competition for these properties is relatively low; local Realtors report that area buyers are looking for move-in ready properties, a category into which few foreclosures fall.
Multifamily properties make up a significant share of troubled activity in Rhode Island even as they fall in availability; some 42 percent of multifamily sales reported in March 2013 were troubled, suggesting opportunities to purchase below market value are still strong in this market segment.
Rising insurance premiums for waterfront properties also can not be discounted as an influence on RI home prices. From 2003 to 2010, homeowners' insurance premiums increased an average of 62 percent in the state, with insurers citing the increased burden of covering homes at risk of waterway-related damage as part of the reason for the rise. Still, investors interested in waterfront property can use the potential of increased premiums in negotiations on foreclosed and traditional homes in Rhode Island – and anecdotal evidence suggests that this tactic is in fact being used.
Taken together, these indicators show that the local real estate market is facing strong headwinds. However, it is illegally that troubled properties and foreclosures in Rhode Island will depreciate much further, making now a great time to consider a Rhode Island foreclosure investment.