2020 Real Estate Trends: Providence, Rhode Island

Goals

To determine 2020 mega real estate trends affecting the residential real estate markets in three areas: Connecticut, Providence, RI and Boston, MA that will cover the key data points of: What types of homes are selling (e.g., affordable, new construction), and who is buying them (e.g., first-time buyers, millennials, etc.)? Are there any trends in home loan/mortgage lending in each market? For example, an uptick in refinancing activity? Uptick in home construction loans? to now focus on Providence, RI and Boston, MA for a comprehensive report.

Early Findings

  • Providence, Rhode Island is one of the top 10 markets for home buyers, according to research released by Realtor.
  • One trend seen in the Providence residential real estate market is the value of homes sold. Home values in Providence are rising, a reversal from the declines suffered during the recession and the collapse of the housing bubble. Homes purchased between one and five years ago have seen appreciation in the amounts of $17,076 for homes purchased one year ago, $44,668 for homes purchased three years ago, and $37,799 for homes purchased 5 years ago. Homes purchased one year ago have appreciation levels higher than the national average, while home purchased three and five years ago have appreciation levels that are lower than the national average. This indicates that rising values are a trend that is expected both to continue and grow.
  • Another trend in the Providence residential real estate market is affordability. While not as affordable as some similarily sized markets, such as Toledo, Ohio, it is more affordable than many others, Homeowners in Providence spend an average 11.1% of their income on monthly mortgage expenses, compared to the national average of 15.1%
  • To keep homes affordable in the face of rising prices and values, the RIHousing’s Board of Commissioners will be investing more than $34 million in the construction of apartments and other affordable housing in various Rhode Island cities, including Providence and North Providence.
  • A trend that coincides with rising home values is rising home prices. The median price of homes in Rhode Island grew 8.3% between November 2018 and November 2019, increasing to $290,000. Providence County, which includes the city of Providence, the median home sales prices in 2018, was $220,000.
  • Another trend related to the overall affordability of housing in Providence is the increasing number of people moving south from Boston, Cambridge, and even Brooklyn, where home prices are higher. According to Mott & Chace Sotheby’s International Realty in Providence, 25%-30% of their business between August 2018 and August 2019 were people relocating from surrounding areas.
  • A trend in the rental residential real estate market is the adaptive repurposing of existing buildings, such as former factories or warehouses, into apartments and condos. Examples of this include the Imperial Knife Factory in Providence that was converted into "60 apartments for families of varying income levels."

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