January 24, 2023

Due to the tight supply of starter homes in the single-family home sector, sales of condominiums increased 44.6%  over last year. At $395,000, the median price of those sales came in  $100,000 less than that of single-family homes. A slight rise in pending sales indicates that closing activity should remain elevated in the weeks ahead.

In contrast, the median price of multifamily homes remained the highest of all three sectors at $550,000. Sales, which have not fallen since January, continued their ascent rising 10.9% more than  July 2023. Barraged by investors, this sector of the market has boomed during the housing crisis, sparked by high rental demand and corresponding income. Incomplete sales expected to close this month,  however, fell 11%, an indication that sales will likely slow in the weeks ahead.

“Overall, there are promising signs for our housing market. More inventory and lower interest rates should help to get the market moving. We’re hopeful that 2024’s housing market will be ending on an upswing,” said Hersey. 

 Multifamily homes continued to be a hot commodity last month, staying on the market only  21 days before going under contract, a 16.7% decline from June 2023. The  sector was the only housing type to experience increased year-over-year  sales in June with a 17.9% increase. Pending sales however, dropped  4.2% foretelling a slight decline in closing activity in the weeks  ahead.   

Today, the Rhode Island Association of Realtors reported that the median price of residential property sales in Rhode Island soared to new heights in May, with multifamily home sales leading the pack.  Multifamily homes with up to four units saw a 23.9% increase from the median price of $440,000 realized just 12 months earlier. The median price of multifamily homes has increased 78.7% in the past four years,  hitting a new record of $545,000 last month.

Largely driven by the well-financed investor market, the allure of solid rental income has pushed significant year-over-year increases in the median price of multifamily homes since 2020. The hike in prices has not deterred sales,  however. Closed sales were up 25.2% from May 2023. The fevered sales volume is expected to continue as pending sales, an indicator of sales activity in the weeks ahead, rose 9.1% from May 2023.

“Real estate has always been a good long-term investment, and that’s never been more true than in the multifamily home market right now. Unlike stocks, a small initial investment – or down payment – enables you to make significant gains on the full value of your investment. And, with today’s strong demand for rentals which shows no signs of subsiding, a steady income is readily available,” said Sally Hersey, President of the  Rhode Island Association of Realtors. 

Multifamily home sales saw the largest annual increase in the median sales price last month, rising 16.7% to $525,000. Closing activity rose 12.9% and the number of listings increased by 10.2%. Often attracting investors and cash and financially fit buyers, the multifamily market is rife with competition.

All residential property types continue to suffer a critical shortage of supply with multifamily homes having the least availability and the condominium market providing the most options, though still limited.

Multifamily home sales followed suit, though more significantly, with March sales falling 19% from one year earlier and the median price rising by 18.9% to $535,000. Pending sales however,  rose 5.6% as multifamily homes remain attractive due to their ability to mitigate mortgage payments with rental income for owner-occupied properties and generate strong rental income for investors. 

The popularity of rental investments and multigenerational housing led to a  7% increase in sales and a 15.6% hike in median price among multifamily home sales. Though the supply of properties in the category is higher than that of single-family homes and condominiums, competition remains fierce as the pool of investor buyers are often well-financed. The median price of multifamily homes in February was $520,000.

“Seeing more buyers able to secure housing is fantastic but the critical issue  remains – we desperately need more housing stock. The Rhode Island  Association of Realtors is committed to working with our state’s leaders and housing advocates to increase supply. We encourage all Rhode  Islanders to reach out to their senators and representatives to support legislation that reduces barriers to development,” said Hersey.

The multifamily home market once again marked the highest median price,  and though the ability to offset the higher costs with rental income is enticing to many, competition in the investor-laden multifamily home market can be difficult for those without cash or excellent financing options. At $480,000, last month the median price of multifamily home sales rose 11.7% from 12 months earlier. Sales activity also rose by eight percent, bucking the trend seen in the single-family home and condominium sectors. Pending sales however, dropped 19.5% from the  previous year indicating a lull in activity in that market in the first  months of the New Year. 

 Today, the Rhode Island Association of Realtors reported that the median  price of residential property sales in Rhode Island soared to new  heights in May, with multifamily home sales leading the pack.  Multifamily homes with up to four units saw a 23.9% increase from the  median price of $440,000 realized just 12 months earlier. The median  price of multifamily homes has increased 78.7% in the past four years,  hitting a new record of $545,000 last month.

Largely driven by  the well-financed investor market, the allure of solid rental income has  pushed significant year-over-year increases in the median price of  multifamily homes since 2020. The hike in prices has not deterred sales,  however. Closed sales were up 25.2% from May 2023. The fevered sales  volume is expected to continue as pending sales, an indicator of sales  activity in the weeks ahead, rose 9.1% from May 2023.

“Real  estate has always been a good long-term investment, and that’s never  been more true than in the multifamily home market right now. Unlike  stocks, a small initial investment – or down payment – enables you to  make significant gains on the full value of your investment. And, with  today’s strong demand for rentals which shows no signs of subsiding, a  steady income is readily available,” said Sally Hersey, President of the  Rhode Island Association of Realtors. 

In other areas of the market, sales of multifamily homes dropped by 6.2% from 12 months prior and the median price rose by 10.3% to $482,500. Pending sales fell only 3.7%, an improvement since the beginning of the year when they were down more than 40%. Sales in the multifamily home market have been fueled by investors looking to capitalize on rising rents as well as multigenerational buyers, who now make up 14% of all buyers nationwide."

While costs are up, real estate remains one of the best long-term investments. In addition to providing a place of shelter and comfort, it’s a great wealth builder. That’s why it’s so important that we find avenues to give everyone access to home ownership,” said Bryant Da Cruz, President of the Rhode Island  Association of Realtors.

In other areas of the market, at  379,900, the median price of condominium sales was 10.3% higher than that of September 2022, while closed and pending sales fell 14.6% and  .4%, respectively. While sales of multifamily homes fell by 12.3%  year-over-year, and pending sales dropped by 14%, the median price of  sales eclipsed other areas of the residential market at $477,500. 

Rhode Island’s multifamily home sector also saw an increase in median price compared to August 2022 to $475,000 from  $424,500, but like the single-family home market, sales continued to fall. Closing activity dropped 33.8% from the prior year and pending sales decreased 8.3%. Only 204 multifamily homes were on the market at the beginning of September, leaving a 1.7-month supply of properties for sale.

The rate of decline in closed and pending sales activity fell significantly in the condominium and multifamily home markets,  possibly a sign that supply and demand is becoming more balanced.  However, low inventory fueled by Rhode Island’s lagging housing  production and homeowners staying put to keep record-low interest rates,  will likely keep prices high. 

At $500,000, the median price of multifamily home sales represented an 11.1% increase from 12 months earlier. Completed sales dropped by 25.2% and pending sales fell by 26.6%. With a 1.5-month supply of properties on the market, the investor-driven multifamily home sector had the least amount of inventory available.

“Multifamily homes have wide appeal for investors. It’s no secret that rents have skyrocketed and with mortgage rates rising, the supply of prospective tenants is growing,” commented Da Cruz. 

“Though the median home sales price nationwide has been declining, the opposite is happening in Rhode Island. The rate of increase began to taper off in the past year however, so Rhode Island’s trends are most likely just running a bit behind the rest of the country. Even if the price appreciation continues to moderate, with just 1.4 months of inventory on the market, prices aren’t likely to decline significantly barring a significant economic shift,” said Bryant Da Cruz, president of the Rhode Island Association of Realtors.

Sales activity continued  to decline from the prior year, falling 12.1%, and pending sales – those  likely to be completed in the next one to two months – fell by 15.6%  from June 2022, the 18th consecutive month of year-over-year declines.

In  recent months, the condominium market has seen significant annual gains  in median price. June’s price of $376,450 represented a 17.5% gain from  June 2022. Both completed and pending sales fell just over 16%  year-over-year.

The multifamily home market, which includes homes  with two to four units, realized a median price of $500,000 in June, a  16.3% gain from 12 months earlier. Sales, however, slowed by 42.3% and  pending sales dropped by 26.2%

“Thankfully the Federal Reserve paused  any further interest rate hikes in June. With shelter costs being one  of the main factors driving inflation, anything that helps keep home  affordability within reach bodes well for the housing market,” commented  Da Cruz. 

At $440,000, the median price of multifamily home sales beat the median price of both single-family homes and condominiums. May’s median price reflected a 2.3% year-over-year gain. Closing activity dropped by 36.7% from 12 months earlier and pending sales fell by 38.1%.

“Investor demand for rental inventory is growing throughout the country and Rhode Island is no exception. Once a property comes on the market, it goes under contract immediately,” said Da Cruz, who explained that the average multifamily home sales process took only 24 days in May.