By JARED GUSTAFSON Rhode Island has become a hot spot for out-of-state home buyers. Rhode Island's four seasons and waterfront properties are attractions for many out-of-state buyers. "The secret is out. Rhode Island has been discovered in the past year
Rhode Island has become a hot spot for out-of-state home buyers.
Rhode Island’s four seasons and waterfront properties are attractions for many out-of-state buyers.
“The secret is out. Rhode Island has been discovered in the past year by those looking for a heaven away from the city. Our housing market has been an economic boon throughout most of the pandemic but the increased demand for our housing stock is taking a toll. Rhode Islanders are having a hard time competing for homes and other buyers, including those from out-of-state, who often come here with cash in hand,” said Leann D’Ettore, president of the Rhode Island Association of Realtors.
D’Ettore explained the domino effect that the pandemic had on out-of-state buyers. “When the pandemic surfaced, people started to reevaluate their quality of life,” she said.
She said when the pandemic surfaced in New England people realized that they would be working at home for a substantial amount of time. Therefore, she said people started to reevaluate their living priorities. The upside of living in Rhode Island is that people will have more square footage per dollar. Also, there is more room for entertaining, such as a big yard, a pool and a home gym.
D’Ettore said living near the coast is a huge upside for Rhode Island. She said the median cost to live near the water or to own a waterfront property is much lower here than in other nearby areas such as the Cape or the Hamptons.
The Rhode Island Real Estate Association recently released second-quarter statistics for home and condominium sales showing out-of-state buyers are having a significant impact on RI real estate sales. During April through June of 2021, sales of single- and multi-family homes and condominiums increased to out-of-state buyers by 69 percent from the same period of last year.
A majority of the buyers were from New York, Massachusetts, Connecticut, California and Florida. Those five states purchased a combined total of 558 properties in 2020 out of the 673 total properties bought by out-of-state homebuyers. In 2021, those totals went up to 918 from those same five states and the total amount of properties purchased by out-of-state buyers went up to 1,136. States other than New York, Massachusetts, Connecticut, California and Florida amounted for 26 percent of sales for the second-quarter sales of 2021, resulting in a 21 percent increase for the same time period as last year.
Warwick, Johnston and Cranston recorded higher sales from out-of-state buyers. In the second quarter of 2020, Warwick recorded 58 properties sold to out-of-state buyers, Johnston recorded 14 sales, and Cranston recorded 29 sales. In the same period this year, Warwick saw 74 properties sold to out-of-state buyers, while Johnston recorded 13 sales and Cranston recorded 48 sales.
With more demand for Rhode Island real estate and lower inventory comes the higher the median price for a single- and multi-family homes and condominiums. The statewide median price for a single-family home is around $370,000 and the price level rose 17 percent from last year. The median price for a multi-family home is $355,000, the median price rose 20 percent from last year and sales nearly doubled jumping to 94 percent from last year. The median price of condominiums statewide is $290,000, an increase of 18 percent from last year, while also recording an 82 percent increase in sales from last year.
Luxury housing sales are also rising in Rhode Island and 47 percent of sales were reported from out-of-state. Luxury sales are defined as sales that cost over $1 million. From 2020 to 2021, Rhode Island saw a 312 percent increase in luxury sales, and almost half of those sales are credited to out-of-state buyers for the second quarter. In 2021 Rhode Island real estate reported that out-of-state homebuyers accounted for 26 percent of luxury sales, resulting in a 21 percent increase from 2020. In 2020 out-of-state buyers bought 27 luxury properties and in 2021 out-of-state buyers purchased 95 properties. Out of those 95 sales in 2021, residents from Massachusetts, Connecticut, New York, Virginia and California purchased 78 properties. Some of those waterfront properties that are have been purchased are located in Little Compton, Charlestown, Jamestown, Westerly, Warwick, East Greenwich and Newport.
Matt Phipps, a partner at Phipps Reality, had similar thoughts about Rhode Island real estate, saying, “The secret is out, Rhode Island is the best kept secret of the Northeast.” Phipps went on to say that homebuyers can purchase a home here for a fraction or half the cost compared to other New England states.