'This is the new normal': RI's median home price hits nearly a half-million dollars

The price of a single-family home in Rhode Island has nearly doubled since 2019, with the median price of a single family home now just short of a half-million dollars.

"It's nuts, it's crazy, it's nuts," said Redfin real estate agent Bryan Quinlan.

Quinlan recently listed a single-family house in Coventry for $510,000 – a price that left him reeling.

"It's just a normal house," he said. "Three bed, one bath. A ranch. It's not even on the water."

"I don't want to say it's absurd, but prices have gone a little absurd," he continued. "There's no other way to put it, no other way to talk. This is the new normal."

In June, the median price for a single-family home hit $494,000. Five years ago, in the pre-pandemic days of 2019, the median price was $250,000.

How high are prices?

Obviously, prices are high.

Really, really high. South Shore of Massachusetts in 2019 high .

Which is also to say that, while Rhode Island has gone high, Massachusetts has gone higher – now at an estimated $635,000 median price for a single-family house.

What's the June 2024 pricing data?

• Single-family house: $494,000 (65% increase over June 2019, 98% increase over February 2019)
• Multi-family house: $530,000 (91% increase over June 2019)
• Condo: $352,500 (48% increase over June 2019)

What is driving these high prices?

• Few new homes, condos, multi-family houses or apartment buildings are being built in Rhode Island, with many of the total units being concentrated in Providence. (Reporter Patrick Anderson took a deep dive into the causes of the overall housing crisis.)
• At the start of the pandemic, would-be sellers took their homes off the market. The supply of houses cratered.
• Even with the year-over-year 32% increase in listings this June, it is still just a third of the number of houses listed in 2019 (3,662 in June), not not nearly enough for what agents call a "healthy" market.
• While legislators have spent the past two sessions focusing on how to increase the number of new units built in Rhode Island, some cities and towns have been trying to circumvent efforts to make it easier to build .

Real-estate agents focus on more houses hitting the market

Rhode Island Association of Realtors President Sally Hersey says she is focused not on the new eye-popping prices but instead on the number of houses listed since June 2023.

“We still have a long way to go to correct our housing crisis, but the good news is, over the last few months we have started to see a shift toward a more balanced market," Hersey wrote in a news release . "We’re hopeful that we will continue to see a slow but steady path to getting there."

While inventory increased in June by 32% over a year prior, more houses always come on the market in June, July and August, Quinlan said, an assertion backed up by historical data. The summer increase in inventory is not an indicator of a change in the market, he said.

"The problem is, every one one of those extra 300 houses that was listed, it's already sold," he said. "There are no more options for people."

Quinlan puts it this way to people who ask what needs to change: Half the state needs wake up tomorrow and decide to put their homes on the market to force prices to come down.

"People think I'm exaggerating, but I'm not," he said. "That's how many we would need. You need an excess of inventory to bring down prices, and we haven't that in who knows when – maybe six years ago."

Wasn't inflation part of the rise?

While the housing market often exists in its own world of cyclical pricing, general inflation, and the much higher construction costs adds a little bit of context.

Here's how (single-family) house prices looked in 2019 , paired with how they look adjusted for inflation, per the Bureau of Labor Statistics inflation calculator.

• $1 in 2019 is the equivalent of $1.23 in 2024 , a 22.9% increase.
• Started at $253,000 in January ($315,782 in June 2024 dollars)
• Dipped to $250,000 in February ($312,038 in June 2024 dollars)
• Crept up to $300,000 by May ($374,445 in June 2024 dollars)
• Dipped down to $285,000 by December ($355,723 in June 2024 dollars)

Houses staying on the market longer increases the total number of homes for sale, but they are staying on the market for so long because they are overpriced. Many sellers think they can sell their house for as much or more than their neighbor, but they don't realize the differences between the properties, or that their neighbor remodeled to boost the value of the house, Quinlan said.

When you have a shortage, prices run up

The housing market is like any other market – when there is a shortage of eggs, the price of a carton goes up. Houses are the same way, Quinlan said.

Each year, the number of listings starts picking up in June and starts to decline in the fall, according to data from the Rhode Island Association of Realtors.

Single-family house sales and listings:

• Listings increased in June to 1,305, from 1,226 in May and 999 in April
• In June 2019, 3,662 houses were listed for sale
• 675 homes sold in June , compared to 644 in May and 557 in April
• Compare those numbers to 2023 : 834 homes sold in June 2023, 688 in May 2023 and 524 in April 2023

More money, all the problems

As prices have drastically risen, buyers at the low end of the market, which is now $250,000 to $400,000, are being squeezed out by competition and high interest rates.

"I have clients in the $300,000 to $400,000 range and they're being beat by cash offers and waived appraisals," Quinlan said. "There's nothing they can do about it unless they have cash. You lose hope as a Realtor. What do you tell these people? You want to make their dreams come true, if possible, but it's just such low inventory."

Add in higher interest rates , around 6.8%, other life expenses like car payments and utilities, and it's becoming increasingly impossible for many people to afford a house.

"I think interest rates need to stabilize around 5% and the government needs to create some seller incentives to get people to put their houses on the market instead of renting them out," Quinlan said.

What the multi-family market looks like

Just like single-family homes, multi-family houses have increased drastically in price :

• Through 2018 and 2019, the median price ranged from $250,000 to $300,000
• From 2020 to 2021, prices increased from $300,000 to just under $400,000
• By June 2023, prices hit a peak of $500,000 before falling slightly
• In February 2024, prices peaked again, last hitting a high of $545,000 in May 2024
• The number of multi-family homes listed in June was 208, compared with 493 in June 2019

In the multi-family market, many of the sales are 1031 exchanges , where an investor sells one or multiple properties to buy another of a similar value. It's a way to keep from paying capital gains taxes. Many investors are selling their Rhode Island properties and buying bigger houses in vacation spots like Cape Cod, Quinlan said.

The more volatile condo market has remained steady: The median price of condos is a little different than single-family and multi-family houses because there are so few on the market and many of them can bring in top dollar.

Is now the time to sell?

Now is a great time to sell with a big caveat: Make sure you have somewhere to go, Quinlan said.

"I work with a ton of sellers who are moving to South Carolina, moving out of the country or taking a month vacation and then coming back to figure out where to live," he said. "Now is the time to do it, if you don't have to buy. You just need to make sure you have somewhere to go, as other markets are just as crazy as ours."

Many of Quinlan's sellers don't believe their house will sell until it's been on the market a week and they've received five offers.

"They say, 'I didn't expect this,' but they can't say I didn't tell them," he said.

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Reach reporter Wheeler Cowperthwaite at wcowperthwaite@providencejournal.com or follow him on Twitter @WheelerReporter .

This article originally appeared on The Providence Journal: 'This is the new normal': RI's median home price hits nearly a half-million dollars