2021 Another Record-Breaking Year in R.I.’s Housing Market
Warwick, R.I. – February 3, 2022 – Rhode Island’s housing market continued to break records in 2021, fueled by high buyer demand which was intensified by buyers from other states. Last year, Rhode Island Realtors transacted nearly $7.9 billion in residential sales through State-Wide Multiple Listing Service, the listing data exchange owned by the Rhode Island Association of Realtors. The total of last year’s sales, which include single-family and multifamily homes, along with condominiums and land, were up from $6.5 billion in 2020, a 22 percent increase. While sales of single-family homes fell slightly in 2021, sales of condominiums and multifamily homes made up the difference, as buyers pivoted to more available options.
In the single-family home market, sales fell by 1.3 percent, compared to 2020, but the median sales price of those transactions rose 14.3 percent to $365,000. Despite the spike in median price, Rhode Island seemed a bargain compared to neighboring Massachusetts, where the monthly median price of single-family homes topped the $500,000 mark since last May.
14.4 percent of total Rhode Island sales derived from Massachusetts buyers last year and that number grew to 17.1 percent in the luxury home sector of properties sold for $1 million or more. Overall, 24 percent of Rhode Island’s total sales involved buyers from other states. Among $1 million-plus sales, only 52 percent were bought by Rhode Islanders.
“Homes flew off the market last year. Multiple offers and sales prices well over the asking price were commonplace. That made it tough for buyers, particularly prospective, first-time homeowners who found it hard to compete with a limited pool of choices. Buyers from other states increased the already pent-up demand, which added to their struggles,” said Agueda Del Borgo, 2022 President of the Rhode Island Association of Realtors.
Condominium sales gained momentum in 2021
Condominium sales saw a significant increase last year, after showing little to no growth in the past three years. The number of condos sold in 2021 rose 19 percent from the prior year. The median sales price of those condominiums sold rose 11.1 percent to $275,000.
“In the face of fewer choices among single-family homes, many buyers expanded their options. While also in short supply, condo options were a bit more plentiful than single-family homes and they often offered a more affordable entry price,” Del Borgo explained.
Multifamily home sales popular
With rising rents, multifamily homes became a hot commodity across the country and in Rhode Island, sales in this category rose by more than any other. Last year, multifamily home closings rose by 35.4 percent compared to 2020 and the median sales price of those sales equaled that of single-family homes, at $365,000, a 17.7 percent increase from 2020.
“Multifamily homes are typically a good option for both investors and first-time buyers who can rely on rental income from one or more of the units to help offset their mortgage costs. They can be a terrific way to build wealth because you can capitalize on future values without having to pay all or any of the monthly mortgage expense. With rents rising as quickly as they are, along with other costs, a lot of people took advantage of that incentive last year,” said Del Borgo.
Fourth-quarter sales highlight shifting market
While 2021 year-end data showed little change in residential sales volume from 2020 overall, fourth-quarter statistics showed a 13 percent year-over-year decline in sales at the end of the year of single-family homes. Condominium sales also fell, decreasing by 5.6 percent while only multifamily homes sales showed an increase. Sales in that investor-driven sector rose by 3.4 percent from the previous year. All three property types showed double-digit increases in median price.
“The lack of inventory, the resulting increase in prices, and likely, buyer fatigue, contributed to tempered activity in the fourth quarter. Overall, the housing market could likely continue to moderate a little in the year ahead, but due to overwhelming pent-up demand, sales should remain strong. We don’t expect prices to drop due to the short supply of properties for sale but rising interest rates may also ease the demand side a little bit, which could slow the price acceleration,” Del Borgo commented.
Months Supply: Click here for interactive display
About the Rhode Island Association of REALTORS®
The Rhode Island Association of REALTORS®, one of the largest trade organizations in Rhode Island with more than 5,000 members in nearly 1,000 offices, has been serving Rhode Islanders since 1948. Advocating for Rhode Island's property owners, the Rhode Island Association of REALTORS® provides a facility for professional development, research and exchange of information among its members and to the public and government for the purpose of preserving the free enterprise system and the right to own real property. Last year, RI Realtors transacted $6.9 billion in residential real estate sales and $7.1 billion in total sales and rentals including commercial transactions.
The Association is one of more than 1,500 boards and associations that comprise the National Association of REALTORS® (NAR). The National Association of Realtors®, “The Voice for Real Estate,” is America's largest trade association, representing over 1.5 million members involved in all aspects of the residential and commercial real estate industries and who subscribe to a strict Code of Ethics.
REALTOR® is a federally registered collective membership mark which identifies a real estate professional who is member of the NATIONAL ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics.