Government Shutdown Affects November Sales

Warwick, RI – Single family homes sales activity slowed by 11 percent in November from 12 months prior, likely resulting from a combination of the October government shutdown which delayed many transactions, and rising interest rates and prices.  According to data from the Rhode Island Association of Realtors, it was the most significant lull in single home sales activity in 30 months.

Median price however, continued to rise, up three percent to $201,000 – good news for homeowners and sellers who have been regaining lost equity since the fall of 2012.  Inventory fell slightly from November, 2012 leaving just over a six-month supply of homes for sale, giving buyers a slight edge in negotiating power.  According to industry experts, a six-month supply indicates a market balanced between demand and supply.

“We expected to see a sales slowdown because pending sales began to slow a few months ago.  And, I don’t think we can overlook the government shutdown in analyzing the significance of the drop last month, which was more than expected,” said Robert Martin, 2014 President of the Rhode Island Association of Realtors. Pending sales, or sales under contract but not yet sold, have long been considered the most accurate indicator of the future market. Though November sales fell, the predicted rise in interest rates due to the Fed’s recent drop in monthly bond purchases, may actually spur activity in future months as buyers rush to take advantage of rates still near historic lows.

Martin also commented that people may be waiting to see the final outcome of changes to flood insurance policies.  The National Flood Insurance Program recently went through updates which are adversely affecting the price of flood insurance for some coastal and flood zone properties.  Legislators like Rhode Island’s Congressmen Jim Langevin and David Cicilline and  Senators Sheldon Whitehouse and Jack Reed have supported changes to the legislation that would provide some relief for affected property owners, though what, if anything, will make its way through Congress, remains to be seen.

Activity in the condominium market remained flat with 123 condos sold in both November, 2012 and 2013.  Median price rose two percent to $209,000, buoyed by a drop in inventory year over year every month for the past 36 months.

The multi-family market bounced back significantly with sales activity up 19 percent and median price up 18 percent to $142,000.  The supply of properties available for sale increased for the first time in nearly two and one-half years.

“If you’re in the position to buy an investment property, it’s a smart move. Interest rates and prices are still affordable and the demand is there on the rental side. Savvy investors understand that,” commented Martin.

Information about changes to the National Flood Insurance Program, can be found on http://www.rirealtors.org/.

About the Rhode Island Association of REALTORS®

The Rhode Island Association of REALTORS®, the largest trade organization in Rhode Island with approximately 4,300 members in nearly 750 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, Rhode Island REALTORS® were involved in over 11,000 real estate transactions with a total sales volume of $2.5 billion. The Association is one of more than 1,437 local 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 1.2 million members involved in all aspects of the residential and commercial real estate industries and who subscribe to a strict Code of Ethics.

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