RHODE ISLAND - If you want to buy a home in Providence, RI, you might want to pay close attention to real estate trends in the next few years. Rhode Island is a city that is experiencing rapid growth, but it's still relatively affordable compared to its neighboring states. The city is also home to Brown University, which has significantly impacted the area's housing market.
The shortage of houses on the market has prompted state leaders to look into new housing policies. These could expand the supply of homes. For example, they could allow tiny houses and accessory dwelling units on single-family lots. However, the hit market will likely continue unless big changes are made.
Prices are on the rise in the Providence housing market. The State-Wide Multiple Listing Service, a Rhode Island Association of Realtors subsidiary, reports that median home prices have been steadily increasing for 66 consecutive months. However, the rate of increase has slowed down in the past few months. Despite the slowdown, home prices are still increasing by more than 20% since the start of the COVID pandemic two years ago. The median single-family home price of $375,000 last month is up 16% from 12 months ago. This trend has been driven by out-of-state buyers' high demand for larger homes.
Prices are expected to remain high in 2022, but it's possible that the lack of supply will push home prices down. While a lack of inventory has already hurt the housing market this year, rising mortgage rates are expected to make homebuying less affordable. Rising mortgage rates and rising inventory will also cause home prices to moderate.
Experts predict a price decline in 2023, but they're not saying this will happen in Providence. They think prices in Providence will fall slightly, but not as much as they did in 2008 and 2013. The current shortage of housing is pushing many prospective purchasers to the sidelines. Although the lack of new housing puts pressure on prices, many experts believe the market will still outperform before the pandemic hits.
While the market is expected to dip briefly in January 2023, it will bounce back in 2021. In July 2023, the median home price will hit $425,000. This would be a record-high for the city. This would be a 6.3% YoY increase. In July 2020, the median home price rose 8.4%. By July 2021, it rose by 17.7%.
Zillow has revised its 12-month housing outlook. According to the company, home prices will grow by 3.1% in 2023. Meanwhile, Fannie Mae and Mortgage Bankers Association expect a 3.2% rise in 2023. Zillow also factors in price cuts into its forecast. As a result, the 2023 real estate trends in Providence are a little bit better than those predicted a year ago.