Expert: RI home values to stay low for a long time
January 13th, 2011 at 6:08 pm by Ted Nesi under General Talk
Edward Sullivan is chief economist at the Portland Cement Association. (No, I’ve never heard of it either.) At this week’s International Building Show in Orlando, Sullivan offered a forecast for how quickly the housing market will recover in all 50 states.
The good news is, the housing market is set to make a fairly quick recovery – if you’re in North Dakota, South Dakota, Iowa, Nebraska and Oklahoma.
The bad news is, as a Nesi’s Notes reader you probably live in Rhode Island – where Sullivan says the housing market will make the fifth-slowest recovery in the whole United States, according to a MarketWatch article. Only Nevada, Michigan, California and Florida will take longer.
That list of states pretty much mirrors the monthly rankings of unemployment rates, which was one of the factors Sullivan used in his analysis. He also looked at mortgage delinquencies – nearly 5% of mortgages are delinquent in Rhode Island – and the decline in home prices, which have fallen 25.6% here from the peak.
Usually this is where I put in an “on the plus side” paragraph, but I’ve got nothin’. That stinks. Still, it won’t be a huge surprise to regular readers here; “RI housing market set for double-dip” was one of my first WPRI.com stories last July.
Tags: home prices, home sales, housing
Nesi's Notes covers politics and the economy in and around Rhode Island for WPRI.com. (Twitter: 
Right now, banks have such a backlog of foreclosed homes that they are essentially a market-maker in the housing market. That and coordination issues virtually guarantee that markets across the country will be stagnant until the local backlogs are disposed of (if demand lags, banks will hold houses off the market to keep from losing money; if demand rises, banks will fight to release more to the public until the gains disappear — either way prices barely move). Places that will have different experiences are those with less exposure to the foreclosure mess (obviously) where there will be slow improvement, and possibly those areas with relatively high property tax rates, where banks might be more willing to just dump the property and get out.
That’s what I think, anyway.
Thanks for the great analysis, Mario. It sounds very plausible to me.
Banks’ “shadow inventory” of foreclosed REO is the big question-mark in my mind. How many homes have been repossessed but kept off the market because nobody’s buying? And are there many homeowners who want to sell but are waiting until they see signs of life in the sales data? If that’s the case, it could be a cat-and-mouse game for quite a while.