Chart: Will home prices drop even further in Rhode Island?
May 31st, 2012 at 11:39 am by Ted Nesi under Nesi's Notes, On the Main Site
As I reported this morning, one in three homeowners in Rhode Island’s two largest counties are still underwater on their mortgages. It’s also interesting to note that housing prices have soared more quickly here than nationwide.
Take a look at this chart from the St. Louis Fed’s invaluable FRED database, which compares the growth in house prices since 1975 for both the U.S. (red) and Rhode Island (blue) :
Looks like a bubble! But is it?
Here’s the same chart with the addition of the home price index for Massachusetts (green):
Thoughts?
Nesi's Notes covers politics and the economy in and around Rhode Island for WPRI.com. (Twitter: 
Since the early 80′s, home prices have been higher in the Northeast. The 3 indexes seem to follow the same pattern, so it doesn’t seem like a bubble but more like a regional difference.
I tend to agree with Don, however I’m not convinced that we’ve seen a bottom to this market. Several industry publications are predicting a continued decline through 2012 and 2013. While I don’t think the rate will be as severe as it has been in recent years, I do think that values could come down by another 3 percent or so over the next 12 months. I see here on Aquidneck Island, which while shielded somewhat from the crash, is still on the decline. Frannie and Freddy are also set to release a new batch of foreclosures into the market later this summer. As I tell my clients, at this point, it’s best to sit back, save, and wait for the fall.
It is only going to get worse in 2013 when the Bush tax cuts end, There will be less economic growth when investors will be paying taxes at the income level on captial gains and dividends. When you remove incentives investors will sell investment before the end of December of this year and will look for investments that don’t produce capital gains or dividends. You will see more money move overseas.
The best thing you people can do is telll your elected officals is to reduce or better yet elminate all ridiculous antibusiness regulations and the excessive taxes. Rhode Island should have the lowest taxes in the country. There is no reason Rhode Island has such overgenerous benefits to it public sector employees and social service benefits. It is time to discourage people from getting welfare in Rhode Island. I really don’t care about your Nanna who never saved a penny for their retirement.
Next, most of the housing stock in Rhode Island is obsolete. In Providence County many of the triple deckers should have been torn down in the 1970′s and 80′s. Anybody who paid more than a $150K for a triple decker was greedy and got what they deserve. It is now the time to elminate zoning laws and allow owners and investors to redevelop and area. Lets be very clear investors are not government spending. That is a waste of money. It is also time to sell the housing projects. Local government should not be in the housing business or enabling people not to work.
Ted, there are still ARMs from 2006 & 2007 sending people into bankruptcy.
The real estate market may turn by 2014 – maybe.
With high unemployment, one of the largest tax burden per individual in the country, the mass exodus of middle income tax payers that are replaced by tax users and a group of lackluster elected officials, I think we will see house values decline for the next 10 years. I believe many of our towns and cities will look like Detroit MI, Gary IN or youngstown OH. It is sadd that our leaders do not have a clue on how to fix it!!!!!