Nothing is off limits for buyers looking to get into the tight Rhode Island market

From waiving inspections and financing contingencies, to free leasebacks and uncapped escalation clauses, real estate agents say that buyers in Rhode Island are willing to do almost anything to get into a house right now. 

“It is really frenetic,” said Rachael Dotson, a Rhode Island-based agent for Residential Properties Ltd. “People who really need to get into even a starter home are willing to extend themselves with offers in order to be successful. Homes under $500,000 are still seeing up to 19 offers.” 

Lindsay Pettinelli, a Providence-based agent for Churchill & Banks, added: “As an agent, you are constantly having to come up with creative ways to make your offer stand out because sometimes just being the highest price isn’t going to be enough to get it done.”

With the lowest level of inventory among all states, according to Altos Research, it isn’t surprising that some Rhode Island homebuyers are willing to do almost anything to get into a house.

Statewide, as of May 17, the 90-day average number of active single-family listings was just 647, slightly above the all-time low of 568 active listings recorded a year ago but well below the 2,400 active listings recorded in May 2019, according to data from Altos Research. 

Although there were almost 2,000 more listings back in 2019, local real estate professionals say the inventory crunch was an issue even then.

“We had a shortage of inventory two or three years before COVID came around and then, of course, things went into a whole other stratosphere altogether and it feels like it has remained there since then,” said Kevin Fox, an East Providence-based Compass agent. 

For buyers, the tight inventory has meant frequent compromises to their search parameters. 

“What is nice about Rhode Island is that you can still be within 20 minutes of your office but look in four different towns,” Dotson said. “We have this really nice density, which creates open searches. They may be able to see four or five houses in four or five different towns at their price point, but there is no way they are going to see five houses in their preferred town, let alone neighborhood.”

While local real estate professionals are seeing a lot of local first-time buyers, as well as move-up and downsizing buyers, they said there is also strong demand coming from outside the state. Agents in Providence noted that they are seeing a lot of buyers coming in from Boston.

“I’ve seen a lot of folks come down from the Boston area because they have been priced out of the market and they realized, as many people have, that they can work from home,” Fox said. “I’ve also seen some from New York and a good few even from California. And when they come from markets like those, everything here seems cheap, so they just scoop up properties.”

In a state with the second-highest population density in the nation, these out-of-town buyers are adding extra stress to Rhode Island’s already constrained housing inventory. And even though many of these out-of-town buyers feel that housing prices are a bargain compared to some of the pricier areas they are coming from, the tight inventory and strong level of demand has meant prices in Rhode Island have risen significantly over the past few years. 

In May 2019, the 90-day average median list price in the state was $399,000, according to Altos Research. As of May 17, 2024, that number had risen to $550,000.

In Providence, the median list price has risen from $215,592 in May 2019 to $388,638 in May 2024.

“There was never a lull in the Providence market,” Pettinelli said. “There has not been a decrease or a lack of an increase, month over month, since 2020. So, our buyers are still looking at prices that have continued to rise.”

On top of the rising list prices, Dotson said that buyers know they are most likely going to pay well over list price in order to successfully purchase a property. 

Adding to the challenges for buyers is that the state’s tight inventory and high level of demand have combined to create a very fast-paced market. Data from Altos Research ranks the Providence metro area as the region with the lowest median time on the market in the nation, with its seven-day average median at only 14 days.

“In the really desirable neighborhoods, it is even less than that,” Dotson said. “It you are not here for the weekend to look at the new crop of houses that pop on the market, you are going to have to wait for the next round of houses to come up if you want to look at something. Right now, I am telling my buyers that they can’t go away for the weekend — they have to be here if they want to buy something.” 

Although agents have started to see a few more listings on the market each week, they expect the next few months to be much of the same.

“It is going to be a competitive market,” Fox said. “For buyers, it is going to be tough. We are still going to be crying out for inventory — it is probably the slimmest inventory I have ever seen and I anticipate that staying that way. I’ve got a roster of buyers chomping at the bit and I really feel for them right now.”