Increasing Home Prices Reported In Some New England Areas, Multifamily Properties

Some New England states are bucking the national housing of falling home prices, says RE/MAX of New England.

For instance, Rhode Island saw average home price increase of 11.2 percent, from $243,968 in 2009 to $271,244 in 2010, the real estate agency reported in its “2011 Housing Market Outlook and Forecast.” That’s in spite of have the highest unemployment rate (11.6 percent) in New England and the fifth highest in the nation.

The average Rhode Island condominium price rose 10.1 percent from $214,116 to $235,735. The average multifamily home prices jumped from $114,131 to $137,451.  The 20.4 percent increase shows that investors believe multifamily homes are priced favorably and are jumping in the housing market.

Massachusetts, with an 8.2 percent unemployment rate, saw single-family home prices rise 7.2 percent from an average of $351,788 in 2009 to $376,970 in 2010. Condominium prices increased 9.3 percent from $305,937 in 2009 to $334,343 in 2010. Multifamily home prices showed gains of 14 percent over 2009, with average prices increasing from $226,535 to $258,322.

“With rates continuing on a steady trajectory, it’s really an investor’s market,” said Jay Hummer, executive vice president and regional director of RE/MAX of New England. “There is no other industry right now in which you can expect 80 percent return on your investment. Consumers who are able to put 20 percent down, rent a property and in 20 to 30 years time own it, will realize that return.”

Fairfield County in Connecticut was another bright spot. The average single-family home price there was up 13.8 percent from $547,259 to $622,547 between 2009 and 2010. Condo prices rose from $277,821 to $288,924, a 4 percent increase. Multifamily homes were pretty much the same, with a decrease of 0.4 percent.

Higher Mortgage Rates, More Foreclosures Forecasted For 2011

RE/MAX of New England is predicting increasing mortgage rates, stable home prices, and more foreclosures for 2011.

As expected, home sales dropped last year. Single family home sales in New England dropped an average 5 percent. Condominium sales were down 2.8 percent and multifamily homes dropped 9.7 percent.

Over 380,000 new foreclosures were initiated nationwide in the third quarter of 2010. There almost 1.2 million foreclosures were in process nationally, 10 percent more than in 2009. That glut will have a huge impact on housing.

“More foreclosures in the market will absolutely affect the timeline to an industry recovery,” said Hummer. “Purchasing a foreclosed property also takes anywhere from six to 12 months and even with conservative estimates, we won’t see a turnaround until at least 2013. That’s why it is so critical that investors ramp up activity now.” How to buy a foreclosed property.

“Foreclosures are only going to increase and what we’re seeing now is a shortage of residential rentals as more and more people are forced from being owners to renters,” said Ed Sutton, Broker/Owner of RE/MAX Flagship in East Hartford. “This creates an environment for investment buyers.”