You hear it everywhere: the doom-and-gloom forecasts, “the market is the worst it’s been in a decade and only getting worse.” I have some good news to share: the Newport real estate market is not so bad after all! For buyers with cash or with good credit and a good down payment, there is a silver lining of opportunity around this dark cloud of economic downturn.
You may not have heard that real estate inventory in Newport County is close to the highest it has been in at least ten years. Inventory, which usually peaks in August, is about 100 units higher in 2010 than it was in 2009. Not only that, but we’ve had almost three years of a down market to dampen prices, so new homes being listed tend to be more realistically priced for today’s market (as opposed to the overinflated prices of the “bubble” days prior to 2008).
Another sign that things aren’t so bleak is that sales that are in contract and pending closing are higher this year than last; this is an indicator that market is turning back up again. It’s also an indicator that sellers are getting more realistic about the types of bids they’ll accept. Part of this increase is due to Baby Boomers coming of age and wanting to move to areas that are attractive for retiring or buying a second home: as we all know, Newport County is a big destination for that!
It’s really a great market for prepared and savvy buyers, for many reasons. Interest rates on mortgages are close to record lows. Consumer purchasing power is high. Right now, buyers who are sitting on cash can obtain a home that would have been out of their reach just a few years ago.
What are some of the main drawbacks to today’s market in general? If you’re trying to sell your home, the initial bids you receive might come in low. Loan requirements are stiffer and mortgages are more difficult to obtain in general. Across the board, appraisals are coming in lower, and foreclosures are causing certain areas to skew lower because of it. But the good thing about being in a resort area (like Newport) is that you don’t typically see as many foreclosures. Buyers who might expect a 50% drop in value while shopping in other markets are being unrealistic if they expect that here. Nationwide trends are not applicable to all areas, and Newport County is one of those places that, while certainly influenced, is still a desirable enough location to keep foreclosures at a low rate.
Sellers should remember that Aquidneck Island is just that – an island. There is limited space to build here, especially with historical restrictions. Waterfront property will always be desirable and rare, so waterfront homes have still been selling quickly over the last few years. In general, if a well-located property in good condition comes on the market, priced appropriately, it will go quickly. I am seeing some properties sell within the first week of coming on! I’m currently aware of a multiple bid situation on a three-family house and have heard of other multiple bid contests as well. This indicates that there is a pent-up demand for affordable homes in Newport County.
So the overall message is: the market is certainly not as bad as you think. It is thriving, but in a way that is more realistic and hopefully sustainable than prior to 2008. The pie-in-the-sky days of paying nothing down for your dream house or buying something dirt cheap and selling it two years later at an overinflated price are not here anymore, but opportunities abound for sensible buyers and for sellers who picked quality homes in nice locations. Times are great for buyers with down payments, a good credit history, and a job. There are also opportunities for buyers who have liquidated stocks, which will enable them to buy at depressed market prices.
Newport County sellers are lucky compared to sellers in many other parts of the country. If you are a seller looking to relocate, the losses you might see selling your home here could be ameliorated by the buying advantages you will find in other communities.
Check with your local real estate agent to discover what types of opportunities might be awaiting you.
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