PROVIDENCE, R.I. (WPRI) — Whether you’re looking to buy or rent a home in Rhode Island, the decision isn’t an easy one to make.
That decision is being made even more difficult due to sky-high housing prices and rising interest rates, according to the Rhode Island Association of Realtors.
Newly-released data reveals the median price of a single-family home in Rhode Island was $430,000 in June, which is up 11.7% from last year.
Agueda Del Borgo, president of the Rhode Island Association of Realtors, said rising interest rates are suppressing the state’s home sales, which fell year over year by 17.6% last month.
“We experienced the lowest number of sales in June since 2014,” she said. “We’ve turned a corner, but we still have quite some time to go before we reach a balanced market.”
Del Borgo said there’s still a significant lack of housing statewide, with a 1.8-month supply on the market last month, which is up from a low of .84-months earlier this year.
Though it’s nowhere near the six-month supply that characterized a balanced housing market, according to Del Borgo.
“We’ve gained a little bit on the supply side, but there’s still a significant shortfall,” she explained. “Rhode Island still lags most other states in building starts and many homeowners who recently refinanced to low rates are hesitant to make a move and give up favorable mortgage rates. These are two major factors exacerbating the housing shortage.”
Mortgage rates rose to 5.51% from 5.30% last week, according to Freddie Mac, as compared to a rate of 2.88% one year ago.
The sticker shock is prompting potential homebuyers to instead look for rentals. But even those monthly payments are still high, according to Rhode Island Association of Realtors’ Bryant Da Cruz.
When asked whether it is best to buy or rent a home, Da Cruz said there are a number of factors to consider.
“There are good options for both,” he said. “I think it really depends on a person’s particular needs at the moment.”
Da Cruz said in the current housing market, a mortgage may end up being cheaper than monthly rent.
However, Da Cruz said people have been hesitant to buy homes in recent months due to rising interest rates.
On the flip side, he said renting is a great option for people who aren’t looking to stay in the state for a long period of time.
Da Cruz also suggested those who are struggling to buy a home in the competitive market rent one for the time being.
“If you have been priced out … at that point, it might be a good time to rent,” Da Cruz said.