Once again the market in Rhode Island has stumped even the most long term astute professionals. While everyone knows about the economy, school and church consolidations, high unemployment and numerous short sales and foreclosures that have racked Rhode Island for the past 4 years or so, no one could predict the current market.
Earlier this year there was a flurry of home buying, mostly bank owned homes, or fixer uppers. This flurry led to an increase in sales as was reported by the NAR. Then in spring, another small flurry took place, this time first time home buyers were coming out to try and take advantage of the $8,000 tax credit and the unusually low interest rates, combined with the monthly dropping of prices. This really was an excellent time to buy.
The biggest problem being that most of these homes needed work and rehab, thereby cutting out the first time home buyer who was looking in their price range and then would have to add an additional $10,000 to $30,000 to get the home up to par. Even with all the new programs, first time home buyers are still at a disadvantage when it comes to buying bank owned homes. The selling banks, 90% of the time, will accept a lower offer as long as the offer is CASH and AS IS. A first time buyer, especially one going through FHA, has to offer higher and then has to be able to finance the repair items. Most selling banks do not want to sit and wait for this to happen.
Another major problem, that I have seen repeatedly, is the Title's of many of these bank owned properties not being clear to close. Once this happens, extensions need to be signed and discussed, some lasting 3 months or more after initial closing date, forcing some buyers to have to back out of the contract. An important note to this is that Rhode Island prices have been dropping so quickly, that the house you bid on in January and waited for it to close for three months is now worth less than you bid!!
All these are daily happenings and all contribute to the disillusionment of buyers. It becomes a vicious circle and right now there is no end in sight. I spend most of my time searching for "deals" for my clients. It takes diligence and hard work and patience, but eventually we find the one.
Yes, everyone knows the market will eventually come back, but the damage done in this particular market has been almost devastating.
For the rest of this year, I would advise First time buyers to act quickly, not only to take advantage of the lower rates (which will definitely go back up), but also to take advantage of the tax credit. This is probably the best time you will ever see to purchase a home. Yes, it's a lot of work and somewhat disappointing to not get the house you bid on, but if you are diligent, your home will appear and it will be the right one.