Recently built condominiums, such as these in the Newbury Village development off Scituate Avenue in Cranston, plus an economic slowdown and mortgage troubles have contributed to an increase in unsold condo units in Rhode Island.

The Providence Journal / Bill Murphy

Rhode Island condominium prices in 2007 declined for the first time in eight years, as rising inventory and slowing sales indicate that demand continues to weaken.

The statewide median price of a condo last year fell 1.8 percent, or $4,000, to $221,000, compared with $225,000 in 2006, according to a report by the Rhode Island Association of Realtors released today.

In 1999, the median condo price declined $2,500, to $88,500, from $91,000 in 1998.

The recent surge in condo construction, followed by the overall economic slowdown and rising mortgage defaults, has left prospective buyers unable or unwilling to purchase condos, experts say, allowing the inventory of unsold units to swell.

At the current pace of sales, it would take an estimated 12 months to sell all the condos on the market as of the end of last year — up from an 11-month supply at the end of 2006, and double the 6-month supply during the same period in 2005, according to The Providence Journal’s analysis of the Realtors’ data.

Rhode Island’s supply of unsold condos now exceeds those of unsold single-family houses, which at the end of last year was estimated at 10 months. A market is considered balanced when the supply is about 6 months.

“I think the buyers are still very nervous because it’s very difficult right now to get a handle on what the economy is doing,” said the Realtors’ immediate past president, Cecile L. Cohen, an associate broker/manager at Randall Realtors GMAC Real Estate. “When you put it into perspective,” Cohen said, “none of those [declines] are huge. Yes, they’re down. But they’re not something that should send anybody to the bridge to jump!”

Condo sales during the fourth quarter of last year fell nearly 10 percent, but the median price rose 3.3 percent, to $224,750, according to the report.

The average selling time improved, to 92 days, compared with 101 days during the same three months in 2006. The improvement, however, may be due in part to sellers taking their condos off the market because they are not selling.

Of the 34 cities and towns reported by the Realtors, the median condo price last year fell in 19 communities, rose in 11 and remained unchanged in 4.

In Providence, excluding the East Side, the median condo price last year fell 8 percent, to $184,950, compared with $201,000 in 2006, according to the Realtors. On the East Side, however, condo prices last year ticked up 0.4 percent, or $1,000, to $266,000.

The median price reflects the “mix and type of properties on the market,” which can fluctuate more dramatically in cities and towns where there are fewer sales, the Realtors said in a statement.

Looked at another way, condo prices have risen every year from 1999 through 2006.

Yet, in real estate, said Cohen, the term “decline” has become the new “four-letter dirty word.” Negative media reports about the housing market and fears about a recession, she asserted, are now influencing buyers more than the actual numbers.

“The prices are good. …The interest rates are great. …You’ve got the new package coming out from Washington raising the FHA limits. So there’s going to be plenty of good solid mortgages available,” Cohen said. “Now it’s just a matter of people taking the step to go forward.”

The Association of Realtors’ current president, Robert Scaralia, said in a statement that “Rhode Island’s condo market didn’t fare too badly last year” when compared with other sectors of the housing market. “Multifamily properties on the other hand, were harder hit as multifamily to condo conversions ceased being attractive to investors.”

Sales of multifamily houses last year plunged 27.3 percent, and the median price dropped 10.5 percent, to $255,000, according to the Realtors.RI Condo Market – 4th Quarter

Source: RI Assn. of Realtors

larditi@projo.com