Battered by one of the highest unemployment rates in the country, Rhode Island is suffering through 
one of the worst housing depressions in the nation. Unemployment levels are projected to top 14%, and as more job losses occur foreclosures will follow suit.
Rhode Island lawmakers are trying to come up with solutions to the long list of problems, but are having little success. Although home sales have increased with federal tax incentives, numbers remain so low that any recovery of the states housing markets will be delayed for the near future. The financial crisis has hammered Rhode Island.
The foreclosure epidemic in Providence has contributed to the markets weakness with nearly half of all home sales being troubled properties. Community leaders passed a local ordinance requiring mortgage lenders to meet with homeowners at risk of foreclosure, but the law has helped few homeowners to modify mortgages. A law was also passed requiring lenders to give tenants 90 days before evicting them from rental homes, which was used in Congress and became federally mandated nationwide.
The housing crisis in Rhode Island illustrates how bad an economy can be racked by unscrupulous lending practices. Housing deflation has been on a double digit fall in every market in the state, and is forecast to sustain that level until major government intervention is enforced. Providence is feeling the severe impact of the crisis even in its most posh waterfront estates and is forecast to see average housing prices fall 12.6% in 2010.
In Newport the tourist business is slower as New Englanders hold tight to whatever money they have. Home sales rose marginally as a result of lower prices and first time home buyers tax credits, but the ailing Newport economy, which has undergone similar downturns in the past is feeling the worst economic pain it has in decades. Average home prices in Newport are forecast to plummet 12.1% by year’s end.
In Warwick, the state’s second most populous city, housing sales have been rising for months due to the lower prices and bargain rate foreclosures. Bankers are cutting prices to sell the properties off quickly before another round of foreclosures, which have been delayed by mortgage servicing companies hit in the early part of the year.
The unemployed are looking for work in Warwick, but lay-offs in agriculture, manufacturing and auto-related industries, which have a large presence in the state, are delaying any sort of rebound. The foreclosure sector of the home market was the only part moving for a while, but as banks took lower prices for homes, sales began to slow with lower inventory. Warwick home prices are forecast to decline an average of 10.6% in 2010.
The federal expansion of the home buyers’ tax credit should act to boost home sales in Portsmouth, where few homes have been selling in the remote scenic patch along the Atlantic Ocean. The high-end market in Rhode Island, which has attracted many of the nation’s richest families through the years will see home prices decline a forecast 11.3% during the year.