Overview of Current Market Conditions

As we all know, we have seen a reduction in the market value of real estate during the last three years. These changes in market value will vary depending on the community, the location within the community and the price-range of individual properties. To measure the extent of the reduction we use the median selling price of real estate within distinct categories, to illustrate those changes. (The median selling price is the middle price of all valid transactions arranged from the highest to the lowest. We use the median and not the average because the median gives equal weight to all sales. The average gives added weight to very high or very low sales.)

Shown in the following graphs are the changes in median price in Newport, for single-family homes, condominiums and two to three family homes. The graph begins with the data from the last revaluation conducted in 2005 and goes on to show the changes that have taken place in the last three years since the 2005 revaluation.

From the above data we can see that the median price for a single family home peaked in 2005 and declined since that date. While this data gives us a general picture of single family homes it does not give us a detailed range of changes for different prices within the Newport market.

In this graph we show the level of assessment for the 2008 single family sales broken down by price range. Where the ratio is higher than 100% this indicates that 2008 sale prices are less than 2005 assessments and can expect a decrease in assessments. Conversely, where ratio is significantly below 100% an increase in assessments is likely. This graph shows how different aspects of the Newport real estate market reacted during 2008. As we can see above, the lower end of the real estate market is showing the greatest loss of value during 2008, the mid-range has a somewhat more stable level and the high-end market has seen an increase in 2008. It should be noted that the increases and decreases we are speaking of are selling prices measured against the assessments established in 2005. The above data indicates that high-end properties will see an increase over their 2005 assessments (not necessarily that market values have increased in 2008). Lastly, the above trends are general representations of the market. Individual assessments can go up or down based on other factors such as building permits, renovations, demolitions etc.

As we can see in the chart below, the median price for a Condominium has remained relatively flat over the four year period under study. In 2005 the median price was $305,000 and in 2008 the median price is $315,000. With only a 3% change over the span of four years this indicates that condominiums in Newport held their value over this timeframe. This trend is a general trend. As we mentioned earlier, individual properties may change based on sales in individual complexes and based on permits, etc.

The last chart below shows the changes in the median selling price of two and three family homes over the timeframe of 2005 through 2008. As we can see it is this group of properties that have decreased the most since the last assessments done in 2005.

All of the above data has been supplied as a guide to understanding what changes have taken place in the Newport, RI market. We hope this data will help in understanding the new assessments recently mailed to Newport property owners.