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U.S Department of Housing and Urban Development
U.S. Department of the Treasury

Spotlight on the Housing Market
in the Providence-New BedfordFall River, RI-MA MSA

U.S. Department of Housing and Urban Development | Office of Help American Homeowners
The Obama Administration’s Efforts to Stabilize the Housing Market and Policy Development and Research | October 2013
The Providence-New Bedford-Fall River, RI-MA Metropolitan Statistical Area (Providence) is located in southeastern New England and includes the
state of Rhode Island and Bristol County in Massachusetts. The foreclosure crisis in the Providence MSA developed somewhat differently than in most
areas of the nation. Home price appreciation during the housing bubble in Providence peaked six months earlier and rose at a pace that was 28
percent greater than the national average. However, the decline in home prices during the second half of the bubble was virtually the same as the
national average. Falling property values and the resulting underwater mortgages were partially fueled by investor speculation and excess housing
construction in the years leading up to the housing crisis, but were primarily due to unsustainable mortgage lending and rising unemployment during
the subsequent recession. From 2000 through 2006, the share of distressed mortgages in the Providence MSA--those 90 or more days delinquent
or in the foreclosure process--were actually lower than comparable shares in the rest of the nation. In 2007, when the rapid rise of distressed
mortgages in the nation began, the share of distressed mortgages in the Providence MSA soon followed suit. As with the nation, rapid increases in
local mortgage distress continued in 2009 with the downturn in the economy. Economic and housing market conditions in the Providence MSA are
improving, but the foreclosure crisis has taken its toll. The Administration’s broad approach to stabilize the housing market has been a real help to
homeowners in Providence and the surrounding cities. This addendum to the Obama Administration’s Housing Scorecard provides a summary of
trends and conditions in the local economy and the impact of the Administration’s efforts to stabilize the housing market and help local homeowners.

Population Growth, Employment,
and Housing Market:

With 1.6 million people according to the most recent Census,
the Providence MSA is the 37th largest in the nation. From
2000 to 2010, the population increased by an average
of nearly 1,800 people, or 0.1 percent a year. Natural
population growth (births minus deaths) accounted for the
entire net population increase. During the last decade, an
average of nearly 2,400 people per year moved out of the
Providence MSA. Those leaving the area reached an average
of 10,350 per year from mid-2004 through mid-2007 when
economic growth was sluggish.
Providence MSA Housing Unit Growth Outpaced Population and
Household Growth During the Past Decade
Date of Census

4/1/2000

4/1/2010

Providence MSA Population

1,582,997

1,600,852

Annual Growth Rate
Providence MSA Households

-

0.1%

613,835

626,610

Annual Growth Rate

-

0.2%

Providence MSA Housing Units

656,755

693,923

Annual Growth Rate

-

0.6%

Source: Census Bureau (2000 and 2010 Decennial)

During the decade spanned by the Census, new housing
production exceeded household growth in the Providence
MSA. Net annual housing unit growth of 0.6 percent was
greater than the corresponding population and household

growth rates of 0.1 and 0.2 percent, respectively. This excess construction,
while not as great as in some parts of the nation, nevertheless contributed to an
oversupply of housing. According to the Census Bureau, the number of vacant units
increased by an average of more than 2,450 units, or 5.7 percent annually during
the 2000s compared with a 4.4-percent national increase. The excess supply
of housing is likely to have contributed to the sharp decline in house prices that
began in late 2005. Investor speculation, although less substantial than in some
areas of the nation, was a factor in the overbuilding in the years leading up to the
housing crisis, as a fairly large share of home purchases in the Providence MSA
were by non-occupant investors. Specifically, from 2000 to 2005 investor home
sales rose from 9.8 to 11.3 percent of total sales in the Providence MSA, while
the corresponding increase for the nation was from 7.7 to 16.0 percent of sales.
Subprime lending is likely to have contributed more significantly to the overbuilding
in the Providence MSA. A study by the National Bureau of Economic Research
shows that in 2005, Providence ranked 16th out of the top 107 metropolitan
areas with the highest share of subprime mortgage originations relative to housing
units. A conservative estimate based on HMDA (Home Mortgage Disclosure Act)
data indicates that subprime originations tripled nationally between 1998 and
2005. According to a study by the Center for Responsible Lending, approximately
90 percent of subprime mortgages experience increases in monthly payments of
30 to 50 percent within a few years, causing subprime loans to typically default at
more than 7 times the rate of other mortgages.
A modest economic recovery is underway in the Providence MSA.
The local economy grew slowly before a steep decline that began in 2007. From
the second quarter of 2003 through the fourth quarter of 2006, nonfarm payrolls
increased at an average annual rate of 2,875 jobs, or 0.5 percent, compared

Spotlight on the Housing Market in the Providence-New Bedford-Fall River, RI-MA MSA | Page 1

U.S Department of Housing and Urban Development
U.S. Department of the Treasury

U.S. Department of Housing and Urban Development | Office of Help American Homeowners
The Obama Administration’s Efforts to Stabilize the Housing Market and Policy Development and Research | October 2013
with a national increase of 1.3 percent during the same
period. The impact of the 2007-2009 Recession was more
severe for the Providence MSA than for the nation. Jobs in
the Providence MSA declined at an average annual rate
of 16,450, or 2.8 percent, from the first quarter of 2007
through the end of 2009, compared with a national annual
decline of 1.8 percent during the same period. The recovery
from the Great Recession has been weaker for the Providence
MSA than for the nation, with jobs increasing at an average
annual rate of 4,025, or 0.7 percent, from the first quarter of
2010 through the second quarter of 2013, compared with a
national increase of 1.4 percent.
The Providence MSA is known for its hospitals and institutions
of higher learning. During the recent recession, a period
when every other private sector in the MSA lost jobs, the
education and health services sector expanded at an average
annual rate of 1,400 jobs, or 1.2 percent, a year. Job losses
were most severe during this period in the construction and
manufacturing sectors, which declined at average annual
rates of 9.8 and 8.0 percent, respectively; declines were also
substantial in the financial activities sector (4.8 percent). The
recovery in Providence’s economy has been led by leisure
and hospitality and professional and business services sectors,
which have expanded at average annual rates of 3.4 and
3.3 percent, respectively. The transportation and utilities sector
(2.0 percent) and the financial activities sector (1.4 percent)
also contributed to the expansion. Gains in the education and
health services sector continued, but slowed to an average
annual rate of 0.2 percent during this period. Growth in
these sectors more than offset average annual job losses of
2.2 percent in the construction sector and 0.7 percent in the
government sector. The unemployment rate for the Providence
MSA peaked at 12.1 percent in February 2010 and has
since fallen to 9.3 percent as of August 2013. The national
unemployment rate peaked in October 2009 at 10.0 percent,
falling to 7.2 percent by September 2013.
Home sales in the Providence MSA are beginning
to improve. After reaching a peak of 26,950 units sold
in 2004,existing home sales dropped by an average annual
rate of 11 percent between 2006 and 2008 and continued
to decline, although more slowly, from 2009 through 2011
at an average annual rate of 3 percent. Existing home sales
began to rise again in 2012, increasing at an average
annual rate of 10 percent (albeit on a low base) and reaching
a pace of 17,300 homes sold during the year. New home
sales also peaked in 2004 at 1,350 units, before falling
each year from 2005 through 2011 by an average annual
rate of 11 percent. New home sales stabilized during 2012,
increasing by less than 1 percent to 300 homes sold.

Providence MSA home prices rose more steeply than for the
nation during the housing bubble. The CoreLogic repeat-sales house
price index (HPI) shows that home prices in the Providence MSA peaked six
months earlier and rose 28 percentage points higher than for the nation.
However, the decline in home prices was nearly the same for Providence and
the nation, with prices falling by 31 percent from their peak in October 2005 to
their low in February 2009 in Providence, compared with a national peak-to-low

Spotlight on the Housing Market in the Providence-New Bedford-Fall River, RI-MA MSA | Page 2

U.S Department of Housing and Urban Development
U.S. Department of the Treasury

U.S. Department of Housing and Urban Development | Office of Help American Homeowners
The Obama Administration’s Efforts to Stabilize the Housing Market and Policy Development and Research | October 2013
drop of 30 percent. The rise in home prices in Providence
during the bubble was likely spurred by investor speculation,
as home sales to investors averaged 12 percent during the
upturn - slightly higher than the 11 percent share nationally.
As described earlier, subprime lending is also likely to have
spurred demand and fueled home prices. A relatively high
level of distressed sales (involving bank-owned properties or
short sales) played a role in the price decline in Providence,
as distressed sales--at 14 percent of existing home sales
during this period- -were equivalent to the national rate.
Home prices in the Providence MSA have since increased
by 4 percent from their February 2009 low, much less than
a 19 percent increase for the nation since the end of the
bubble. Data from the 2011 American Housing Survey,
which included a survey of the Providence MSA among the
metro areas surveyed on a rotating basis, indicate the cost
of owning a home in Providence remains higher than that for
the nation: median monthly housing costs (including utilities
and real estate taxes) for owner-occupied units in Providence
during 2011 were $1,309 compared to $1,008 at the
national level.
Although the rental market in the Providence MSA
continues to be tight, construction activity remains
low. According to AXIOMetrics, Inc., the Providence
apartment vacancy rate was 3.5 percent in the third quarter
of 2013, down from 4.0 percent a year earlier, representing
tight market conditions. The slight decrease in the vacancy
rate occurred because, despite increased renter demand,
additions to the rental market were extremely limited during
the past year. The national apartment vacancy rate declined
from 5.5 to 5.2 percent over the same period. During the
third quarter of 2013, the average apartment rent in the
Providence MSA increased by 4.7 percent from a year earlier
to $1,292; the average rent nationwide increased by 3.7
percent to $1,127 during the same period.

Trends in Mortgage Delinquencies
and Foreclosures:

Providence homeowners continue to struggle with high rates
of mortgages at risk of foreclosure. According to LPS Applied
Analytics, as of August 2013, the Providence MSA placed
58th out of 381 metropolitan areas ranked by share of
mortgages at risk of foreclosure (90 or more days delinquent
or in the foreclosure process). LPS data show that mortgages
at risk of foreclosure decreased by 34 percent during the
last year in Providence from 11,350 in August 2012 to
7,550 in August 2013, compared with a national decline of
40 percent during the same period. A lengthy foreclosure
processing timeline does not explain the high share of
distressed mortgages in Providence. As of the second quarter

of 2013, the average time period to complete a foreclosure in Rhode Island was
259 days compared to a national average of 526 days. CoreLogic data indicate
that from 2000 through 2006, the rate of mortgages at risk of foreclosure in
the Providence MSA were consistently below the national rate. By 2007 and
2008, when the foreclosure crisis began for most of the nation, and single-family
foreclosures were largely driven by unaffordable loan products, the increase in
mortgages at risk of foreclosure in Providence paralleled the national trend. The
share of mortgages in distress rose from 1.5 percent in Providence and 1.6 percent

Spotlight on the Housing Market in the Providence-New Bedford-Fall River, RI-MA MSA | Page 3

U.S Department of Housing and Urban Development
U.S. Department of the Treasury

U.S. Department of Housing and Urban Development | Office of Help American Homeowners
The Obama Administration’s Efforts to Stabilize the Housing Market and Policy Development and Research | October 2013
in the nation in the beginning of 2007, to 4.4 percent for
both by the end of 2008. Beginning in 2009, foreclosures
were increasingly driven by loss of income, unemployment,
and strategic defaults as the economy worsened, according
to research by the Federal Reserve Bank of Chicago. A sharp
spike upward in the rate of distressed mortgages occurred
in 2009 for both Providence and the nation. By early 2010,
mortgages at risk of foreclosure reached a peak of 8.0 percent
nationally, and have since fallen to 4.9 percent. The share of
distressed mortgages in the Providence MSA reached a peak
of 7.9 percent in early 2010 but has fallen more slowly to 6.1
percent as of August 2013.
Realty Trac data indicate that the foreclosure completion rate
in the Providence MSA has been lower than the national rate.
As of August 2013, the number of foreclosure completions
as a percent of all housing units in the Providence MSA since
April 1, 2009 is 2.0 percent compared with a national rate
of 2.7 percent. Foreclosure completions have been trending
downward nationally as well as in Providence. During the
third quarter of 2013, completed foreclosures in Providence
were down 13 percent from a year earlier, while completed
foreclosures in the nation declined 24 percent during the
same period. During the third quarter of 2013, the rate
of foreclosure completions as a percent of housing units
in Providence was 0.07 percent, slightly lower than the
0.09-percent national rate.
Foreclosure Completion Rates in the Providence MSA
Third Quarter 2013
Area
Providence MSA

Nation

Foreclosure
Completions

Foreclosure
Rate

Since April 1, 2009
Foreclosure
Completions

Foreclosure
Rate

500

0.07%

13,850

2.0%

119,500

0.09%

3,546,500

temporarily increase. CoreLogic reports that 17.3 percent of mortgages in the
Providence MSA were underwater as of the second quarter of 2013, down from
21.5 percent a year earlier, but higher than the 14.5 percent national rate- -still
representing additional homeowners potentially at risk.

The Administration’s Efforts to Stabilize the
Providence MSA Housing Market:

The Administration’s mortgage and neighborhood assistance programs--the Home
Affordable Modification Program (HAMP), the Federal Housing Administration
(FHA) mortgage assistance programs, the Neighborhood Stabilization Program
(NSP), and the Hardest Hit Fund (HHF) program–combined with assistance from
the HOPE Now Alliance of mortgage servicers and the National Mortgage
Servicing Settlement have helped stabilize the Providence MSA housing market.
From the launch of the Administration’s assistance programs in April 2009
through the end of August 2013, nearly 26,800 homeowners received mortgage
assistance in the Providence metropolitan area. More than 15,600 interventions
were completed through the HAMP and FHA loss mitigation and early
delinquency intervention programs. An estimated additional 11,200 proprietary
mortgage modifications have been made through HOPE Now Alliance servicers.
While some homeowners may have received help from more than one program,
the number of times assistance has been provided in the Providence MSA is
nearly twice the number of foreclosures completed during this period (13,700).
Under the landmark National Mortgage Servicing Settlement, more than 2,000
Rhode Island homeowners had benefitted from over $150 million in refinancing,
short sales and completed or trial loan modifications, including principal reduction
on first and second lien mortgages provided as of June 30, 2013. Nationwide,
the settlement has provided more than $50 billion in consumer relief benefits to
more than 640,000 families. That is in addition to the $2.5 billion in payments
to participating states and $1.5 billion in direct payments to borrowers who were
foreclosed upon between 2008 and 2011.

2.7%

Note:

Foreclosure Rates as Percent of All Housing Units;
Data through September 2013 for foreclosures since April 2009	
Source: Realty Trac and Census Bureau

The efforts of numerous state and local entities and financial
institutions in partnership with the federal government have
helped contain the rate of foreclosures. A lengthy judicial
process has also contributed to the national decline in
foreclosure activity. Recent legislation in Rhode Island has
had an impact on foreclosure activity as well as the share of
distressed mortgages in the state. In mid-2011, a U.S. District
Judge ordered a halt to all foreclosures in Rhode Island until
serious attempts at mediation were made. This may be part
of the reason why the foreclosure rate in Providence is lower
than the nation, while the share of distressed mortgages is
higher. In September 2013, however, the judge dissolved
the injunction in response to an Appeals Court order and
825 pending foreclosures in Rhode Island will be impacted,
which may lead foreclosure activity in Providence to

Given over three rounds, the Neighborhood Stabilization Program
has invested $7 billion nationwide to help localities work with non-profits and
community development corporations to turn tens of thousands of abandoned and
foreclosed homes that lower property values into homeownership opportunities
and the affordable rental housing that communities need.

Spotlight on the Housing Market in the Providence-New Bedford-Fall River, RI-MA MSA | Page 4

U.S Department of Housing and Urban Development
U.S. Department of the Treasury

U.S. Department of Housing and Urban Development | Office of Help American Homeowners
The Obama Administration’s Efforts to Stabilize the Housing Market and Policy Development and Research | October 2013
NSP1 funds were granted to all states and selected local
governments on a formula basis under Division B, Title III of
the Housing and Economic Recovery Act (HERA) of 2008;
NSP2 funds authorized under the American Recovery and
Reinvestment Act (the Recovery Act) of 2009 provided grants
to states, local governments, nonprofits and a consortium of
nonprofit entities on a competitive basis; and NSP3 funds
authorized under the Dodd–Frank Wall Street Reform and
Consumer Protection Act of 2010 provided neighborhood
stabilization grants to all states and select governments on a
formula basis.
In addition to stabilizing neighborhoods and providing
affordable housing, NSP funds have helped save jobs. Each
home purchased, rehabilitated and sold through the NSP
program is the result of the efforts of 35 to 50 local employees.
Overall, a total of $25 million has been awarded to the State
of Rhode Island and the City of Providence through NSP1 and
NSP3. Including program income earned, over $28 million
will be expended in the Providence MSA. Approximately
365 households in the Providence MSA have already
benefited from NSP, and activities funded by the program are
expected to provide assistance to an additional 95 owneroccupied and renter households. Examples of how these funds
have been put to use are provided below.
State of Rhode Island
•	 The State of Rhode Island received $19.6 million
in NSP1 funds and $5 million in NSP3 funds. Including
program income, the State has expended more than
$26 million since 2008 to development activity within
the Providence MSA. To date, the Rhode Island
Neighborhood Stabilization Program has played a pivotal
role in finding new homes for more than 300 families
and revitalizing neighborhoods across the state. The State
has also been very successful at targeting low-income
households who are earning 50 percent of area median
income or less. One of NSP’s requirements is that grantees
Providence MSA NSP Activity (Housing Units)

Projected

Completed

Rhode Island Federal Program

34

NSP3 Total
Construction of new housing
Rehabilitation/reconstruction of residential structures

2

5

0

29

2

Rhode Island State Program

360

363

Clearance and demolition

2

2

Construction of new housing

6

6

Homeownership assistance to low-and moderate income

178

136

Rehabilitation/reconstruction of residential structures

174

219

66

0

Construction of new housing

11

0

Rehabilitation/reconstruction of residential structures

55

0

NSP1 Total

NSP3 Total

use at least 25 percent of their grant funds for the purchase and redevelopment
of abandoned or foreclosed homes to house individuals or families whose
incomes do not exceed 50 percent of area median income. The State’s 25
percent requirement was $4.9 million, but the State has committed over $9.5
million for this set-aside requirement, far surpassing its original goal.
The State awarded its NSP dollars to several community development
corporations or non-profits working throughout its targeted neighborhoods
in the Providence MSA. One such organization, SWAP Inc., a non-profit
committed to providing affordable housing opportunities, has acquired and
rehabilitated a vacant two family home into a four-bedroom unit that will be
sold to an eligible family. Neighborworks Blackstone River Valley (NBRV), a
community development corporation, is rehabilitating a multi-family foreclosed
building into a nine unit rental property for families earning up to 50 percent
of the area median income level. A third community developer, OMNI
Development Corporation, is rehabilitating several foreclosed, vacant, and
abandoned properties in the West End neighborhood of Providence into
affordable rental housing.
City of Providence
•	 The City of Providence received more than $2 million in NSP1 funds
from the State of Rhode Island and an additional $1.3 million as a
direct recipient of NSP3 funds. In developing its NSP strategy, the City
coordinated with its Green & Healthy Housing Initiative to achieve
environmental sustainability goals. The City encouraged all applicants
for funding to incorporate “green and healthy” design and construction
principles in their proposals. The funds were used for demolition of severely
deteriorating and abandoned homes and the construction of new homes for
homeownership and rental, as well as extensive rehabilitation of foreclosed
properties. To date, the City has been able to assist over 25 families to find
decent, affordable housing with its NSP funding.
One example of the use of state-awarded NSP funds was the acquisition of an
architecturally significant building by Community Works Rhode Island (CWRI)
that was left neglected and vacant for nearly three decades. The home,
referred to as the “Wedding Cake House,” is located in the Broadway Local
Historic District as well as the Broadway-Armory National Register District.
The property was listed on the Providence Preservation Society’s (PPS) Most
Endangered Properties list in 2010 and was recently foreclosed upon. CWRI
is working to rehabilitate the building to create five energy-efficient, affordable
condos--2 one-bedroom, 2 two-bedroom, and 1 three-bedroom unit(s). CWRI is
leveraging both NSP and HUD HOME dollars to renovate the property. HOME
is a HUD grant program to States and localities that communities often use in
partnership with local non-profit groups to fund affordable housing activities or
provide direct rental assistance to low-income people.
The Administration allocated $79.3 million from its Hardest Hit Fund to
the state of Rhode Island. Rhode Island Housing oversees the Hardest Hit
Fund Rhode Island (HHFRI), which was launched in December 2010. On
January 31, 2013, HHFRI became the first Hardest Hit Fund program in the
country to stop taking applications because they reached full commitment of
their allocated funds. As of June 30, 2013, the most recent quarter for which
data are available, HHFRI had assisted 2,968 Rhode Island homeowners
with $44.7 million, or 66% of their total program allocation. HHFRI helped
homeowners at high risk of default or foreclosure through several programs:
Loan Modification Assistance, Temporary and Immediate Homeowner
Assistance, Moving Forward Assistance, Mortgage Payment Assistance –
Unemployment, and Principal Reduction. For additional information, see
http://www.hhfri.org/.

Spotlight on the Housing Market in the Providence-New Bedford-Fall River, RI-MA MSA | Page 5


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