Rhode Island no longer has affordable cities for homebuyers or renters due to construction and zoning hurdles

Chris Witten has three children in their late teens and early twenties who are almost grown, but the prospect of becoming an empty nester doesn’t keep him awake at night; it’s the fear that none of them will be able to buy or even rent a home in their home state of Rhode Island.

Whitten, the 2025 president of the Rhode Island Association of Realtors® and owner of Premeer Real Estate in Smithfield, R.I., says he doesn’t expect his children to have their own place in the next five to seven years unless they get exceptionally high-paying jobs.

“It’s just the reality of where we are now,” Whitten says Realtor.com®.

Rhode Island, the nation’s smallest state, is made up of 39 municipalities, including 31 villages and eight cities, and not one of them is affordable for the average resident to purchase or lease real estate, according to the Fact book on housing 2025 recently released by HousingWorks RI at Roger Williams University.

Based on average house prices for single-family homes in 2024, an average household would need an annual price
income of nearly $130,000 to affordably purchase a home anywhere in the Ocean State with a 30-year fixed mortgage rate, Federal Housing Authority (FHA) financing, and local hazard insurance and property tax rates.

The problem is that the median household income in Rhode Island is roughly $86,000.

The affordability gap is widest in New Shoreham, RI—the only city on tiny Block Island, located about 12 miles from the mainland—where researchers found that the annual income needed to buy a home without financial strain was more than $521,000.

Realtor.com’s latest housing data reflects these findings, revealing that Block Island was the most expensive market in Rhode Island, with a median sales price of $3.5 million.

On the other hand, Pawtucket, RI, was the state’s most budget-friendly municipality, with an average price of just over $393,000. According to the HousingWorks RI report, a household bringing in about $128,000 a year could buy a home in Pawtucket without breaking the bank.

But it’s not just buying a home in Rhode Island that’s out of reach for the typical family; for the first time this year, renting has also become unaffordable across the state.

The latest data shows that affordably leasing a median-priced two-bedroom apartment, including utilities, requires an income of more than $60,000, which exceeds the median renter income in Rhode Island by about $12,000.

“To some, these statistics are shocking,” said Whitten, who has worked as a real estate agent in New England for the past 17 years. “For us, [agents] That’s not surprising at all, because it’s a growing concern that we’ve had for almost a decade now.”

Realtor.com senior economic research analyst Hannah Jones explains that the limited inventory for sale has put steady upward pressure on Rhode Island home prices since the pandemic. As of October 2019, there were approximately 3,500 homes for sale statewide. Six years later, that number had dropped to about 1,700.

“Because there are so few homes available, buyers compete more intensely, causing prices to rise,” she says.

The result of this serious imbalance between supply and demand, according to the housing report, is that one-third of all Rhode Island households (or 142,920) are cost-burdened and must spend more than 30% of their income on housing.

Of these households, 44% are seriously cost-burdened, with half of their income going to housing.

What’s going on with Rhode Island?

Jones and Whitten agree that Rhode Island’s housing problems are caused by a combination of limited housing supply, strong demand and strict zoning laws that limit new construction.

Furthermore, Rhode Island does not have a robust enough labor market to reliably support incomes high enough to put homeownership within reach of the average family.

“We are constantly losing businesses leaving the state, and on the other hand, we have more and more people wanting to call Rhode Island their home,” the agent said. “It’s a beautiful place.”

Whitten notes that the small state of New England has attracted a lot of attention from entertainers and media personalities lately Taylor Swift’s purchase of an $18 million mansion in Westerly, RI, more than a decade ago until the arrival of “The Real Housewives” franchise.

“There are a lot of eyes on Rhode Island,” the agent adds, “but there isn’t enough housing to support it [the demand] and not enough jobs to support it.”

Because inventory is so tight, finding affordable housing is a challenge, and those that do come on the market sell quickly, usually for cash or with “very, very large down payments,” Whitten says.

For aspiring homebuyers looking to settle in Rhode Island, purchasing a home there can be a frustrating experience as they face stiff competition for a limited number of top listings.

“We see a lot of our buyers just hanging around and missing out,” Whitten says. “Things are getting out of hand for the buyers who came to us to own a home and get into the market. Now they just have to hang it up and wait to see what happens: whether they get a raise, whether the situation changes, or whether home prices drop, which we won’t see in Rhode Island anytime soon.”

A closer look reveals that relatively affordable homes can still be found in cities like Pawtucket, Coventry and Warwick, but price-conscious buyers often have to make compromises and opt for smaller lots or fewer bedrooms.

A growing number of fed-up Rhode Islanders are throwing in the towel and leaving the state, heading to places like Connecticut, Virginia and the Carolinas where they can buy more homes for their money, and Whitten says this trend is alarming.

“It’s sad because it affects me, especially for me, with my 18, 19 and 20 year old [children]’ says the officer. “We’re trying to come up with creative ways to get them to stay in Rhode Island because their intent is to stay in Rhode Island, but affordability says otherwise.”

How to solve the housing problem?

Experts and economists agree that expanding housing supply is essential to improving affordability in Rhode Island and the entire Northeast.

“If new housing and construction projects can keep pace with demand, home price growth will likely moderate and the state’s overheated market conditions may finally begin to cool,” Jones says.

But for that to happen, Whitten says all stakeholders — from elected officials at the local and state levels to planning boards, zoning boards and building departments — must come together and work to improve the state’s housing situation.

“We all need to come together to come up with solutions to address this because there is not just one answer,” the officer said.

A key issue is creating the conditions to dramatically increase construction across Rhode Island by relaxing zoning restrictions and streamlining the permitting process.

“It’s a huge hurdle,” Whitten says. “There’s so much red tape here in Rhode Island.”

There has been some progress lately: The state passed a law in June 2024 that makes it easier for homeowners to build an outbuilding on their lot. However, Whitten says more can and should be done, including converting abandoned commercial buildings into affordable housing.

“It’s a tough challenge, but I think if we all work together, we could come up with plans instead of bumping into each other,” says the real estate professional.