New Hampshire Housing Market Stumbling… and Why That Matters

Asked how business was, a New Hampshire real estate broker confided to a friend a few weeks ago that he was just as busy as he was a year ago. The difference is that all activity is not translating into sales like before.

The slowdown in the real estate market is a reality, here and across the nation. The latest analysis shows that the downturn in New Hampshire mortgage activity has accelerated in recent months.

Even as new affordable housing units are being constructed, home sales excluding condominiums fell 19 percent in New Hampshire during the first 10 months of this year, compared with 2005.

Statewide, the median price fell 1 percent in this year’s first 10 months to $309,000, and sales volume fell by $800 million. Condo prices fell 3 percent to $201,000 and sales dropped 18 percent.

We have been riding the crest of a real estate boom. Sellers have in recent years been demanding top dollar for their homes and more often than not prospective buyers were eagerly lined up to pay the asking price.

But no more.

The numbers tell the tale.

Data provided by Foster’s Online shows taht there was not one month this year that matched the months of the previous year — not one. They weren’t too bad in first half of the year, but in August 2006 revenues went south as real estate sales plummeted.

January through December saw total revenues from financing, refinancing, home mortgages, liens, attachments, etc. drop by more than $210,000 — more than 13 percent less than revenue generated a year earlier.

At least one other troubling number is tracking the slide in sales. There were 36 foreclosures on property in 2005 in the months of January through November. This year the number of foreclosures for the same period reached 103 — a rise of 186 percent.

Some people have been referring to the real estate bubble, but that metaphor should not be taken too far. The real estate market is not like a soap bubble that suddenly bursts, or like a speculative boom in a commodity that can suddenly collapse.

Real estate typically, at first, plateaus as prices stop rising. Owners refuse to sell at lower prices, and so properties remain for sale for longer. Construction gradually slows as previous projects get completed but there are fewer housing starts.

That’s the situation in which we find ourselves.

The New England housing market saw prices rise by 73 percent from 1995-2004 compared with 44 percent growth nationwide. Experts say that in New Hampshire, from 2005-2010, the median home price will rise at an annual average of 1.2 percent, the fourth-fastest appreciation rate among the six New England states.

This is not an issue only of concern to agents, mortgage brokers, bankers, and home sellers and buyers. It has real ramifications in the town and city halls and school district headquarters everywhere.

Local fiscal policy in recent years has quite clearly been predicated on the continuing heady increase in the value of taxable property through sales of existing buildings and new construction which generated the kinds of revenue that helped to cushion the impact of increased spending.

But with the market having lost its effervescence, municipal managers and school officials need to reorder their priorities and strategies if they really expect to keep property taxes in check. Taxpayers are becoming increasingly anxious that officials will not adjust their way of doing business to suit the changing conditions.