As New Hampshire home prices continue to hit record highs, the president of the New Hampshire Association of Realtors doesn’t think the market — which is heavily weighted in favor of the seller — is about to change.
“I don’t see that happening in New Hampshire anytime soon, certainly not in 2022,” said Adam Gaudet, NHAR president and owner/broker of 603 Birch Realty in Concord.
“It’s still a seller’s market in the sense that they get the best price for their home with offers that often include valuation gap coverage and/or waiver of inspections,” Gaudet said. “Most sellers still receive multiple offers and ask for too many purchase amounts.”
The ingredients of a seller’s market have been part of New Hampshire’s residential real estate mix for several years, even predating the COVID-19 pandemic, but certainly exacerbated by it.
The popularity of a particular state – or a particular region within that state – drives demand. If supply cannot meet demand, prices rise. And New Hampshire’s residential real estate supply is at historic lows.
“Lack of inventory continues to drive up prices and limit our number of sales,” Gaudet said. “The demand for a home in New Hampshire far exceeds the supply.”
One area where the seller’s market has been most evident is the Seacoast, which has the most expensive homes, by median price, in the state. But it has been said nationally that rising interest rates for mortgages are slowing demand in some parts of the country.
“The key ingredient to continued market strength is consumer confidence. As long as this remains strong, the bidding wars and price escalation are likely to continue,” said John Rice, a broker at Tate & FossSotheby’s International Realty in Rye.
Rice has long held sales data from the Seacoast Board of Realtors. Each month it gleans figures from a sample of Seacoast communities which includes Exeter, Greenland, Hampton, Hampton Falls, New Castle, Newfields, Newington, North Hampton, Newmarket, Portsmouth, Rye, Seabrook and Stratham.
“We are learning that rising mortgage interest rates have driven some buyers out of the market, lessening pressure and competition among buyers and lengthening days on the market,” Rice said. “I’m also hearing that in some cases the property is selling for less than the asking price and the home inspection possibilities are resurfacing. So there may already be a slight shift to a more balanced. But we’re taking inspiration from Boston, and that field continues to be very competitive. So if the tide turns, it does so very slowly. Bidding wars are still the norm, but maybe not as much bidders.”
“Very active market”
The numbers tell the story.
In May, the median price for a single-family home statewide was $460,000, according to the NHAR. That’s a record, and it comes after previous highs in April and March of $440,000. Over the past decade, the median home price in the state has more than doubled.
The median price for a residential condominium in May was $350,000, matching the record first set in March of this year.
One of the reasons it’s hard to buy a house here is that they sell out so fast. A data point called days on market is the average number of days it takes for a property to sell. In New Hampshire in May, it was 17 days for a single-family home and 15 days for a condo, according to NHAR data.
Of the 10 counties in the state, the most expensive county to buy a single-family home — as it has been for several months — is Rockingham, where the median price hit $589,000. The next closest was Hillsborough at $486,000.
In Rockingham County, the Seacoast area is even more expensive.
In May, the median price of a home in Rockingham County was $650,000, up $25,000 from a year ago but still a far cry from the all-time high of $682,500, which was set in March, according to the latest monthly report from the Seacoast Board of Realtors.
For a residential condominium on the Seacoast, the median price was $615,000, an all-time monthly median price record, smashing the old record of $552,500 set in January.
“We continue to experience a very active market despite challenges with inventory levels,” said Jessica Ritchie, chairman of the board and broker at Great Island Realty in Portsmouth. “Even as we experience an uncertain national financial situation, buyers continue to see strength in their real estate investment.”
The monthly inventory supply hit a historic low in May, reaching 1.1 months. Months supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current pace of sales. A healthy month’s supply is six months.
At the end of the first quarter of 2022 in April, Fannie Mae’s chief economist said inventory shortages, high prices and rising interest rates indicated an exit from the seller’s market.
“A deeper slowdown in residential investment is underway and we will likely revise our near-term home sales forecast down,” said Doug Duncan, chief economist at Fannie Mae.
Gaudet fails to see that rising interest rates are significantly affecting sales in the Granite State.
“Yes, the rates have gone up, but they’re still low compared to what they’ve been for decades. We just got used to seeing them go down over the last decade,” he said. “I think until rent prices are settled more and more people will continue to gravitate towards owning their own homes, it just makes more sense financially for most people.”
But nationwide, lenders are writing fewer mortgages.
In a June report, ATTOM, a leading nationwide real estate data curator for land and real estate data, said lenders issued $892.4 billion worth of mortgages in the first quarter of 2022. , down 17% per quarter and 27% per year.
“The decline in refinancing activity in the first quarter is no surprise, with mortgage rates rising as quickly as they have,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “But many forecasts predicted that purchase loans would remain strong in 2022, and even increase both the number of loans made and the dollar volume of those loans. Weakness in purchase loan activity shows how the combination of rising house prices and rising interest rates is having an impact.
These articles are shared by partners of The Granite State News Collaborative. For more information, visit collaborativenh.org.