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Fewer homes, higher prices for NH home buyers

New Hampshire Union Leader

September 16. 2017 10:43PM
Carriage Manor, a cul-de-sac of luxury townhomes, is springing up in Hooksett. Construction activity remains at only half of the level just prior to the Great Recession, according to New Hampshire Housing Finance Authority. (DAVID LANE/UNION LEADER)

MANCHESTER - Prices for single-family homes this summer broke a monthly high record dating before the Great Recession.

June's median price came in at $280,000, beating the previous record of $279,900 set in June 2005, according to the New Hampshire Realtors. Five years ago, that mark was below $225,000.

August's median price settled at $270,000 - $12,000 higher than in August 2016. The state's highest prices typically occur during the summer months, the Realtors said.

"I'm still experiencing multiple showings (on the same house for sale), and that's telling me there's more buyers than homes for sale," said Moe Archambault, owner and real estate broker at Moe Marketing Realty Group in Bedford.

Last week, the New Hampshire Housing Finance Authority issued a "housing market update" report on the state's real estate market.

"The trend continues in New Hampshire's housing market: a relatively low inventory of homes for sale, particularly in the entry-level range; higher prices for homes that are for sale; and a rental market with low availability of units and increasing rents," the report said.

For the first eight months of this year, the statewide median sales price jumped 6.6 percent to $265,000 compared to the same timeframe in 2016.

That period saw $206.4 million more spent on closed sales for single-family homes this year compared to last year, despite selling 81 fewer homes this year.

"I think it is a reflection of a solid economy and high levels of consumer confidence, but there are other reasons as well," Dover economist Brian Gottlob said.

Many factors influence rising home prices, including consumer confidence, strength of the economy and availability of credit.

"But psychology also plays a role - 'Buy now or you will be priced out,' or when home buying takes on the characteristic of investment, and people want to get in on a bull market in housing," Gottlob said. "Both the reflection of economic conditions and consumer confidence are playing into the current housing market."

Supply and demand also factor into the equation.

"In addition, demand for rentals has been high with millennials. And, along with limited new construction, (that) has pushed up rental rates significantly, making home buying more attractive to some and over the last couple of years probably contributed to home buying demand," Gottlob said.

The housing authority report said different types of home buyers sometimes are looking for a similar type house.

"Potential entry-level homebuyers are contending with a low inventory of homes near employment opportunities," it said. "Their efforts to buy a home may be challenged by high student debt, stagnant wages and stricter lending requirements for mortgages. And young professionals and older individuals who are downsizing their households often are competing for similarly sized, priced and located houses and rental units," the report said.

The median sales price for a condo in August stood at $198,000, or $7,500 more than a year earlier. Through August of this year, sales of condos were up 9.5 percent this year while the median sales price for them increased 5.5 percent, according to the New Hampshire Realtors.

There is a rise in the number of housing permits issued this year, but "construction activity remains at only half of the level just prior to the Great Recession," the housing authority report said. "New Hampshire continues to lag behind the U.S. on average."

The report noted that the first seven months of 2017 saw an 8 percent drop in foreclosure notices.

"With (mortgage) delinquencies down, foreclosure auction notices are also down, and there are fewer homes potentially going to foreclosure" and then on the market, the report said.

Interest rates for 30-year, fixed-rate mortgages increased from a summer low of 3.44 percent to 3.97 percent in July, according to the housing authority.

Archambault said that is a wild card for homebuyers in the coming months.

"If the interest rates start to go up, you might start seeing a leveling of home prices," he said. "You have the affordability factor coming in."

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