In Tight N.H. Housing Market, Millennials & Empty Nesters Vie For Same Small Crop Of Homes
New Hampshire's housing market is fiercely competitive and expensive these days. Available homes are few and far between -- a situation otherwise known as "low inventory." That means it's a good time to sell -- but buying a home is another story.
Here's how quickly houses are selling, according to Russ Thibeault, president of Applied Economic Research, an economic and real estate consulting firm in Laconia: "If the paint’s dry, the unit’s filled."
Although the state has added 55,000 new jobs since the economy hit its lowest point during the recession in 2010, housing has not caught up with that job growth, said Thibeault, who joined The Exchange to discuss today's competitive market.
“Part of the problem is that listings are really declining. There are fewer homes on the market now … than was the case in a normal market environment. Part of the reason is, if you are [an] empty-nester, if you can’t find the house to move into, you’re going to hang onto the house you have. So the market is stalled, almost. … The other part is that our rate of home construction is very low, partly because a lot of the tradesmen have left the industry. Part of it’s that for communities it’s very difficult to get approval for new subdivisions and new housing units.”
Rachel Eames, President of the New Hampshire Association of Realtors, said regulations (such as requiring the same study from different subdivision builders in a single town) increase the cost and difficulty of building, keeping contractors away. Neighboring states handle housing development regulations more smoothly than New Hampshire, said Eames.
“If we look at our border states of Maine and Massachusetts, they lay out the welcome mat a lot more, is how I would put it. They’re a lot more friendly to do residential subdivisions with. They’re not as onerous when it comes to the municipalities implying zoning ordinances and regulations. New Hampshire is wonderful at laying out the welcome mat for businesses … but when it comes to residential, we tend to throw up what I call the stone wall.”
In the midst of these inventory problems, millennials who want to move out of their parents' homes are competing with aging empty-nesters seeking to downsize, according to Eames.
“The floodgate is kind of opened. Both of these generations are looking for the same type of house at this point,” she said.
Thibeault said it’s difficult for young people to purchase a house with student loan debt, “subprime jobs,” and sometimes high rent payments that make it challenging to save up for a down payment. The state’s median rent is $1,200.
Even elderly households with paid-off mortgages have trouble affording housing due to high utility costs and property taxes, according to Thibeault.
Thibeault says the state has added 55,000 new jobs since the economy hit its lowest point during the recession, but housing has not caught up with that job growth.
However, affordability and competition in the housing market vary widely across the state, according to Eames. Affordable housing is defined as 60 percent of the median income of an area, according to Carrie DiGeorge, sales manager at Envoy Mortgage, a nationwide mortgage bank.
Thibeault said there are “great disparities across the state” in the actual price of housing -- with Rockingham’s median home price sitting at $335,000, and Coos County’s at $89,000. In general, the southern part of the state faces higher prices and thinner inventory.
To those concerned that the housing market will plummet again any time soon, Thibeault had a somewhat reassuring prediction:
“I think the only vulnerable point we have right now … the only thing we have on the horizon that seems likely to happen is that interest rates are going to go up. When interest rates go up, it has a significant effect on housing affordability. Is this a bubble? It isn’t a bubble like 2006, 2007, because the underwriting standards are much tighter now than they were back then.”
For the full conversation, listen here.