When Brandy Blackinton prepares financing for interested homebuyers these days, the banking executive gives them cautionary advice: be patient.
As retail lending manager at Claremont Savings Bank, Blackinton can do everything possible to prepare her clients for a sale. She can help them assess their goals and budget. She can walk them through the requirements and secure preapproval for financing. One thing Blackinton can’t do is bring the buyers an available house.
“We have a whole slew of customers just waiting in the wings,” she said. “So they’re prequalified for a mortgage, but our prequalifications at our bank are only good for 60 days. So we’re in constant contact with our buyers that are just waiting for properties.”
Blackinton and her colleagues do what they can to find listings. They scour Realtors’ Facebook pages and lean on local contacts to come up with new offerings.
“But really,” she added, “it’s just telling people during this time to keep saving, keep saving, keep putting that money away. So when something comes open, OK, you have that extra money if you have to overbid.”
The paradox is inescapable. Buyers in New Hampshire – and beyond – have unprecedented access to financing with mortgage rates hitting historic lows. But that easy cash has made competition fierce, and outside interest and cash offers have closed off opportunities for many interested buyers.
Add to that a perennial New Hampshire problem: Housing remains scarce, and it continues to hit new lows.
“In terms of inventory, it has been the lowest and it certainly feels that way,” said Adam Gaudet, president of the New Hampshire Association of Realtors board of directors and founder of 603 Birch Realty in Concord.
High prices and low availability
In 2002, New Hampshire housing prices reached a milestone: The median price for a single-family home hit $200,000 for the first time.
Today, New Hampshire median home prices are hovering around $400,000, a threshold first passed last summer.
That doubling didn’t happen gradually. It was only in 2019 that median home prices first breached the $300,000 mark, according to data from the New Hampshire Association of Realtors. But a ferocious, pandemic-prompted buying spree has helped accelerate the normal rate of increase in the state. In just two years, median prices climbed another $100,000.
The prices have increased as supply continues to dwindle. In January 2022, 706 houses were added to the market. In January 2020, just before the disruptions of COVID-19, the state added 1,083.
The low availability has set off bidding wars over nearly every listing, made even more visible over the past year with the return of in-person open houses, Gaudet said.
“Now that open houses are happening again, you go and you’re just kind of floored at how many people are at the open house,” he said. “And it’s not just for the $300,000 price point.” It happens at showings for homes that are over a million dollars, too, he added.
Yet even with the low supply, the market has been lucrative for those who are selling homes. While overall January housing stock diminished by 35 percent from 2020 to 2022, the sales volume for that month increased from $298 million to $422 million – a 42 percent increase.
Meanwhile, some buyers who need financing are feeling pressure to move quickly before interest rates rise again.
Financing hurdles
For buyers without the money to buy homes outright, financing can prove trickier than it looks, Blackinton says. Simply prequalifying for a mortgage is only the first step. If the buyer finds a house they like, they must compete with cash buyers, many of whom opt to waive inspections.
If the buyer’s offer is accepted, they’ll need to wait for a property appraisal from the bank, a process that can take weeks. Appraisers in the state are in short supply, and many have been stretched thin by the number of homeowners refinancing their mortgages, Blackinton said. Those homeowners are themselves motivated by the low interest rates.
Once the appraisal is complete, the valuation might come in lower than the amount the buyer has offered – especially if they endured a bidding war. That might limit the amount that can be paid for through financing, forcing buyers to provide the additional money for the sale themselves, a daunting cost.
Even the most prepared first-time buyers can be priced out by that, Blackinton said.
“A lot of them have saved and been driven to have at least, you know, 5 percent to 20 percent down,” she said. “But then when you add that extra layer and they have to have all this other cash, but the appraisal doesn’t come in (high enough), it totally puts them out of the market.”
And many buyers face another hurdle: selling the house they’re living in. In the past, homebuyers might insert a contingency clause into the contract stipulating that the purchase is dependent upon the buyer selling their house. But amid fierce competition for every property, that kind of clause can be a nonstarter, and might result in the buyer losing the bid. If a seller must wait for one buyer to sell their current home, an offer from another buyer without that stipulation might become more attractive, Blackinton noted.
Amid those complexities, Blackinton and her colleagues work with buyers to arrange mortgages to better fit their circumstances – sometimes by lowering the amount of the down payment. But the risk of losing a desired home to the process is always real.
Gaudet has a different approach. For clients wanting to sell their home but nervous about buying their next house in time, Gaudet suggests they build in a move-in delay to the home they’re selling. The result: A family that might sell their house but stay in it for several months while they look for a new house. And with limited alternatives the buyer of that house might overlook a move-in delay time in order to lock down the house.
It’s an approach that works in large part due to one overarching truism: In this housing market, sellers are in control.
“Buyers are very flexible right now,” Gaudet said. “If as a seller you say, ‘Hey, I’ll take your offer, but I need you to wait four more months.’ Buyers are like, ‘OK, I can do that.’”
No crystal ball
Observers and stakeholders say the end of New Hampshire’s housing market spike is impossible to predict.
The Realtors Association uses one metric above others when assessing the health of the housing market, Director of Communications Dave Cummings said. That measurement is the time it would take to sell all of New Hampshire’s housing inventory if no new houses came on the market. The hypothetical number – which factors in both inventory and demand – can speak volumes, Cummings said. A healthy market would take six months to sell all houses. Currently, New Hampshire sellers would take only 26 days.
But Cummings argued it was only a matter of time before the pattern must reverse, if only because the state’s housing stock can’t get much lower.
“You know, we’re still just seeing it level, level, level out,” he said. “It can’t get too much lower, because essentially you’d have zero inventory.”
New Hampshire Bulletin is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. New Hampshire Bulletin maintains editorial independence. Contact Editor Dana Wormald for questions: info@newhampshirebulletin.com. Follow New Hampshire Bulletin on Facebook and Twitter.
