Home prices in New Hampshire are stabilizing and will likely begin to increase in 2010

Peter Francese says in the latest Market Trends report that he prepares for the New Hampshire Association of REALTORS that the “home prices in New Hampshire are stabilizing and will likely begin to increase in 2010.”  The general feeling in the field is that he is right. Agents are feeling optimistic that we are indeed starting to climb out of this recession and that better days are ahead. I wish I had a crystal ball, don’t we all, but it sure feels like we’re heading in the right direction.

Below reprinted with permission from the New Hampshire Association of REALTORS is Peter’s market trend report… I’d love to know what you think. Comments are always welcome.

The Great Recession is over,
but it will take some time to feel over

—By Peter Francese

According to economists at Moody’s Analytics, what is now being referred to as the Great Recession is technically over.  However, the damage from this economic downturn was severe enough that it will take quite a few months until it feels really over to us ordinary people.

There’s a reason this recession has felt so bad:  The economists say it has lasted twice as long and was twice as deep as the average of the past 10 recessions the nation has experienced since 1948.  The New Hampshire economist Dennis Delay, speaking at a recent New England Economic Partnership conference, said that the recession won’t feel like it is over “until unemployment stops climbing and job growth returns.”

New Hampshire’s unemployment rate, which is now 7.2 percent (well below the national average of 10.2 percent) is not forecasted to rise above 7.8 percent before starting to fall sometime next year.  This bodes well for the recovery of New Hampshire’s residential real estate values, which may have already begun to rise.

During the first five months of this year, for example, residential home sales were below last year.  But year-over-year the number of homes sold has risen in four out of the past five months (see Table I below).  Overall, for the first 10 months of 2009 home sales edged up 0.3 percent over the same period last year.

Median home prices statewide were still about 7 percent below October of 2008, but the difference is narrowing from monthly numbers that earlier this year ranged between 10 and 20 percent below 2008.  This trend indicates that home prices in New Hampshire are stabilizing and will likely begin to increase in 2010.

The expanded home buyer tax credits will almost certainly have a positive effect on home sales and values in the next several months.  Also, as home prices stabilize, that will reduce any perceived risk on the part of potential home buyers and encourage lenders to finance more purchases.

New Hampshire has been considerably more fortunate with regard to home prices than many other states.  Median home prices statewide are expected to bottom out in 2010 at between 20 and 25 percent below their 2005 peak.  Given the worst recession in 60 years, that’s really something to be pleased about.  Several other states have seen home prices fall 50 percent or more from their peak in 2005.

Every REALTOR® in our state, as well as every lender or potential home buyer, should know this: The recession is over, but the speed of recovery here depends in large part on the real New Hampshire advantage.  It has certainly mitigated this recession’s bad effects and will be extremely important to our recovery.

Assuming it will be maintained, real estate values will recover more quickly and more solidly than anywhere else in this region, and perhaps most other places in the nation.

Table I shows that residential home sales are likely to be about the same as last year, just above 10,000 units, and at a median sale price that will be within 10 percent of 2008.

Table I shows residential home sales and median sale prices for first 10 months of 2009.

2009
Units sold    % change 2008-09    Median sale price    % change 2008-09
Jan           453                     -15%                           $200,000                        -17%
Feb          505                      -13%                          $184,900                         -20%
Mar         703                         9%                          $200,000                         -14%
Apr          739                      -11%                          $204,900                          -15%
May         881                       -6%                          $210,000                          -13%
Jun        1,151                         1%                          $225,000                          -12%
Jul         1,169                        6%                          $220,000                         -10%
Aug       1,096                        4%                         $222,000                            -7%
Sep           979                      -3%                          $214,900                            -8%
Oct        1,083                       8%                          $210,000                            -7%
YTD      8,857                    0.3%                         $210,000                             -7%

Table II shows that in October, residential unit sales rose above last year’s for seven of the state’s 10 counties, and median sale price increased 9 percent in Belknap County, where nearly one-third of dwelling units are second homes.  Condominium sales were also strong in October, when unit sales jumped 23 percent above October of last year at a median sale price just $100 below last year’s $170,000.

Units sold    % change 2008-09    Median sale price    % change 2008-09
Belknap                 66                       6%                             $192,875                        9%
Carroll                    79                     -2%                             $190,000                    -12%
Cheshire                52                      -2%                            $160,450                       -4%
Coos                       41                        8%                              $89,000                     -11%
Grafton                 76                       19%                             $174,950                       -6%
Hillsborough     283                       10%                            $224,000                      -9%
Merrimack          125                      18%                             $189,000                     -12%
Rockingham       230                       9%                             $255,000                       -4%
Strafford              105                     22%                              $194,900                     -10%
Sullivan                 26                    -40%                              $150,000                      -3%
Statewide          1,083                      8%                             $210,000                        -7%

Source: NNEREN

NH Real Estate Professionals Jay and Monika McGillicuddy