Past trends & future prospects
for New Hampshire real estate

By Peter Francese

However, the past several years here have not been kind to either home sales or home prices. (Please see charts 1 and 2 below.) Since 2007, annual residential home sales in New Hampshire have been below 11,000, condo sales have been below 3,000, and mobile or manufactured home sales have been below 1,000.  Meanwhile, home prices for all types of dwellings have been flat or trending down for each of the past five years.

Residential homes have been about three-quarters of all home sales over the past five years, and in general their selling prices fell more rapidly than unit sales. The 10,700 residential homes sales in 2011 were only 11 percent below sales for 2007, but median home price dropped 23 percent in that five-year period.

For condominiums, which were 18 percent of all homes sold, sales in 2011 were 39 percent below those in 2007. But during the past five years, their median selling price fell only 18 percent. As a result, the median selling price of a New Hampshire condo in 2011 ($155,000) was 77 percent of the $201,700 median selling price for a residential unit.

Looking at the lack of sales growth and absence of any price appreciation over the past five years, as seen in Charts 1 and 2, the obvious question is this: What must happen to change this pattern over the next five years?

New Hampshire has several key economic advantages over other states in New England and the nation. We have the fourth lowest unemployment rate in the nation at 5.2 percent (compared to 8.7 percent for the country) and by far the highest index of economic activity in this region, and ours is a full 20 percent above the national index.

Our state also has the seventh-highest median household income ($61,000, compared to $50,000 nationwide in 2010), as well as the nation’s lowest crime rate and one of the nation’s lowest personal tax rates that leads to low average business costs.

But we’ve had those advantages for some time, and the best we can say is that without them, things would likely have been much worse. Despite New Hampshire’s considerable economic advantages, there were 10,000 fewer workers in our state in 2011 than there were in 2007. After increasing early in the past decade, labor force growth in New Hampshire has been virtually stagnant over the past five years.

The most recent Census Bureau estimates reveal that since the 2010 Census was taken, New Hampshire has had a net loss of over 3,600 people to other states and that our overall population growth rate, which used to be over 1 percent per year, is now one-tenth of one percent per year. Over the past decade, our state lost 22,000 children and 60,000 young adults while gaining 65,000 residents ages 60 or older.

The bottom line is this: Our state needs more young people and more housing that they can afford. Why? Because long-term housing demand is fueled by young adults starting new families and buying homes. Our state is very attractive to retirees and second home owners, but has not been so attractive or welcoming to young families.

Portsmouth was recently written up in a national magazine as one of the best, and cheapest, places in the nation to retire. That’s nice. But it would be so much better for home sales and home prices if our state could somehow get written up as a great place to live as a young person and raise a family.

Before the next presidential primary, perhaps a consortium of organizations here might think about creating a multi-year online promotional campaign that would describe the opportunities New Hampshire has for young adults and talk about all the reasons why our state is such a fine place to raise a family.

Over the past decade, new housing in New Hampshire has favored anyone over age 55. Perhaps if over the next decade new housing favored younger people, we just might see a more positive trend in home sales and home prices.

Table 1 below shows that between 2010 and 2011, the number of homes sold increased in five counties, but decreased in five with no discernable pattern. Statewide, the number of residential homes sold edged up 2 percent, but the median selling price of those homes slipped 6 percent. Condominium sales were down 3 percent, and median selling price in 2011 was 6 percent below 2010.

Median residential selling price declined in every county except Belknap and Grafton, where prices edged up a fraction of one percent. Condo median selling prices dropped everywhere except in Rockingham County.

Perhaps a reason for home sales increasing the most since 2010 in Carroll, Belknap and Rockingham County is the high density of second homes. They are 42 percent of all dwellings in Carroll, 28 percent in Belknap and 26 percent in Rockingham County. According to a special tabulation of data from NNEREN, the statewide multiple listing service, one in three homes sold in Carroll County in 2010 was purchased as a second home.

As soon as the full 2011 buyer origin data on home buyers is published by NNEREN later in January, we will post a special report on the NHAR website discussing out-of-state buyers and second-home buyers in 2010 and 2011.

Table 1: Residential & condo sales with median selling price for NH counties in 2011

 Source: NNEREN

NHAR columnist Peter Francese is a demographic trends analyst for MetLife Mature Market Institute and a demographic forecaster for the New England Economic Partnership. His most recent book, with co-author Lorraine Stuart Merrill, is titled Communities & Consequences, and is on the future of New Hampshire.  Francese is the recipient of the Silver Bell Award from the Advertising Council for distinguished public service and is a graduate of Cornell University. He can be reached at peter@francese.com.