New Hampshire's Housing Market Dip: How Long? by Carl Johnson
The real estate market in New Hampshire is experiencing a slowdown in 2006. A question that is often asked by both home buyers and home sellers is "How long will the market be like this?" Although no one can predict the future, it is helpful to take a look at what is influencing the market.
People who are making a home buying or home selling decision are often influenced by several factors.
* Their job outlook -Will they have one and where will it be located?
* Home Prices- Influenced by supply and demand, population trends and interest rates
* Interest rates- influences home affordability
So how does the future housing market look for New Hampshire?
New Hampshire continues to have a strong job market that is expected to outperform the other New England states and the national average.
* State unemployment was at 3.4% for Q1 of 2006
o Below the national average of 4.73%.1 Continuing a trend seen since 2000 and one expected to continue.
* The New England Economic Partnership (NEEP) projects employment growth:
o 0.8 percent in 2005
o 2.2 percent in 2006
o 1.1 percent in 2006
1. From a New Hampshire Economic Outlook Presentation by Erica Menard (May 10,2006)
Although New Hampshire is loosing its manufacturing industry (NEEP projects manufacturing employment to continue to decline an average of 0.4% through 2007) other industries are growing. The industries that are expected to grow over the next 5 years are:
Professional & Business Services (15.2%)
Education & Health Services (14.8%)
Leisure & Hospitality (11.1%)
Other Services (5.5%)
Source: New England Economic Partnership
Population growth for the state is at 0.9%2, on par with the national average of 1.0% but well above the growth of surrounding states. The counties in the lakes region are expected to have the largest growth through 2010. With increasing population comes demand for housing.
2. From Bureau of Labor Statistics obtained from the FDIC "State Profiles" NH Economic Profile Summer 2006
Mortgage interest rates are holding steady (just under 7% for a conventional 30 yr fixed mortgage) which should take some of the downward pressure off the market. When interest rates increase buyers are more apt to hold off buying, or to offer a lower price due to the higher monthly interest payments.
In summary, New Hampshire has a growing job market coupled with changes in the types of jobs available. This should cause more buying and selling in the market as people move with the jobs. There should also be an overall increase in the demand for housing due to the moderate growth in population. Continued low interest rates should enable more buyers to be able to afford a home. So it seems there is no fundamental reason for this slowdown except for the rising home prices which were out pacing the increase in salaries over the last 3 years. This finally caught up with us. As home prices stabilize or even come down a bit it should allow potential home buyers to catch up. This slowdown may not last for very long, perhaps only until the spring of 2007. But again, no one can foretell the future.
About the Author
Carl Johnson is a Realtor in Amherst, NH