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Housing Market Update

Housing Market Update. New Hampshire Housing 2 nd Annual Conference on Homeownership. New Hampshire’s Changing Demographics and Economy. New Hampshire Population Growth Has Slowed Dramatically.

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Housing Market Update

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  1. Housing Market Update New Hampshire Housing 2nd Annual Conference on Homeownership

  2. New Hampshire’s Changing Demographics and Economy

  3. New Hampshire Population Growth Has Slowed Dramatically The past 6 years has been the period with the slowest population growth in New Hampshire in the past 30 plus years.

  4. While Our Rate of Population Growth Has Slowed, We Have Not Stopped Aging

  5. Based on Current Population Projections Growth Remains Slow, And We Continue to Age

  6. New Hampshire Job Growth Has Also Slowed Annual job growth in New Hampshire has been less than 1% each year since the end of the recession. By comparison, Massachusetts has grown at about 1.4% in each of the past three years.

  7. The Quality of New Hampshire Employment Has Changed Average annual employment in Manufacturing declined by 35% between 2000 and 2013, while employment in Education and Health Services increased by 28% and Leisure and Hospitality increased by 11%.

  8. Job Quality Can Be Expressed by Weekly Wages Much of the job loss in Manufacturing came with higher wages, while increases in employment in Education, Health Services, Leisure and Hospitality are at lower wages.

  9. The Home Ownership Rate in New Hampshire Remains High In 2005 after more than a decade of economic growth the home ownership rate in New Hampshire had reached a peak of 73%, with renter households making up the remaining 27%. Since then the ownership rate has declined slightly.

  10. But, Recent Growth Has Been in Renter Households The growth in renter households in New Hampshire has been significant in recent years, growing by nearly 13% since 2005, after declining by 5% between 2000 and 2005.

  11. After Age 34 New Hampshire Households Are Predominantly Owners, And We Remain Mostly Owners Into Old Age 65% of households age 35 to 44 are owners, 77% of households 45 to 54 are owners, and more than 80% of households age 55 to 64 and 65 to 74 are owners. For Households 75 to 84 the percent of owners declines slightly to 77%. But, even for households 85 and over, the ownership rate is 61%.

  12. NHHFA Study Housing Needs and Preferences in New Hampshire including Independent and Assisted Living Need Indicators for an Aging Population • Purpose: • Update the existing housing production needs model to better reflect changes in demographics and employment; • Produce a qualitative analysis of housing preferences by household age, income, make-up and geographic location; • Review and develop the need indicators specific to housing typically referred to as independent and assisted living; and, • Final Study will be used by a Policy Advisory Group that will make policy recommendations for best practices to address housing needs and preferences for New Hampshire’s changing population.

  13. Homeownership Market

  14. $200,000 New Hampshire Home Prices are Again Showing Signs of Appreciation 19% Decline 8% +

  15. How does New Hampshire Compare with other New England States ?

  16. Statewide – Sales are improving slowly. Total sales for 2013 increased by 11.5% above sales in 2012. Dec. – 1,246 The December 2013 median price of $210,000 is 10.6% above the median in December of 2012. Prices are showing consistent signs of measurable appreciation. Dec.– $210,000 The statistics used in this analysis are based on information from NNEREN for the period January 2003 through December 2013, for all towns in the State of NewHampshire. All analysis and commentary related to the statistics is that of NHHFA and not that of NNEREN. This analysis excludes land, interval ownership,seasonal camps/cottages, multi-family property, mobile/manufactured homes and commercial/industrial property.

  17. Fifteen of the past eighteen months have shown price increases when compared to the same month in the prior year, while all of the preceding 18 months recorded declines.

  18. Six months is the traditional measure of supply in a balanced market. At 9 months the December 2013 inventory is similar to last year and near its seasonal low point for the year, but still reflects a significant improvement over the prior five plus years. The statistics used in this analysis are based on information from NNEREN for the period January 2003 through December 2013, for all towns in the State of NewHampshire. All analysis and commentary related to the statistics is that of NHHFA and not that of NNEREN. This analysis excludes land, interval ownership,seasonal camps/cottages, multi-family property, mobile/manufactured homes and commercial/industrial property.

  19. Hillsborough County – As inventory declines, median prices improve. Dec.– $214,900 The statistics used in this analysis are based on information from NNEREN for the period January 2003 through December 2013, for all towns in the State of NewHampshire. All analysis and commentary related to the statistics is that of NHHFA and not that of NNEREN. This analysis excludes land, interval ownership,seasonal camps/cottages, multi-family property, mobile/manufactured homes and commercial/industrial property.

  20. August– $257,750 Rockingham County – Inventory is also declining and the median price is increasing. The statistics used in this analysis are based on information from NNEREN for the period January 2003 through December 2013, for all towns in the State of NewHampshire. All analysis and commentary related to the statistics is that of NHHFA and not that of NNEREN. This analysis excludes land, interval ownership,seasonal camps/cottages, multi-family property, mobile/manufactured homes and commercial/industrial property.

  21. Coos County – Inventory, while dropping remains above 20 months, sales volume is low, and median prices are volatile (ranging from $77,000 to $159,000 in the past 12 months). Cheshire County – The inventory remains above 10 months, and median sales prices are volatile but are beginning to show signs of appreciation. The statistics used in this analysis are based on information from NNEREN for the period January 2003 through December 2013, for all towns in the State of NewHampshire. All analysis and commentary related to the statistics is that of NHHFA and not that of NNEREN. This analysis excludes land, interval ownership,seasonal camps/cottages, multi-family property, mobile/manufactured homes and commercial/industrial property.

  22. Median Purchase Price in 2013 Less Than $100,000 $100,000 to $150,000 $150,000 to $175,000 The median purchase price is highest in Rockingham County, and lowest in Coos County. 63 percent of owner occupied housing units in the state are in Hillsborough, Rockingham and Merrimack Counties. $175,000 to $200,000 $200,000 to $225,000 More than $225,000

  23. New Home Construction Remains Low While showing some improvement since the end of the recession, construction activity remains at about 38% of the level of a decade ago.

  24. And New Home Sales Account for Only a Small Portion of All Sales New home sales which accounted for as much as 18% of the market in 2004 and 2005, accounted for less than 8% of all sales in 2012 and 2013.

  25. Affordability Home ownership affordability drivers: Price, Income and Interest Rate. 3.5x 2.3x 3.2x 2.6x

  26. Affordability In the home ownership affordability equation, price, income and mortgage terms are basic. However, each element has some additional complexity. • Income is influenced by other assets and debts. • Equity in an existing home, savings, or other family assets can increase affordability. • Consumer debt, car loans, student loans and other financial obligations can diminish affordability. • Interest rate is just one element of the mortgage credit terms. • Credit score and down payment requirements can influence the interest rate and may make credit unavailable. • Mortgage insurance can add to debt and reduce affordability. • Other factors also influence affordability. • Real Estate Taxes, Hazard Insurance, and Utility costs. • Location / transportation or proximity to income.

  27. Affordability For Qualified Buyers it may be a good time to buy. Since 2009 the monthly PITI for the median priced home has been very close to the median gross rental cost for a three-bedroom unit. However, when the costs of utilities and maintenance are included in ownership, there remains an additional $400 to $500 monthly cost for ownership.

  28. Home Foreclosures

  29. The 194 foreclosure deeds recorded in December of this year is a decrease of 35% from foreclosures recorded in December of 2012.

  30. The cumulative total of foreclosure deeds in 2013 was 26% below the total in 2012, and lower than the total in any year since 2007.

  31. December 2013 foreclosure notices decreased by 24% when compared with December of 2012 and cumulatively a decline of 36% in activity for all of 2013 when compared with 2012.

  32. For New Hampshire, New England, and the US this 3rd quarter delinquency rate decline breaks the typical pattern of 3rd quarter increases for only the second time in recent years. However, this rate remains stubbornly high.

  33. New Hampshire’s delinquency rate compares favorably with most other New England states.

  34. At the current pace of foreclosure deed recordings, it could take nearly 12 months to clear this inventory, without any new foreclosure initiations.

  35. Summary of Issues • Homeownership market is recovering slowly as inventories decrease and the economy continues to improve. • On average the housing market in the southern part of the state is stronger than other parts of the state. • Foreclosures are down as the economy and housing market improve. • Lenders appear more willing to negotiate short sales. • Delinquencies continue to decline but are still historically high. • Foreclosures will continue to moderate purchase price increases and add pressure to the rental market.

  36. New Hampshire’s Mortgage Market

  37. Source: Real Data Corp. The number of purchase mortgages in 2013 increased over the prior two years due to improving market conditions and a release of some pent-up demand. With slowly rising interest rates, refinance mortgages have been declining since the 2nd quarter of 2013.

  38. As a percent of total mortgages, refinance mortgages have now dipped 50%. Essentially equal to the number of purchase mortgages.

  39. The November FHA Insured loan data for New Hampshire suggests that the decline in refinance is continuing.

  40. What does the mortgage market in New Hampshire look like in the future? Assuming a stable/growing economy • Short term • Purchase mortgage activity continues to grow especially in the southern tier of the state. • There continues to be some pent-up demand, and cross border activity has returned. But, the inventory of good quality homes is already limited, especially in the most desirable locations. • Refinance activity is negatively influenced by changes in mortgage interest rates. • Mortgage interest rates are at a 40+ year low, but are unlikely to remain there much longer. • On a $200,000 mortgage, a raise of 1% in interest rate means an increase of about $100 in payment. • Mid term • Continued growth in purchase mortgage activity will require much stronger job growth in New Hampshire and a return of the single family home construction. • Refinance activity will continue to decline as interest rates climb toward +/- 6%. • Long term • Demographics (the aging of the baby boom generation) and economic growth will play a big part in what happens, and there are still a lot of unanswered questions.

  41. New Hampshire Housing 2nd Annual Conference on Homeownership Dan Smith Director of Housing Research 603.310.9251 direct dsmith@nhhfa.org www.nhhfa.org www.GoNewHampshireHousing.com www.HomeHelpNH.com

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