LITTLETON – Two years after the start of the COVID-19 pandemic, the local real estate market remains strong, although a tightening in inventory has started to slow sales.
That report, along with the new kind of demographics entering the region, was featured in a local housing market update by Andy Smith, owner-broker of Peabody and Smith Realty, who spoke at the 29th Annual Luncheon on Monday. Littleton Region Chamber of Commerce Economic Development Fund. and celebration.
“I think everyone was a little surprised during COVID how strong the real estate market has been, and it continues to be very, very strong,” he said.
Single-family home construction, however, has declined significantly and is one of the biggest challenges in the industry, he said.
This low housing stock is expected to increase in 2022.
“We need more inventory,” Smith said.
For the past 24 months, the area had a fairly good supply of homes before the pandemic and brokers have done what they can, whether that is closing parking lots and dealing with a snowstorm during pandemic restrictions. , to meet demand and sell houses, he said. .
“With that, inventory levels have certainly gone down,” Smith said. “We believe stocks will come back over the next 12 to 24 months and return to more sustainable levels.”
Whereas previously a home that had been on the market for three to six months indicated a healthy market, homes today sell in days or weeks.
And while median home selling prices have increased dramatically, so have wages, and they are moving together, making homes still affordable for many, he said.
Coupled with interest rates currently in the 2 to 3 percent range, income mortgage payments are still very low, he said.
“The Mortgage Bankers Association and others predict that during 2022 and 2023, rates will rise, but still nowhere near what they were 10 to 12 years ago,” Smith said.
As for inflation, consumers take it, but homes have always been a great hedge against inflation and the equity people have built up in their homes over the past 24 months is significant and has been able to stay ahead. on inflation, as it has done in decades past, he said.
Home prices are on the rise, to record highs.
“I don’t think five years ago if someone had said the median selling price in New Hampshire would be $ 380,000, I wouldn’t have believed it,” Smith said. “But that’s what it was in October of this year.”
The average number of days on the market statewide was 24, down 41% from the previous year.
More locally, the median selling price in Grafton County is $ 315,000, with an average of 31 days on the market, down 65% year-over-year.
Coos County has seen a sharp increase in the median selling price, currently at $ 165,000, a 10% increase over last year.
“Coos County has had a great recovery and I think they will continue to do so,” Smith said. “It’s a very robust market, not only for homes, but also for land. In Coos and Grafton counties, land sales have increased by 120, 130% in the two years of the pandemic. Although we are currently seeing a slight decline in inventory levels, year over year sales continue to be very strong. With 25-30 days on the market, we’re selling almost as many homes as last year and a lot more than in 2018-19… We just don’t have that many to sell at once.
The bottom line is that the residential real estate market will remain strong and there does not appear to be any storm clouds at this time that would change that, he said.
“Rural areas have been really hit by urban shoppers looking for safety, quality of life and a sense of community,” Smith said. “There have been a lot of people who have come from urban areas to our rural areas, from the northern part of the Lake District, throughout COVID, and they are staying. “
This has transformed what was once a second home market into a ‘second home’ market that has seen people grow up, enroll their children in school, work from home, and perhaps commute to their urban jobs a day. times a month, Smith said.
“The demographics of people coming in are quite rich and they filter through the whole community,” he said. “The companies I talk to are all seeing an increased demand for services. These people come here and they live here.
A new demographic trend is that of “climate change refugees”, people moving north from Texas, Colorado, California and other states to avoid wildfires, mudslides, water shortages and other disasters, he said.
“The Northeast continues to be seen as a kind of haven from climate change at this time,” Smith said. “We have a lot of water, a lot of wood, we don’t have wildfires and we see people coming here not only because of COVID, but because of climate change. We believe the inventory will remain tight, although it will improve a bit. “
In his banking update, Chris Logan, CEO of Bank of New Hampshire, said the current inflation rate, based on the Consumer Price Index, is north of 6.2%, the highest for three decades.
The Federal Reserve expects inflation to last at least a year.
“It definitely affects our portfolios and I think it will continue,” said Logan.
Supply chain disruptions, leading to shortages in grocery stores and consumer goods, are also expected to last until 2022, he said.
COVID has closed many factories, many in China, and shipping companies have halted shipping orders, he said.
Many shipping containers have been moved to other parts of the world to help with masks and other supplies, and unfortunately many containers are in the wrong ports, Logan said.
“Right now, the cost of shipping a container from China to the United States has dropped from $ 2,000 to $ 25,500,” he said. “It’s a huge increase and you’ll see it when we buy our products.
Ports in Los Angeles and other communities are overwhelmed and do not have enough workers to unload the boats and there are not enough truckers to move the cargo after they are off the boats, a situation which it says Logan, is not likely to be resolved within the next 12 months.
Staff shortages in all fields have led to price increases in restaurants, grocery stores and elsewhere, mainly because of the pandemic, which Logan says has caused many workers to choose other career fields, including particularly out of retail, or leaving the workforce.
Wages have increased dramatically, leading to an increase in the cost of goods.
While New Hampshire’s unemployment rate is currently 3% from 16% in April 2020, there aren’t enough workers to deliver the goods consumers need, Logan said.
As for interest rates, they will rise in 2022 and 2023, with some analysts predicting an increase of up to 1% in 2023, he said.
“2022 promises to have its own challenges like the past two years have had for all of us,” Logan said. “COVID, inflation, supply chain disruptions and staffing will continue to be a challenge for us. I think interest rates will go up in the second half of 2022. I don’t think they will go up dramatically in 2022.