Francese: Is 2012 the Breakout Year?
By Peter Francese
First quarter residential home sales in New Hampshire were 17 percent above 2011 and the highest they have been since 2007. Maybe it was the mild winter, or perhaps it was the rising stock market. Whatever it was, it may predict a very good year and the beginning of the end of this historically long period of flat home sales.
Every year for the past four years, first quarter residential home sales were in the narrow range of 1,675 and 1,900 units, and total sales for those years (2008 through 2011) never exceeded 10,800 units. During that same, four-year period, first quarter home sales averaged about 17 percent of the entire year’s sales.
First quarter home sales this year reached 2,223, the first time since 2007 that the number has exceeded 2,000. If that ends up being 17 percent of 2012 sales, the state would reach 13,076 homes sold in 2012, the most since 2006. If, as in 2007, first quarter sales end up being 20 percent of the year’s sales, we can expect about 11,100 homes sold in 2012, still higher than any year since 2007.
My view is that 2012 residential home sales will match the 12,000 sold back in 2007.
Here’s the sales data for the first quarter and annually since 2006:
|Year||1Q Sales||Annual Sales||1Q Percent of Year||1Q Median Price|
* Projected by author; Source of historical data: NNEREN
Despite a sharp, 17 percent rise in home sales statewide from first quarter a year ago, the median residential home selling price in that period was 5 percent below last year. First quarter year-over-year homes sales increased by double digits in all New Hampshire counties except Merrimack (where it rose 6 percent). But home prices declined in every county except Merrimack (up 6 percent) and Coos (up 25 percent).
Residential home prices in New Hampshire are now just three times the median household income of $61,000 (from the 2010 American Community Survey). If that’s not a historic low, it’s very close to it. As economic conditions continue to improve, as they are forecasted to do, home prices have no place to go but up, in my opinion.
New Hampshire Realtors now have a new source of information about home buyers in our state: the buyer origin report from NNEREN, which includes quarterly data for 2010, 2011 and first-quarter 2012. This report shows the total residential home sales for each county and then reports how many of those buyers came from either out-of-county (from where the home was sold) or out-of-state.
Statewide, 22 percent of all sales were from an out-of-state buyer. But in Carroll County, 44 percent of buyers so far this year have been from out of state. That was the case for 36 percent of buyers in Grafton and 25 percent of buyers in Rockingham. Data from 2010 and 2011 shows that out-of-state buyers typically increase during the summer and fall months, rising to half of all sales in Carroll County.
In seven of New Hampshire’s 10 counties, more than one in every four homes sold were to someone from out of the state. This speaks loudly to the importance of maintaining a first-rate and very accessible website that is rich in detail and frequently updated.
This same NNEREN report also shows how many homes were purchased as a primary home or as a secondary home. As has been reported here, New Hampshire ranks third in the nation (behind only Maine and Vermont) in the percent of homes (10 percent) that are second (or in a few cases, third) homes.
Of those sales which completed the primary-versus-secondary report, more than one in five (22 pecent) of home sales statewide (and 58 percent in Carroll County) were second homes.
There is no doubt in my mind that with many thousands of affluent Baby Boomers reaching their peak asset years, combined with more buyers from other countries, the demand for second homes in New Hampshire will continue to increase for the foreseeable future. Just another reason to have a well designed website, with all the information second-home buyers are looking for.
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 firstname.lastname@example.org.