Mark Warden - Porcupine Realtor

This is from the New Hampshire Association of REALTORS’ chief economist:

The Great Recession is over, but it will take some time to feel over
—By Peter Francese

According to economists at Moody’s Analytics, what is now being referred to as the Great Recession is technically over. However, the damage from this economic downturn was severe enough that it will take quite a few months until it feels really over to us ordinary people.

There’s a reason this recession has felt so bad: The economists say it has lasted twice as long and was twice as deep as the average of the past 10 recessions the nation has experienced since 1948. The New Hampshire economist Dennis Delay, speaking at a recent New England Economic Partnership conference, said that the recession won’t feel like it is over “until unemployment stops climbing and job growth returns.”

New Hampshire’s unemployment rate, which is now 7.2 percent (well below the national average of 10.2 percent) is not forecasted to rise above 7.8 percent before starting to fall sometime next year. This bodes well for the recovery of New Hampshire’s residential real estate values, which may have already begun to rise.

During the first five months of this year, for example, residential home sales were below last year. But year-over-year the number of homes sold has risen in four out of the past five months (see Table I below). Overall, for the first 10 months of 2009 home sales edged up 0.3 percent over the same period last year.

Median home prices statewide were still about 7 percent below October of 2008, but the difference is narrowing from monthly numbers that earlier this year ranged between 10 and 20 percent below 2008. This trend indicates that home prices in New Hampshire are stabilizing and will likely begin to increase in 2010.

The expanded home buyer tax credits will almost certainly have a positive effect on home sales and values in the next several months. Also, as home prices stabilize, that will reduce any perceived risk on the part of potential home buyers and encourage lenders to finance more purchases.

New Hampshire has been considerably more fortunate with regard to home prices than many other states. Median home prices statewide are expected to bottom out in 2010 at between 20 and 25 percent below their 2005 peak. Given the worst recession in 60 years, that’s really something to be pleased about. Several other states have seen home prices fall 50 percent or more from their peak in 2005.

Every REALTOR® in our state, as well as every lender or potential home buyer, should know this: The recession is over, but the speed of recovery here depends in large part on the real New Hampshire advantage. It has certainly mitigated this recession’s bad effects and will be extremely important to our recovery.

Assuming it will be maintained, real estate values will recover more quickly and more solidly than anywhere else in this region, and perhaps most other places in the nation.

Table I shows that residential home sales are likely to be about the same as last year, just above 10,000 units, and at a median sale price that will be within 10 percent of 2008.

Table I shows residential home sales and median sale prices for first 10 months of 2009.

2009
Units sold % change 2008-09 Median sale price % change 2008-09
Jan 453 -15% $200,000 -17%
Feb 505 -13% $184,900 -20%
Mar 703 9% $200,000 -14%
Apr 739 -11% $204,900 -15%
May 881 -6% $210,000 -13%
Jun 1,151 1% $225,000 -12%
Jul 1,169 6% $220,000 -10%
Aug 1,096 4% $222,000 -7%
Sep 979 -3% $214,900 -8%
Oct 1,083 8% $210,000 -7%
YTD 8,857 0.3% $210,000 -7%

Source: NNEREN

Table II shows that in October, residential unit sales rose above last year’s for seven of the state’s 10 counties, and median sale price increased 9 percent in Belknap County, where nearly one-third of dwelling units are second homes. Condominium sales were also strong in October, when unit sales jumped 23 percent above October of last year at a median sale price just $100 below last year’s $170,000.

Units sold % change 2008-09 Median sale price % change 2008-09
Belknap 66 6% $192,875 9%
Carroll 79 -2% $190,000 -12%
Cheshire 52 -2% $160,450 -4%
Coos 41 8% $89,000 -11%
Grafton 76 19% $174,950 -6%
Hillsborough 283 10% $224,000 -9%
Merrimack 125 18% $189,000 -12%
Rockingham 230 9% $255,000 -4%
Strafford 105 22% $194,900 -10%
Sullivan 26 -40% $150,000 -3%
Statewide 1,083 8% $210,000 -7%

Source: NNEREN

Well, we finally did it. According to the latest Census Bureau estimates, New Hampshire is now tied with Florida for the distinction of being the fourth oldest state in the nation.  Our median age went over 40 years old for the first time ever.

Here’s the 2008 top four lineup: Maine at 42.0, Vermont at 41.2, West Virginia at 40.6 followed by New Hampshire and Florida at 40.2 years old. New Hampshire’s median age has risen three years since 2000, which is twice the nationwide increase of 1.5 years.

See full article on a separate page in this blog.

Short sale — annoying process but a good opportunity . . .  sometimes.

While working with my clients in a variety of purchase scenarios (bank-owned foreclosures, short sales, distressed sales, and normal/seller-direct purchases), we’ve found the “short sale” transaction to be the most confounding.

In a short sale, the seller of the home must sign off on the sale, which is the easy part.  Then his/her lender must also approve the price and terms of the purchase which, by definition, brings in purchase proceeds below the amount of the outstanding mortgage loan.  For example, if the property is sold for $150,000 and the owner/mortgagee owes $160,000 on the mortgage, they are in a short sale predicament.  The lender has to look at the overall strategy and comparable sales for the area and decide (often by committee) whether to sell at a loss and write off the loss, or to proceed with foreclosure and take over ownership of the property and then hope to sell at a price higher than the current offer.  This rarely works out well for the bank, since values typically drop on the property once it has been foreclosed upon and vacated, perhaps sustaining damage along the way.

It’s frustrating for the buyer/client who has to wait weeks for an answer on the first offer and any subsequent offers.  He’s going through two layers of respondees — the current owner, then that owner’s lender.

If you’re patient however, you can get a good deal on a property and get a home that has been lived in recently, thus expecting that all major systems function fairly well and vandals haven’t destroyed part of the home.

Pay back a loan in future inflated dollars. Lock in your payment in today’s dollars and then it will easy to make the payment in inflationary times, especially if you have an investment property with tenants paying a portion of your mortgage.
Not everyone is ready to be a landlord, though; it can be a tricky, unpleasant undertaking.

We could be in a perfect storm of real estate-buying opportunity right now:  near record-low interest rates, falling prices, and a buyers’ market.

Imagine locking in a long-term mortage loan at today’s low interest rate and 2009 dollars and paying it back over 15-30 years in devalued currency, while watching interest rates soar.  Rates are invariably going to rise (rember the double digit mortgage rates of the early 1980s?).

If you have cash, or at least a small down payment and a good, steady job with W-2 income (i.e. salary, as opposed to self-employed or 1099 ind. contractor status), then you’re golden.  Now is the time to jump in.