Strong demand for second and retirement homes in the state has helped buoy the property market.
The Federal Reserve Bank of Philadelphia's recently released State Coincident Index (available here) shows that by its calculations New Hampshire leads the US in recovery from the recession. This index combines four leading economic indicators to encapsulate a state's current economic conditions in one simply expressed figure. The four variables in each state's coincident index are the unemployment rate, nonfarm payroll employment, wage and salary disbursements deflated by the consumer price index (U.S. city average), and average hours worked in manufacturing. New Hampshire's current index of 189 is a two-year high for the state, well ahead of the other New England states and the national average of 150.
In addition to the results of the Philadelphia Fed's index, there are several other significant indicators that New Hampshire is in the midst of a robust recovery, and that strong home sales are in store for 2011. State census data revealed that as of April 1st, 2010 New Hampshire had a total of 1,316,470 year round residents. This figure represents a 6.5% increase since the last census in 2000. While this figure is lower than the national average population growth rate of 9.7%, it is by far the highest of all the nine Northeastern states.
Another strong indicator of New Hampshire's recovery from the recession is our unemployment rate. We are waiting for the most recent data to be released, which based upon all indications will show further reduction in the number of people unemployed; however, as of November 2010 the unemployment rate was 5.4%- the fourth lowest level of unemployment in the nation. All signs point to increasingly strong economic growth that will surely be a boon to our housing market.
Over the course of the next week I will be analyzing the data for the Seacoast and Lakes Regions and will have local market updates completed shortly, however I have had time to take a look at the bigger picture of New Hampshire's housing market for 2010 and definitely see some trends developing.
For the year 2010, the median sales price for a home was $215,000, a 1 percent increase over the 2009 median of $212,000. While 1% does not seem like a significant increase in median price, this statistic is in fact very important as it represents the first annual increase in several years. When the median price increase is taken in combination with a falling unemployment rate and strong State Coincident Index rating the suggestion is that home prices have stabilized and are likely to appreciate further this year.
There were 10,525 home sold in 2010, which was 3 percent below the 10,810 sold in 2009. However, four counties showed a year-over-year increase in home sales: Grafton was up 7 percent, Rockingham was up 1 percent, Belknap was up 5 percent and Carroll was up 1 percent. Peter Francese of the New Hampshire Association of Realtors has theorized a reason for these increases: Those are the four counties with the highest concentration of second homes.
As I discussed in a look at Baby Boomer Housing Trends for 2011, millions of Boomers are approaching their retirement years and are beginning to consider where they will live out their retirement. Many of these individuals have equity in their houses that can be released, or assets on hand that can be used to secure a second home at this time. Many of these individuals may see that second home as a future retirement home. The Wall Street Journal reported in its January 10, 2011 issue that despite lackluster home sales nationwide, “Sales in many vacation communities across the U.S. soared last year to levels not seen since boom times …”
The New York Times story reminds us once again that the demand for housing in New Hampshire is not just driven by employed individuals or families looking for a home to buy. There are over 60,000 homes in New Hampshire that the Census Bureau classifies as “…for seasonal, recreational or occasional use” – that’s more than 10 percent of all 600,000 dwelling units in the state! New Hampshire is leading the US in its recovery from the recession, driven by a strong employment market and steady population growth. We must remember though that there are also buyers just looking for a second home, a retirement home or both, and they are a significant factor in our state.