Cash is king as New Hampshire’s real estate market keeps soaring

If you have put your house up for sale, chances are your real estate agent will get as many inquiries from brokers outside the Lakes Region as from those who are local.

That’s because the demand for real estate in the area is extremely hot, and the supply of homes for sale is as low as many real estate professionals can remember it ever being.

So an article that appeared April 27 in The Wall Street Journal – which listed Concord and Manchester-Nashua as the No. 8 and No. 9 top emerging real estate markets in the country – is just one more indication that the area’s real estate market will continue to be robust because the area is a desirable place to live.

That two of the state’s population centers — both within an hour’s drive from Laconia — rank at the top of the Wall Street Journal/Realtor.Com list says a lot about what Americans are thinking about how they want to live, work, play, school and raise their families in a post-pandemic future. It also signals that much of the Granite State is where they feel confident putting roots down financially into one of the biggest investments of their lives while the current economic climate still is far from certain.

And just as interesting is that this activity in the real estate market has not occurred in spite of the Covid-19 pandemic, but because of it.

“Covid has pushed people’s envelope to a shorter timeframe,” said Frank Roche, owner of Roche Realty Group, who has worked in Lakes Region real estate for 43 years. “They’ve learned life can be short and that quality of life is important.”

All of this is happening at a time when the inventory of homes for sale is extremely low.

Chris Kelly, owner/broker of RE/MAX-Bayside real estate agency, said that, in a healthy real estate market, there will typically be a four-month inventory of homes for sale. However, the present inventory in the Lakes Region will all be bought up within a month’s time.

Roche said there are now only between 960 and 970 single-family homes for sale in the whole state.

Couple that with the continuing rise in home prices and low interest rates and you have the makings for a very bullish real estate market.

According to the New Hampshire Association of Realtors, the ongoing pairing of scarce supply and strong demand pushed the median price of a single-family home in New Hampshire to $362,900 in March – a 16.5% increase from March 2020.

A bubble?

For Roche, New Hampshire continues to attract a lot of homebuyers because it offers a lot in terms of quality of life. Taxes are lower compared to many other states. It is a safe place to live and enjoys low unemployment. On top of that, the state basks in the glow of Massachusetts’ economy.

“It’s no wonder everyone is grabbing up affordable homes,” he said.

This pent-up demand can have its drawbacks, however,

Roche said this market is tough for first-time homebuyers. They will typically be looking to finance the purchase, whereas someone looking to buy a second home is more likely to be able to pay cash. Sellers often prefer that kind of offer because it takes away some of the uncertainties that accompany financing and shortens the time it takes to close on a sale.

“I’ve never seen so many cash sales,” Roche said.

Kelly acknowledged that first-time homebuyers sometimes face challenges, but there are still opportunities for them in this market.

Like Roche, Kelly said the pandemic has intensified the marketability of real estate throughout the state.

“People have learned they don’t have to travel into the office. They can work from home,” he said. “And after they’ve finished their work for the day they can go for a swim, or take a hike, and go out in the kayak.”

Those who are selling now are doing so for all kinds of reasons. Some want to be closer to other family members. Others have had changes in their personal circumstances which prevent them from using their Lakes Region house. And there are those who are downsizing.

Buyers too are a diverse group. Many are from greater Boston or the southern tier of New Hampshire who are looking for a second home. But others are moving here to take a job in the area’s service sector or some professional occupation.

In the case of second-home buyers, many of those purchases are being financed to some extent by inherited money, according to Roche and Kelly.

This hot market makes Roche anxious.

“I get taken aback and worried – will we have a correction at some point?” he said. “These prices are not sustainable.”

But Kelly said he does not foresee a repetition of the collapse of the real estate market that occurred in the runup to the Great Recession.

“I don’t think we’re in a bubble,” he said. “This (market) is going to continue for some time.”

He points to the differences that make this real estate boom different than in 2008. The inventory of homes for sale is low. A lot of the purchases are cash sales, and where there is bank financing, those loans are solid, he said.

“People see real estate as a good investment,” he said.

Roche credits the internet, and social media in particular, for putting the Lakes Region on the map.

”People came up here to visit and they took pictures and then posted them on their Facebook page, and people all over the world got to see what it is like here. This place has literally been discovered,” he said.

This article is being shared by partners in the Granite State News Collaborative. For more information, visit collaborativenh.org.