N.H. growth threatened by foreclosure crisis
The continuing foreclosure crisis will hit the Nashua-Manchester area harder than almost any other metropolitan area in the country next year – or maybe it won’t.
“I have one word for that: nonsense,” said Peter Francese of Exeter, director of demographic forecasting for the New England Economic Partnership in Waltham, Mass.
Francese was responding to a report compiled for the United States Conference of Mayors, which predicted that fallout of the mortgage and foreclosure crisis would trim 1.4 percentage points from the economic growth of the Manchester-Nashua area in 2008.
The report, “The Mortgage Crisis,” predicted only five metropolitan areas in the country would see a bigger reduction in growth from the mortgage crisis, out of 276 for which data was available. A majority of the hard-hit areas were in California or Florida, where the housing market has been pummeled.
“The idea that Manchester (and Nashua) ranks up there with California and Florida and Michigan metros is just silly,” Francese said. “Imagine if you had to create a database for 275 places, 274 of which you haven’t been to … when they crunched numbers, something isn’t right.”
The study, released last month, projects the economic effect of the housing and credit crunch only since this summer.
The figures are projections based on data on economic, unemployment, housing and other factors, compiled by analysts at Global Insight of Lexington, Mass.
A Global Insight spokeswoman indicated one possibility for the anomalous data was that California and Florida cities had been hit hard by the crisis well before this summer, while New England was less affected – as a result, the most recent problems might not have increased their impact.
It’s unclear why that would affect the Manchester-Nashua region more than the rest of New England, however.
At No. 6, Manchester-Nashua is the only New England area in the 40 worst-hit regions; Bangor, Maine, is 42nd, and Boston is 44th.
Record foreclosure rate
The report doesn’t say Manchester-Nashua will shrink next year. In fact, the projected 2008 increase in gross metropolitan product – a local version of gross national product – is a comparatively healthy 2.2 percent.
However, just six months ago, Global Insight projected the area would grow by 3.6 percent in 2008.
The difference between those two predictions — 1.4 percentage points — is larger than the difference for 270 other communities. It correlates to an estimated $406 million in economic activity that won’t happen.
“I don’t think that people who do this on a national basis really have a clear understanding of how different New Hampshire real estate markets are from the average run-of-the-mill metropolitan area of a similar size,” said Francese.
He said the total number of foreclosures remains relatively small in New Hampshire – perhaps 2,000 statewide this year, out of more than 360,000 owner-occupied dwellings.
“The (foreclosure) rate is way, way, way lower than other places of a similar size,” he said.
Still, foreclosures have certainly been rising, and rising fast.
Foreclosure filings at the Hillsborough County Registrar of Deeds are on a record pace, and all but certain to be at least twice the 2006 figure.
Further, the housing market doesn’t seem to be recovering. Nationwide, sales fell 20 percent in October from the year-earlier period.
Global Insight says in its report that slowing home sales and increased foreclosures have been trimming economies for more than a year.
Last summer, it said, large institutions holding mortgage-backed securities began to be affected by problems with subprime loans, and credit has begun to dry up, accelerating the difficulty.
The effect of the most recent problems, says the report, could cut $166 billion from the national product next year.
– DAVID BROOKS/THE TELEGRAPH