I was at a sales meeting at Roche Realty Group the other day, and we were all talking about the number of cash sales we’ve seen in the Lakes Region. It’s an interesting topic, so I thought I’d put some research into it. The results are pretty eye-opening. I pulled all of the towns surrounding Lake Winnipesaukee, including Moultonborough, Gilford, Laconia, Meredith, Center Harbor, Tuftonboro, Wolfeboro, and Alton. I then took all of the residential properties that sold, including single-family homes, condominiums, and mobile homes, and I broke out all of the cash sales. The research results comparing the last three years are as follows.
- In 2023, there were 1,009 residential sales in the above towns, of which 480 of them were cash sales representing 47.6% of all residential sales.
- In 2022, there were 1,207 residential sales in the above towns, of which 556 of them were cash sales, representing 46% of all residential sales.
- In 2021, there were 1,407 residential sales in the above towns, of which 661 of them were cash sales representing 47% of all residential sales.
You can see from the above that the number of residential sales dropped considerably from 2021 to 2023, a 28.3% difference, due primarily to the severe lack of residential inventory. The percentage of cash sales in these towns is what’s eye opening. To think that 47.6% of all residential sales in these towns were all cash closings is remarkable.
It’s hard to believe there’s that much cash circulating in our local economy, which has a very positive impact. It also shows the demand for our Lakes region from outside markets that infuse so much capital into the region. For example, the largest sale in the State of New Hampshire during 2023 was on Lake Winnipesaukee in our town of Meredith on Spindle Point at $14 million. That was an all-cash sale.
The number of cash sales, however, has created a very difficult market for those individuals who need financing to complete a transaction. In the last several years, we have seen many young couples trying to buy their first home and others who needed financing who lost out on their offers because the Sellers were intrigued by an all-cash offer. It’s a sad situation where affordability has become such a problem. Prices have run up, interest rates have increased, and there’s an abundance of cash entering the marketplace.
New Hampshire home prices have never been higher than they were in 2023, yet at the same time, there were fewer statewide home sales than any year since 2011. To give you an idea of how prices escalated, the median sales price in New Hampshire this year was $470,000. This represents a 57% increase since 2019. At the end of December, there were 1,382 residential homes for sale in New Hampshire, that’s an 11% drop from December of 2022. As a result, the New Hampshire Affordability Index sits at 66. The New Hampshire Association of Realtors® reports that the 66% affordability index has seen a 47% decline from December 2020, when the index was 124.
Another recent statistic that really surprised me was the share of Americans who are mortgage-free. It’s at an all-time high where almost 40% of US homeowners own their homes outright as of 2022, according to Bloomberg. It turns out many of these are baby boomers who refinanced when rates were low. It was reported that 33.3 million single-family homes and condos were mortgage-free in this country, a 31% increase compared to 25.4 million homes a decade ago. Sounds like a very impressive statistic.
However, let’s compare the USA with other countries. A 2022 OECD study of 28 countries found the US had the third lowest percentage of households that owned their homes “free and clear” with no mortgages. Guess which country came out the highest… Lithuania at 83%, second Slovak Republic at 69%, third Hungary at 68%, fourth Slovenia at 68%, and fifth Poland at 66&. The United States, Denmark, and The Netherlands were at the bottom.
It looks like the countries where 30-year fixed-rate mortgages dominated, like the bottom three above, when interest rates fall, many homeowners will refinance into new 30-year mortgages even though they had less than 30 years left on their old mortgages. Therefore, free and clear homeownership is delayed. The OECD report also indicated, “looking at all homeowners whether they have mortgages or not, the overall household homeownership rates was highest in 19 of the 28 countries listed than in the US.”
The bottom line: 47.6% cash sales for residential sales in 8 Lakes Region towns for 2023 is very impressive. It truly shows the strength of our very unique market place.
This article was written by Frank Roche. Frank is president of Roche Realty Group with offices in Meredith and Laconia, NH, and can be reached at (603) 279-7046. Data was compiled by a NEREN search on 01/10/2023 and is subject to change. Please feel free to visit www.rocherealty.com to learn more about the Lakes Region and its real estate market.