How Inflation Impacts Lakes Region Housing Prices

Inflation and housing prices

I was out with a friend this week on Squam Lake, and we were talking about the effect of inflation on housing prices in the Lakes Region. All of us know that inflation is spiraling. The Government reported in June that inflation registered at 9.1%, the highest recorded since 1981. Wow, that’s 41 years ago, and I remember that year vividly. Interest rates were at record highs, and the real estate market was in turmoil. Between 1978 and 1981, existing home sales fell by 50% nationally, from 3.99 million homes in 1978 to 1.99 million homes in 1981. It took almost two decades, or until 1996 before home sales exceeded the 1978 level of 3.99 million units nationally.

If rising inflation worries you about the housing market, you are not alone. Generally speaking, owning a primary or second home is looked upon as a good asset when we go through periods of inflation. The main reason is because a home’s value will usually rise with the inflation rate. Part of the reason is that the home is a leveraged asset with a mortgage in place in most instances. If you have a reasonable fixed interest rate that does not change, the leveraged aspect of the investment will increase over a long period of time. So, if you’re putting down a 20% down payment, for example, the increase in value is based on the home’s value, not the down payment made. When you apply an inflation rate of 8.5% as of July 2022, you generally are ahead of the game if your fixed rate mortgage is at 5.47% (today’s average rate for a 30-year fixed rate mortgage.) The reason is because you would be making a payment in inflation-adjusted dollars. In other words, you are paying less for the loan than when you started the loan because inflation has boosted your return.  

Inflation, however, can negatively affect housing prices if interest rates make the asset too expensive to borrow. As a result, fewer buyers will commit to borrowing mainly because of high rates, which can ultimately depress housing prices. We are not at that state like we were in 1981 when variable interest rates were around 17% for a 30-year mortgage in the Lakes Region. Yes, the current rate of 5.47% will likely increase as we head towards the new year; however, over the last 30 years, the average has been over 7%. So even today’s rates hovering around 5-5.75% are still a good deal by comparison.

The big picture

Yes, we do have real estate cycles that go up and down like the tides in the ocean. That’s what my friend and I talked about on Squam Lake this week. Both of us were blown away when we talked about a few examples of properties we sold back in the day and what they are worth today. Over time inflation always wins, and over the long-term, values will increase.

Examples we talked about

  • In 1977 on Big Squam Lake, I sold the West Wind Resort. The property included 8 acres with 426′ of shorefront, sandy beach, docking for 15 boats, 21 large housekeeping cottages, and a lovely owner’s residence for $209,500!

In August 2020, just one of the 21 cottages not even on the water sold for $650,000, and in June 2018, Roche Realty Group sold the same cottage for $467,000 (an increase of $200,000 in just two years)

In September 2022, a 0.61-acre island property on Ithaka Island with a 1,102 square foot cottage built in 1910, a gazebo, and a boathouse slip on the Squam Channel sold for $3,225,000! This is an excellent example of what inflation does to real estate.

  • Around 1980, I sold the original parcel of land to the developer of Samoset Condominiums on Lake Winnipesaukee in Gilford. The property included 850′ of shorefront with 22 acres and spectacular views. The purchase price was $250,000.

130 individual townhouses were built on the site. In the last 2 years alone, there have been 24 resales of the individual townhouses, with the average price at $577,311. The highest sales price was $829,000! How’s that for inflation?

  • In 1979 I sold Edwards on Wentworth Resort in Wolfeboro for only $500,000. The parcel included 50 acres with approximately 1 mile of shorefront on Lake Wentworth, Crescent Lake, and the Smith River. It included a colonial Inn, a scenic barn, a multitude of nice cottages, and a beautiful sandy beach.

The development turned it into a 44-lot subdivision with cottages, and today the individual lakefront homes sell in the $1,000,000+ range each…another example of inflation.

  • In 1980, I sold the Chanticleer Motor Inn and Cottages on Lake Winnipesaukee in Gilford to the developer of Broadview Condominiums for $500,000. The property included 640′ of shorefront on 10 acres with a 32 slip rock cribbed marina, an inn, and multiple cottages.

50 townhouses with attached garages were constructed on the site. In 2021 one of the 50 units on the upper level sold for $655,000, and a waterfront unit would sell for much more today.

  • In 1976, I sold Lakeport Landing Marina for $428,000. It included 600′ of waterfront, 154 covered and uncovered slips, 55,000 square feet of storage buildings, a storeroom, gas docks, a repair shop, and a towner’s residence. Today the marina is worth well up in the high millions. Inflation does its thing.
  • In 1978, I sold Whispering Pines Resort on Lake Winnipesaukee for $195,000 with 550′ of shorefront, 10 cottages, and a house. Ledgecroft Resort for $200,000 and the White Oak Motel for $188,000. In 2021 just one seasonal cottage out of 11 at Whispering Pines sold for $404,000.
  • In 1984, I sold 75 boat slips at Bayshore Yacht Club in Meredith on Lake Winnipesaukee that I converted to condos for the owner. They all sold in 3 weeks in the range of $8,000-$15,000 for a covered slip. Boat slip #13 Sold in 2021 for $179,900. A nice increase due to inflation.

So, using just a few examples above, you can see how inflation impacts property values. It only adds fuel to the fire, causing prices and mortgage rates to rise further, a double whammy where consumers’ dollars have less buying power and loans get more expensive. During my career, the trajectory has always been up, and you will see the normal cycles where prices correct, just like the stock market, and timing is critical. However, in the long run, with rising inflation, it only means that cash now holds more value than it will in the future, assuming inflation continues to rise.

Frank Roche, President of Roche Realty Group, Inc. with offices in Meredith and Laconia, NH

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. Please feel free to visit www.rocherealty.com to learn more about the Lakes Region and its real estate market.

Waldron Bay on Lake Winnisquam with 3,482 feet of shorefront.

Exclusive Waldron Bay Market Report: Is It Time to Cash In?

There are so many water-access communities in the Lakes Region to consider when looking for ...
Read More →
Winter Wonders in New Hampshire’s Lakes Region: A Season of Adventure and Tradition

Winter Wonders in New Hampshire’s Lakes Region: A Season of Adventure and Tradition

As snow covers the Lakes Region of New Hampshire, the area becomes a winter destination ...
Read More →
Balmoral – One of Winnipesaukee’s Original Water Access Communities

Balmoral – One of Winnipesaukee’s Original Water Access Communities

There are so many water-access communities in the Lakes Region that provide great memories. Let’s ...
Read More →
Four Years of Sales Activity at the Village of Winnipesaukee

Four Years of Sales Activity at the Village at Winnipesaukee

The Lakes Region of New Hampshire is known for its rural communities, quaint towns, scenic ...
Read More →
Suissevale on Lake Winnipesaukee – a Popular Community in Moultonborough

Suissevale on Lake Winnipesaukee – a Popular Community in Moultonborough

When you navigate the shores of Lake Winnipesaukee, there are 71 square miles of water ...
Read More →
Gunstock Acres in Gilford: 7 Years of Sales Activity

Gunstock Acres in Gilford: 7 Years of Sales Activity

We have so many interesting communities in the Lakes Region. Let’s take a look at ...
Read More →
Lakeside Setting at Long Bay and South Down Shores

Four Years of Sales Activity at South Down Shores and Long Bay

South Down Shores and Long Bay on Lake Winnipesaukee are two very popular water access ...
Read More →
Real Estate Goals: From Dream to Reality in 2025

Real Estate Goals: From Dream to Reality in 2025

As we approach the new year, it’s the perfect time to turn your real estate ...
Read More →
Wolfeboro New Hampshire Community Bandstand

New Hampshire’s Real Estate Data to Date

The excitement of the holiday season and Christmas approaching this week often comes from the ...
Read More →
Why Home Inspection by Licensed Home Inspectors are Critical

Why Home Inspections Are Critical

We have a competitive market here in the Lakes Region due to the lack of ...
Read More →
Lakes Region's Future: Balancing Natural Beauty and Urban Growth

Lakes Region’s Future: Balancing Natural Beauty and Urban Growth

When you drive around the Lakes Region, you will see a considerable amount of new ...
Read More →
12 Essential Winter Home Maintenance Tips for New Hampshire Homeowners

12 Winter Home Maintenance Must-Dos for New Hampshire

Winter in New Hampshire brings its unique set of challenges for homeowners. From freezing temperatures, ...
Read More →
Roche Realty Group Launches Toys for Tots Drive in Meredith

Roche Realty Group Launches Toys for Tots Drive in Meredith

Spreading Holiday Cheer in the Lakes Region! Roche Realty Group is happy to announce its ...
Read More →
Shop Local at Small Business Saturday in NH’s Lakes Region

Shop Local at Small Business Saturday in New Hampshire’s Lakes Region

We have so many things to be thankful for here in New Hampshire: plenty of ...
Read More →
Emily Brock Joins Roche Realty Group

Emily Brock Joins Roche Realty Group

MEREDITH – Frank Roche, President of Roche Realty Group, Inc, is pleased to announce that ...
Read More →
Inflated Asset Classes and the National Debt

Inflated Asset Classes and the National Debt

A question all of us get asked is have we gotten ahead of ourselves in ...
Read More →
Waterfront Home Sales Activity on 10 of our Lakes Region Area Lakes

Waterfront Home Sales Activity on 10 of our Area Lakes

Most of the leaves have fallen, and political signs are disappearing in the Lakes Region. ...
Read More →
Woman hiking at Artist's Bluff in autumn. View of Echo Lake. Fall colours in Franconia Notch State Park. White Mountain National Forest, New Hampshire, USA

New Hampshire Named Second Safest State in America

In recent years, the country has faced increasing public safety challenges and severe climate events. ...
Read More →
Lots Of Activities Left in The Lake’s Region heading towards the end of fall

Lots Of Activities Left in The Lake’s Region Before Winter Arrives

A burst of warm weather & the crisp air of autumn has extended our fall ...
Read More →
join us for a festive celebration at Twin Barns in Meredith on Sunday, October 20th starting at noon as we raise a glass to the release of the Official Beer of the NH Pumpkin Festival!

NH Pumpkin Festival’s Beer Release Party at Twin Barn in Meredith

The peak foliage and perfect fall weather is as good as it gets in the ...
Read More →
Wolfeboro Waterfront New Hampshire Lakes Region Market Update for 9 Months

Lakes Region Market Update for 9 Months

It’s Columbus Day weekend, with lots of visitors enjoying the fall spectacle of color. I ...
Read More →
The Evolution of the Lakes Region: Balancing Growth and Tranquility

The Evolution of the Lakes Region: Balancing Growth and Tranquility

The Lakes Region of New Hampshire, known for its picturesque landscapes, serene waters, and small-town ...
Read More →
Mountain Bliss: Hiking the Peaks of New Hampshire in Autumn

Mountain Bliss: Hiking the Peaks of New Hampshire in Autumn

This past Tuesday was a bright, sunny autumn day, and I had no appointments scheduled, ...
Read More →
Why Fall is the Perfect Time to Sell Your Home in the Lakes Region

Why Fall is the Perfect Time to Sell Your Home in the Lakes Region

The fall season in New Hampshire’s Lakes Region offers a unique and strategic opportunity for ...
Read More →
Important Fed Decision and The Fall Market in The Lakes Region

Important Fed Decision and The Fall Market in The Lakes Region

On Wednesday, we received the much-anticipated Federal Reserve decision to slash its key overnight borrowing ...
Read More →
New Hampshire Housing Market Trends Broadview Condos in Gilford, New Hampshire

New Hampshire Housing Market Trends

New Hampshire’s housing market has been hitting the national airwaves and the Granite State has ...
Read More →
Second Home Market in The Lakes Region

Second Home Market in The Lakes Region

While practicing real estate in the Lakes Region during the past 48 years, I’ve always ...
Read More →
Meredith, New Hampshire. As summer fades into fall, the Lakes Region bids farewell to another season of sun-soaked days and bustling activity.

Goodbye Summer, Hello Fall

This summer has been one for the books in the Lakes Region. The area saw ...
Read More →
Disadvantages of Lockboxes and Unassisted Showings

Disadvantages of Lockboxes and Unassisted Showings

I was talking with one of our agents the other day, and she showed a ...
Read More →
Price Drops and Hot Sales: Inside New Hampshire’s Housing Market

Price Drops and Hot Sales: Inside New Hampshire’s Housing Market

On August 10th, I was reading an article on SmartNews called “If you live in ...
Read More →
Lakes Region Market Update for 7 Months

Lakes Region Market Update for 7 Months

Summer has been flying by, so I researched the closed real estate market activity for ...
Read More →
New Restaurant Hotspots You Need to Visit in the Lakes Region

New Must-visit Restaurants in the Lakes Region

The restaurant industry is a driver of economic growth and an integral part of the ...
Read More →
New Hampshire Housing Trends and Forecast

New Hampshire Housing Trends and Forecast

The New Hampshire housing market in 2024 is marked by increasing home prices and a ...
Read More →
Significant Land Sales in New Hampshire

Significant Land Sales in New Hampshire

As the summer of 2024 unfolds, the New Hampshire real estate market has seen a ...
Read More →

Inventory Shortage Impacts New Hampshire Housing Affordability

Real estate prices have continued to accelerate in New Hampshire after we saw a historic ...
Read More →
New Hampshire Advantage and Lakes Region Accolades

The New Hampshire and Lakes Region Advantage

We had a great Fourth of July in the Lakes Region, where we celebrated our ...
Read More →
New Hampshire's Fourth of July and Real Estate Boom

New Hampshire’s Fourth of July and Real Estate Boom

The Summer season is off and running, and it’s time to break out those fireworks! ...
Read More →
Summer in the Lakes Region on Little Squam

Ready, Set, Summer in the Lakes Region!

As the rumble of motorcycle engines fades into the background, the Lakes Region of New ...
Read More →
Manchester, New Hampshire, USA Skyline on the Merrimack River at dusk.

New Hampshire Cities in Top Hottest Housing Markets

New Hampshire keeps showing up on the radar as one of the hottest housing markets ...
Read More →
South Down Shores & Long Bay: Real Estate Market Analysis

South Down Shores and Long Bay: Market Trends

South Down Shores and Long Bay on Lake Winnipesaukee are two very popular water access ...
Read More →
Lake House Dreaming: Steps to Make It a Reality

Lake House Dreaming: Make It a Reality

Owning a waterfront home in New Hampshire’s Lakes Region is a treasured experience. For many ...
Read More →
Memorial Day

Beyond the BBQ: A Symphony of Remembrance and Summer Joy in the NH Lakes Region

Memorial Day serves as the official kick-off to summer in the Lakes Region. Towns ready ...
Read More →
Welcome to New Hampshire's Lakes Region

Welcome to New Hampshire’s Lakes Region

New Hampshire’s Lakes Region is one of the most stunningly beautiful places in the United ...
Read More →
The Granite State: Top Spot for Relocation in 2024

The Granite State: Top Spot for Relocation in 2024

New Hampshire just garnered major recognition as the best state to relocate to in 2024 ...
Read More →
Real Estate Sales Insights: Lakes Region Market Update

Real Estate Sales Insights: Lakes Region Market Update

It’s hard to believe we’ve already churned through 4 months of 2024. I researched the ...
Read More →
Market Trends – Spring 2024

Market Trends – Spring 2024

As a Realtor®, I’m always paying attention to the real estate market. I’m often asked ...
Read More →
Temperance Tavern in Gilmanton Sold

The Historic Temperance Tavern in Gilmanton Sold

Gilmanton—According to Frank Roche of Roche Realty Group in Meredith, the historic Temperance Tavern in ...
Read More →
Needs and Wants When Buying a Home Balanced

Balancing Needs and Wants When Buying a Home

In the current housing market, where choices are often limited, and demand frequently outstrips supply, ...
Read More →
Only two homes for sale at South Down Shores and Long Bay on Lake Winnipesaukee pictured above

Spotlight on Homes: New Hampshire Market Analysis

At present time, there are 1,007 single-family homes for sale in New Hampshire. The median ...
Read More →
New Hampshire Ranks High in Recent Studies

New Hampshire Ranks High in Recent Studies

Every day in our industry, we see how rising home prices have made it more ...
Read More →

Leave a Comment