Post by Kim Cedarstrom of Roche Realty Group
We know that the recession has impacted waterfront and residential sales here in the Lakes Region of NH, but a good question might be “has commercial property followed the same trend?” A look into the numbers should give us a clue and maybe some insight as to the existence of a relationship between these two aspects of the real estate business. Home sales are driven by need and emotion. We all need a place to live and over the past years a home has given us that and, before the recent recession, a good investment. As we succeed in life a second home has been a great showplace for that success. We don’t need a lakefront seasonal property, but it sure looks good and is a great place for the family to enjoy. It makes us feel good – an emotion. With the end of the easy money driven boom of the early to mid 2000’s, home (and second home) prices have lost the demand they enjoyed and sales have slowed and prices dropped. Commercial property sales and prices are (supposedly) driven by the cool logic of numbers. What will a business support in terms of rent and will commercial property deliver a decent return on investment? Will logic follow the same route as emotion?
The following table shows the tracking of commercial real estate sales in Belknap County from before the recession (2004) to today. The results are drawn from NNEREN sales and do not list sales done privately or the sales of businesses without commercial property involved in the transaction.
| Year | Total Sales | High | Low | Average |
| 2004 | 42 | $1,750,000 | $69,000 | $384,540 |
| 2005 | 35 | $1,050,000 | $58,000 | $403,480 |
| 2006 | 29 | $750,00 | $50,000 | $323,880 |
| 2007 | 18 | $1,000,000 | $75,000 | $446,470 |
| 2008 | 10 | $725,000 | $85,000 | $294,500 |
| 2009 | 16 | $475,000 | $45,000 | $232,725 |
| 2010 | 20 | $598,000 | $15,000 | $212,630 |
| 2011 | 16 | $769,000 | $20,000 | $221,066 |
| 2012 | 20 | $580,000 | $25,000 | $207,77 |
What can be seen is that there seems to be some similarities. Now I must state that this is a very limited sample in a very small market, but I think it’s interesting none the less. 2004 through 2007 were the go-go years of residential real estate here in the Lakes Region and not bad for commercial as well. The highest commercial prices were in the $1,000,000 to $1,750,000 range and the average selling price was between $384,540 and $446,470. Warp ahead to the financial crisis. 2008 saw number of sales fall dramatically as well as the average selling price. Then from 2009 to today we have seen an increase in the number of sales, but a drop in average selling price and highest price as well.
What does this mean? Recently, we at Roche Realty have seen an uptick in number of sales of residential and waterfront homes, just like commercial between 2011 and today. We have also seen the average selling price in residential drop, as has the price of commercial. Strangely (or not), there has been a correlation between the two markets. What does this mean? Does emotion and need have the same effect in the market as cold blooded logic of numbers? Maybe.
What does seem to be happening is that there is an increase in activity in both commercial, residential, and waterfront property sales here in the Lakes Region. The market has adjusted the prices and people are feeling that now is a time of opportunity to invest in Real Estate here. We feel the same. If you are considering taking advantage of this opportunity and have any questions, call me Kim Cedarstrom at 603-520-6609 or email me at kcedarstrom@roche.g.corvida.com. I’d be glad to talk with you.
