Here are a few real estate tidbits I’ve pulled to keep you up to speed on what’s happening in New Hampshire and nationally.
- Wow – the median price for a single-family home in New Hampshire hit $495,000 in June. This is the most expensive month in the Granite States History.
- Because of this record median sales price, the affordability index dropped to 61. This is the lowest in the 20 years the New Hampshire Association of Realtors® have been recording these numbers. This amounts to a 40% decline in just the past two years! What this means is that the state’s median household income is just 61% of what is necessary to qualify for a median priced home under today’s prevailing interest rates. This is not a good statistic.
- In New Hampshire, there were 1,644 single-family homes for sale at the end of June. This represents a 23% drop from the same time last year. This represents a 1 ½ months supply of inventory… we should be seeing a 6-7 month supply for a more balanced market.
- In New Hampshire, for June, there was a 16% drop in the number of homes sold compared to the same period last year. For the first six months, sales decreased 20% compared to last year.
- Mortgage rates rose across the board during the week ending July 6th. The 30-year fixed rate jumped to its highest point in nearly 8 months. The 30-year fixed rate was 7.26%, the highest it’s been since peaking at 7.33% in November 2022. The week previous to this, was at 7.15%. The 15-year fixed rate came out at 6.61%.
- According to Kiplinger’s Interest Rate Outlook, the Federal Reserve is likely to raise rates on July 26th as the economy shows continued strength.
- The US Central Bank has raised interest rates to its highest level in 16 years as it battles to stabilize prices, so it looks like these rate hikes mean that mortgage rates are likely to stay elevated for longer than previously thought.
- There are ways to get around the higher rates if you have the funds. Homebuyers have the opportunity to purchase discounted points as an upfront fee to lower their mortgage interest rate. By adding these fees to your closing cost, you can reduce your monthly principal and interest payments. According to Zillow, about 45% of conventional home loan borrowers purchased discount points in 2022. That was up from 27% in 2021 when rates were lower.
- Where are New Hampshire homebuyers coming from? 71.3% are coming from New Hampshire, 15.8% are coming from Massachusetts, and 13% are coming from other states. Most homebuyers from other states came from California, Maine, Florida, New York, and Connecticut.
- In Carroll County, 45.02% of the homes purchased were secondary residences, 50.04% were primary residences, and 4.494% were investment properties. In Belknap County, 28.38% were secondary, 67.87% were primary, and 3.75% were investment.
- In addition, to increased mortgage interest rates, many individuals are being affected by credit card interest rates at record highs. Americans set a record for total credit card debt at $986,000,000,000 in the fourth quarter of 2022. With credit card interest rates now at 20.55%, the highest since Bankrate started tracking them in 1985, it certainly creates a problem.
- This past week an outside client of our firm who’s very experienced in the national commercial banking industry was warning about pressures he’s seeing with many regional banks. He indicated they are seeing losses in commercial real estate, especially office buildings and some retail malls. He felt that a number of smaller banks will be picked up by larger banks, similar to First Republic Bank, acquired by JP Morgan Chase. He indicated rising rates are affecting the yields on existing treasuries, and also, many banks are losing depositors where they are pulling cash out that’s not insured or they’re shopping for higher interest rates. He also said many of the existing commercial mortgages are coming up for renewal, and the interest rates are much higher, but compounding that many of the buildings have vacancies. In the news this past year, I saw how quickly a bank could unravel when depositors started pulling funds out. When you think about it, since 2008, all of the banks had huge surpluses of deposits and extremely low rates…a perfect scenario. However, after all of the Federal Reserve’s rate hikes, so many depositors have been looking for higher yields, and they have been moving funds around, and they are also looking for safety over the $250,000 FDIC limit. So lenders have been forced to pay higher rates to retain their deposits.
- Most of us remember what happened in 2008 and in 1991 in the banking and financial industry, and this is certainly something to watch as we wade into next year. Keep in mind the real estate market, stock market, and crypto markets have been churning to all times highs. How much of this is sustainable? My only advice is to follow history, think rationally, and be conservative. Always strive to make an informed decision using common sense and, most importantly, work with a financial advisor and a Realtor® you have the utmost trust in.
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