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NH Legislature: NH Real Estate Update January 2010

NH Legislature: NH Real Estate Update January 2010. Russ Thibeault Applied Economic Research. Research Support Provided By:. Conclusions. The worst of the real estate downturn has passed Markets are generally stable, but at far lower levels than we would like to experience

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NH Legislature: NH Real Estate Update January 2010

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  1. NH Legislature:NH Real Estate UpdateJanuary 2010 Russ Thibeault Applied Economic Research Research Support Provided By:

  2. Applied Economic Research

  3. Conclusions • The worst of the real estate downturn has passed • Markets are generally stable, but at far lower levels than we would like to experience • The outlook is for a gradual improvement during 2011 provided: • The number of new foreclosures drops somewhat • The state and national economies do not double dip • Interest rates don’t rise dramatically Applied Economic Research

  4. Sales Show Modest Recovery, But Remain Well Below Their Peak • In 2010, about 12,500 homes sold. • Sales were down slightly from 2009 levels • 2010 is down 45% from peak levels Applied Economic Research

  5. Prices Are Stable • Median price averaged $205,000 in 2010 • Up about 1% over 2009 • Down 27% since peak in 2005-06 • Matches or exceeds price drops in early 90s downturn Applied Economic Research

  6. Inventory Remains High • 15,000 Unsold Units at Year End • Has Been Dropping at a Very Modest Rate Since 2007 • Twice the Level of Earlier in This Decade Applied Economic Research

  7. Effective Inventory • Would Take 15 months to sell off the units listed in the MLS system • Not getting worse, but improvement is modest. • 6-9 months is normal—supporting reasonable price increases • Remains a buyers’ market Applied Economic Research

  8. Housing Recoveries Are Slow Boats • Took nearly a decade for NH prices to get back to peak levels in the last major downturn • Job growth was strong then • Real recovery has yet to surface this time Applied Economic Research

  9. Primary Factors Driving the Market • The overhang of foreclosed properties • Job and Income Growth • The Pace of New Construction • Interest Rates/Credit Availability • Affordability • Consumer Confidence Applied Economic Research

  10. Foreclosures Are a Problem—Wet Blanket on This Market • 2010 will be a record year with about 4,000 foreclosure deeds • 10 times normal level • Represents about 25% of the properties sold in the MLS system Applied Economic Research

  11. NH Economy is Improving, Reversing Recent Pattern Applied Economic Research

  12. Few New Units Being Built: A Mixed Blessing • Fewer than 2,000 units added in 2010—lowest pace in 40 years. • Helps keep unsold inventory from growing. • But: Extreme hardship for the building community Applied Economic Research

  13. Mortgage Rates Remain Very Low Applied Economic Research

  14. Affordability Is Dramatically Better Applied Economic Research

  15. Rental Market Conditions—No Dramatic Rent Change, But Vacancies Have Risen Rent Increases Have Moderated Vacancy Rate Has Increased Applied Economic Research

  16. Outlook • Improving economy should help stem new foreclosures. • Improved affordability helps marketability, adding liquidity to the market. • Most economists anticipate higher interest rates, which will keep the housing recovery modest. Applied Economic Research

  17. Prediction • Patriots will win the Superbowl! Applied Economic Research

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