An interesting twist to the Souhegan Valley real estate market!
Since late 2005 the real estate market in the Souhegan Valley of New Hampshire has seen declines in the number of homes sold, increases in the number of homes on the market, and falling prices. This is completely logical. Lower demand and higher supply inevitably leads to lower prices. But there is an intersting twist in this market.
The number of homes sold through October 2006 is down 23% from last year, while there is currently a 13 month supply of homes on the market. This has lead to a drop in home prices, as evidenced by the drop in per square foot sold price since the end of 2005 (see Charts at Web site below).
Despite this drop in home prices, the average price of a home sold has increased slightly over 2005. In fact, the average price of a home sold in the area is up about 0.7% from last year. This is perplexing! The price of a home is dropping but the average price of a home being bought is increasing.
If the major problem in the New Hampshire housing market is that homes have become unaffordable and the prices of homes are falling due to lower demand then one would expect that the average price of a home sold would fall as well. Instead, the average price of a home sold has clearly increased. This is an indication that many buyers have the means to buy a home and are willing to spend that money to get the home they want. So as the prices of homes drop, buyers are simply buying more house for their dollar.
This is not to say that buying a home is easy for everyone. In southern New Hampshire a first time home buyer faces difficulty in finding an affordable first home. They can expect to pay $230,000 or more for a single family home in the area. Even a condominium can cost $180,000, which is difficult for the first time home buyer.
However, with a strong job market and increasing wages, buyers in the market are taking advantage of lower prices and low interest rates to buy the home they want. Today, buyers do not have to compromise on home size, location or amenities like they did when the market was hot. These indicators also highlight the fact that this market was not precipitated by a major economic event, such as major job losses, that prohibit people from buying. Therefore, this market will probably not last long. I do not expect a return to the red hot real estate market we had with 15% appreciation per year, but I do anticipate increases in buying with moderate appreciation. (Of course this assumes no changes in economic conditions that will impact buying power.)
As a closing note, I have noticed over the last few weeks that the news media has begun to run stories about the market hitting bottom. These stories are important to note because they will change buyers perception of the market. When buyers believe that prices have hit bottom perhaps, they will begin to buy.
Enjoy the Thanksgiving holiday!
Market Notables Single family home sales through the 31st of October 2006 were down 23% from the same period last year. Single family home sales in the month of October were down 38% from last October. (Recall that sales in September were off 53% from a year earlier, so this is an improvement.)
The number of single family homes on the market was down in October to 840 homes. This is an improvement from September when there were 902 homes on the market.
Despite the lower demand for homes the average selling price of a home in October was $387,009, 0.7% higher than in October of 2005.
The towns with the largest percentage increase in average selling price so far this year are Greenville, where the average price of a home is up almost 20% and Mason, up 14%.
Two towns in the area have the distinction of actually exceeding the number of sales they had in 2005. These are Temple and Wilton.
Note:
This data in this article is based on information from the Northern New England Real Estate Network for the periods indicated for the towns of Amherst, Bedford, Brookline, Francestown, Greenfield, Greenville, Hollis, Lyndeborough, Mason, Merrimack, Milford, Mont Vernon, Temple, and Wilton.
Carl Johnson has been a Realtor since 2002 and serves home buyers and sellers in the Amherst and Milford area of New Hampshire. Visit http://www.SouheganHomes.com for complete market reports for the Souhegan Valley of New Hampshire
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