A report in the Wall Street Journal recently declared that, led by an uptick in high-end residential inventory, the historic national real estate boom is seeing a slight regression.
Amid the current craze, what is the status of the Seacoast real estate frenzy? John Rice, statistician for the Seacoast Board of Realtors, read the article and then analyzed his own sales and pored over local data. He said the Seacoast real estate market at present should be likened to a kitchen stovetop.
“If you have a burner on a stove that was on high, maybe somebody turned it down to medium high,” he said of the current market. “It’s still hot.”
Local and national numbers show that, even as median monthly home sale prices continue to skyrocket and set records on the Seacoast and across the United States, more single-family home listings are beginning to pop up on the market.
Seacoast inventory is certainly showing trends of replenishing, equating to a slight cooldown in urgency for buyers to act, Rice said.
“It only stands to reason that as inventory increases that the intensity level to buy what was out there cools a little bit,” he said.
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Still, market anecdotes and statistics show that the Seacoast is highly sought-after and in competition with some of the country’s largest metropolitan markets as far as home listing prices and sale prices go.
“If you were going to say, ‘Oh my God, the sky is falling, money is tightening,’ that’s not happening,” Rice said of Seacoast real estate. “There is still a lot of money out there.”
What are specific indications that a real estate market is cooling down?
Over the last year, Caitlin DeSoye, a senior finance lecturer at the University of New Hampshire’s Peter T. Paul College of Business and Economics, has watched as homes have found new owners within 24 hours of being listed, selling for tens of thousands of dollars over the asking price.
The first signs of a real estate market cooling down after a prolonged spike would be if homes spend more days on the market and if sale prices are closer to the original asking price than they had been, she said.
“The closer the closing price is to the asking price, the more likely the demand is lowering, as it will indicate people are not willing to pay over asking in order to close the deal on a new home. Many Realtors have waiting lists of clients looking for certain property types so that when a home hits the market there are already lists of buyers in queue, resulting in homes going under contract on the same day they are listed,” she wrote in an email. “As the days on the market grow, that will demonstrate that the waiting lists are getting shorter. It will also indicate that people are lowering their demand for housing and potentially waiting for prices to come back down.”
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Listing prices have risen high enough that some would-be sellers are delaying their moves because they cannot find another residence to purchase at affordable costs, even with the near certainty that in this market, their own homes would likely sell for top dollar, DeSoye added.
How some are currently affording their homes are with lower interest rates, which DeSoye said “have made it possible for people to purchase more with less.”
In a hypothetical, she said, the difference in buying power for someone spending $2,000 a month on mortgage payments would be “drastic” should they face higher interest rates.
That $2,000 a month spent on mortgage payments for a 30-year loan with a fixed interest rate of 2.85% would lead to a loan amount of roughly $484,000, she said. On the other hand, if interest rates jumped toward the 5% range, then $2,000 a month would only cover approximately a $373,000 mortgage.
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“Interest rates have played a significant role in the affordability of the ‘hot’ market, which is why it has lasted for so long – that extra $100,000 of buying power enables the high priced homes to remain as such,” she said. “The market will start cooling off as people start refusing to pay more than asking, delay their goals, and as interest rates rise.”
What does local real estate data show?
Analyzing 13 sample communities, the Seacoast Board of Realtors stated in its June report that, once again, last month saw an all-time high in monthly median single-family home sales price.
Totaling $662,500, the June record “completely eclipsed” the former record set in May, which saw a monthly median sales price of $625,000 in Seacoast-area homes, per the report.
In May, there were 88 reported sales, followed with a slight bump last month with 90 sales overall. Monthly listings hit their highest point since last October, with 114 homes hitting the market. Though 35 more homes were listed in the Seacoast in June than the month prior, the Seacoast Board of Realtors said that June 2021 set a record low for June listings since data collection began.
“By comparison, there were 205 available units last June,” the report said.
The New Hampshire Association of Realtors’ June report found that homes in Rockingham County stayed on the market for an average of 18 days. The county also set an all-time monthly median sales price record of $509,850, the highest of the 10 Granite State counties and first time median monthly county home sale prices exceeded the half-million dollar threshold.
Performing listing searches for local buyers, Rice said that the June increase in Seacoast-area home listings, though skimpy compared to years past, means the market could be on its way to correcting itself.
“That can only mean one thing: prices are bound to moderate and buyers will take maybe a little more time to make their decisions because there’s a little more time,” he said.
Portsmouth Bean Group Realtor and associate broker Karen Dorow said cash buyers have dominated the current market since the pandemic hit, effectively eliminating mortgage-wielding buyers from the race to purchase homes.
As she is starting to see local inventory levels increase, Dorow also is seeing fewer homes turn around and sell after only spending a weekend on the market. More sellers seem to be willing to have their showings occur on a Tuesday or a Wednesday, decisions she said are emblematic of more normal times in the real estate market.
Less higher-priced units are getting snatched up with head-spinning speed, she said, and homes priced between $300,000 and $500,000 are still flying off the market. Unlike in months past, however, they’re spending longer than between 48 and 72 hours on the market.
Still, that doesn’t diminish the fact that, in her 32 years of real estate work in the Seacoast region, the current pace, demand and inventory levels are entirely unprecedented.
“I’ve seen great markets and lack of listings, but I’ve never seen super exaggerated prices, and that’s what we’ve seen,” she said.
What does national real estate data show? How does the Seacoast compare?
Released Thursday, July 1, the nationwide June report conducted by Realtor.com showed real estate trends paralleling those occurring in the Seacoast-record median monthly home listing prices and a month-over-month listings increase contrasted by a decline in year-over-year home listings.
American homes listed in June saw a monthly median listing price of $385,000, the fifth straight month of record-setting median sales price and 12.7% increase from last June. Compared to June 2020, American homes for sale decreased by 43.1% last month, though saw a monthly uptick compared to May’s 50.9% listings decline compared to the year before.
The monthly housing overview examined the 50 largest United States metropolitan areas, identifying each area’s median listing price and year-over-year listing price growth, as well.
Data provided by Realtor.com for Rockingham County in June reports that median listing prices in the county last month reached $542,000, an 8.5% increase from June 2020. 468 homes were for sale in the county last month, a 49% decrease from last June.
“While this decline is slowly easing, this market is a long way from recovering enough inventory to consider as cooling,” said Realtor.com economic research analyst Nicolas Bedo.
Though reporting smaller sample sizes, Rockingham County’s median listing price outpaces 40 of the 50 metropolises listed in Realtor.com’s monthly overview, including the greater Chicago area ($355,000), greater Las Vegas area ($400,000) and the greater Washington D.C. area ($525,000).
Nearby Boston and its surrounding communities registered a $699,000 median listing price, and the San Francisco and Oakland area topped the list with a median listing price of $1,058,000.
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“Based on the latest Realtor.com listing data, the (New Hampshire) Seacoast housing market doesn’t seem to be slowing down,” Bedo said. “This region continues to perform very strongly in terms of price growth and market pace. With inventory shortages still far from recovery, any cooldown will come gradually further down the line.”
‘This is craziness what we’ve had’
In 2022, Rice will hit a personal milestone – five decades working in the real estate business.
In all 49 years of his Seacoast real estate career, he views the current market as a healthy one, but the region is headed back to a previous semblance of itself, one he said will be “more normal” for everybody and less dominated by rising prices and diminished inventory.
“It could be a long and winding road because inventory levels are so low,” he said.
Though he’s the numbers cruncher for the Seacoast Board of Realtors, one thing Rice can’t measure is the current consumer confidence in the market, a widespread feeling he said has proved to be “unshakeable” in recent months.
“There’s a lot of faith in the value of real estate right now. If that were to get shaken then you’d see the market change,” he said.
The Seacoast-area real estate market, which data suggests isn’t suffering from a sudden slowdown, is seeing more units gradually come on the market. Buyers, Rice added, may not be as willing to pay some elevated listing prices as cheaper inventory emerges.
That may be a sign that the local real estate craze might be beginning to wane, but for now, Rice believes the demand for Seacoast homes still has plenty of stamina.
“This is craziness what we’ve had. It’s craziness, and it’s totally unsustainable,” he said. “Everyone knows it’s unsustainable.”