June 30, 2004
By DENIS PAISTE
Union Leader Staff
June 21, 2004

Home purchase costs in the state of New Hampshire rose 5.4 percent in the first quarter this year compared to the same quarter in 2003, a modest increase compared to double digit increases of recent years.

From 2002 to 2003, the average residential sales prices (which include single-family homes, condominiums and mobile homes) rose 15.1 percent in the Jan. 1 to March 31 period.

“I think the pricing has leveled out, which I think is good, because it was just increasing astronomically for a few years,” said Lynne LaBombard, a home buyer’s representative and broker-owner with Housing Solutions Real Estate in Hanover.

Hanover-Lebanon region sales fell in the first quarter, according to figures compiled by the Northern New England Real Estate Network (NNEREN) in Concord, which operates the Multiple Listing Service for real estate agents in New Hampshire and part of Vermont.

NNEREN figures do not include “for sale by owner” (FSBO) sales, however, LaBombard said. That could skew figures in some areas such as Hanover, LaBombard said.

“In our office, one out three of our purchases were for sale by owner purchases,” she said.

Among homes purchased through LaBombard’s office, the median selling price is up from $195,000 in 2003 to $227,000 in 2004, she said. (The median price is the number below which half of sales prices fall and above which half of sales fall. The average is the total of all sales divided by the number of sales.)

Days on market also have dropped from 130 last year to 106 in 2004, she said.

Coastal surge

On the Seacoast, which continues to boast the highest average selling prices in the state, some local communities are seeing strong demand and steep price increases.

In the town of Stratham, according to NNEREN figures, single-family homes (excluding condos and mobile homes) rose to an average of $384,050 in the first quarter of 2004 from $302,046 in the year-ago quarter, an increase of $82,004, or 27 percent.

“I think what you’re seeing is some new homes which are selling for substantially more than new homes used to sell for, and you’re seeing some growth in value of existing homes,” said Dane Hahn, broker/owner of Exit 11 Real Estate in Stratham.

“That’s a function of the town being a good place to live, the school systems being substantive and desirable,” Hahn said. The town also has or is near other things young families demand such as shopping and medical care, he said.

“Principally these are younger families that are buying,” he said. “These are people who haven’t reached their earning maximums yet. Many of these people who are moving in to the area have young children.”

Other factors driving up costs include higher costs to contractors for raw materials such as concrete and plywood and minimum 2-acre zoning that limits the number of homes a developer can put up, he said.

But while costs are still rising, the surge in growth has slowed.

“I’m seeing a stabilization of prices in many of the towns, Stratham notwithstanding,” Hahn said, echoing the sentiment of several real estate agents interviewed for this article.

Stabilizing forces

Rising mortgage interest rates will likely put additional pressure on prices. Last week, Freddie Mac reported that rates on benchmark 30-year, fixed-rate mortgages climbed to 6.32 percent for the week ending June 17. That’s up almost a full percentage point from this year’s low nationally of 5.38 percent for 30-year mortgage during the week ended March 18.

“Just the slight increase that we’ve seen in the last several months knocks a lot of lower-end buyers out of the marketplace and also makes people think twice about paying more than the list price even though there is a shortage of property,” said Rick Stoudt, owner of RE/MAX Properties, which has offices in Nashua and Hollis.

Nevertheless, “We’re about to have our best closing month ever in June,” Stoudt said.

“The major problem that we’re seeing right now is the lack of quality inventory,” he said. “Even with the lack of inventory, we’re seeing buyers be very picky about the type of property they’re buying.”

In the Nashua-Hollis area, fewer buyers are willing to bid up prices over the offering price, he said. “That particular phenomenon has slowed down a little bit, which might have accounted for a lot of the artificial appreciation because we were seeing a lot of bidding. With the low interest rates, we were seeing a lot of people willing to pay over the listing price.”

Urban area sales

Although greater Manchester residential sales rose just 1.54 percent in the first quarter to an average of $226,963, sales this spring have been strong, according to Karen Cormier, branch manager of Carlson GMAC Real Estate in Manchester.

“We’re definitely seeing prices increase; and it’s still a sellers market,” she said. “There are more buyers in the market than there are sellers. So we’re still seeing multiple offers on the same property and properties going for above the asking price.”

Cormier’s office territory, which includes the prestigious North End of Manchester, has averaged $229,900 for home sales this spring, she said.

“The market’s still great. Interest rates are still low. We still have a lot of buyers out there who are still looking,” Cormier said. “It’s just really hard for first-time homebuyers to find anything decent for under $230,000 so that’s why a lot of them are going into condos, so condos are coming up in price because of supply and demand as well and we find a lot of our listings go under agreement in less than a week, in some cases in 24 hours.”

Rockingham

Rockingham County continues to see high demand with prices up nearly 8 percent. Jay McGillicuddy, president of the New Hampshire Association of REALTORS®, as well as the owner of Century 21 Bridge Realty in Plaistow, said the area is very desirable for people who want to live in southern New Hampshire and work in high-tech areas in Massachusetts. “We’ve seen a lot of growth over the last 10 years. . . .both prices and construction of new houses,” he said.

Although interest rates have crept up from their historic lows of early last summer, they’re still low by comparison. Rates were at about 12 percent when McGillicudy entered the business.

McGillicuddy said the Rockingham County Planning Commission is predicting continued growth along the Route 111 corridor over the next 10 years.

Portsmouth

In Portsmouth, Ann Cummings, broker at RE/MAX Coast to Coast, said demand is still high. “We’re not seeing anything that’s showing us a decrease or a leveling out.”

Although Hampton showed a year-over-year decline in the first quarter, Cummings said that may not mean prices are going down on comparable properties so much as that a different mix of properties sold this year than last.

Several new construction projects were completed in 2003, such as Hampton Meadows — high-end detached condos that sold in the $300,000 to $400,000 range, she said. “The natural thing would be to show prices have come down a little,” she said.

“It’s not indicative of prices coming down, it’s just indicative of a different supply of inventory being available,” Cummings said.