New Hampshire Real Estate Market Trends & Analysis

New Hampshire’s economy has improved dramatically in a relatively short period of time.  For the better part of a decade, the entire state has seen encouraging growth in both its labor force and available jobs.  Few states, for that matter, have a better unemployment rate than New Hampshire. Improvements in the local economy have translated into a healthier housing industry than in years past.  Pending sales have increased year-over-year and homes are selling faster. It is worth noting, however, that wages haven’t been able to maintain the same pace as appreciation rates within the New Hampshire real estate market. 

After nearly seven consecutive years of appreciation, real estate in New Hampshire has become less and less affordable, and the Coronavirus has done nothing to help. The shutdown, which halted just about every industry in the first quarter, also prevented homebuilders from adding to existing inventory. As a result, the ongoing lack of housing has increased prices further, as supply and demand were tilting in favor of owners. If that wasn't enough, record-low interest rates issued by the Fed have increased demand further. At the moment, there are plenty of reasons to buy, but supply needs to catch up; when it does, the New Hampshire real estate market could take off.

The Top New Hampshire Real Estate Markets

While the best real estate market in New Hampshire is up for debate, here’s a list of the cities investors may want to pay special considerations to:

• Concord

• Manchester

• Nashua

• Dover

• Rochester

New Hampshire Real Estate Fees & Regulations

Real Estate

Closing Conducted by:	Attorneys
Conveyance:	Warranty or Quitclaim Deed

Foreclosure Procedure

Primary Foreclosure Method:	Non-Judicial
Process Period:	2 - 3 Months
Notice of Sale:	Trustee
Redemption Period:	None

Taxes

Income Tax:	5.00%
Corporate Tax:	8.50%
Sales Tax:	None
Estate Tax:	No
Inheritance Tax:	No
Median Property Tax:	1.86%
Property Taxes by County:	http://www.tax-rates.org/new_hampshire/property-tax#Counties

Average Transactional Costs

Closing Cost:	$2,641.00
Transfer Fee:	1.50%
Origination Fee:	$1,975.00

New Hampshire Housing Market Overview

• Median Home Value: $309,709

• 1-Year Appreciation Rate: +7.5%

• Median Home Value (1-Year Forecast): +7.6%

• Median Rent Price: $1,700

• Price-To-Rent Ratio: 15.18

• Average Days On Market: 72

• Unemployment Rate: 6.0% (latest estimate by the Bureau Of Labor Statistics)

• Population: 1,356,458 (latest estimate by the U.S. Census Bureau)

• Median Household Income: $74,057 (latest estimate by the U.S. Census Bureau)

• Percentage Of Vacant Homes: 15.46%

• Foreclosure Rate: 1 in every 25,105 (0.3%)

New Hampshire Median Home Prices

The median home value in New Hampshire is $309,709, which serves as a testament to the strength of the state’s housing sector. If for nothing else, real estate in New Hampshire has come a very long way in a relatively short period of time. No more than eight years ago, in fact, New Hampshire home prices bottomed out in the first quarter of 2012. At the time, New Hampshire’s median home value was around $207,000, which marked one of the state’s lowest points of the recession. Shortly after the first quarter of 2012, however, real estate in New Hampshire started appreciating, and the state hasn’t looked back since.

Thanks, in large part, to a strengthening economy, improving optimism, and a distinct lack of available inventory, home prices in New Hampshire started to move in a positive direction. Over the course of a few years, nearly all of the equity that had been lost as a result of The Great Recession was returned, and then some. For eight consecutive years, however, prices appreciated at a historical rate, to the tune of more than 40.0%.

To put things into perspective, the median home value in the United States was around $160,000 when the recession was at its lowest point (February 2012). Since then, the median home value in the United States has appreciated more than 50.0% to get to where it is today.

Appreciation rates in New Hampshire trailed the national average for the better part of a decade. That said, slightly more modest gains aren’t necessarily an indictment on the state of New Hampshire, but are rather more indicative of a slightly more expensive market. Home values in The Granite State were simply higher than that of the national average, which left slightly less room for price growth.

Despite exhibiting different appreciation rates over the last eight years, it appears as if New Hampshire is trying to catch up. In the last year (from September 2019 to October 2020), the median home value in New Hampshire managed to slightly outpace the national average—7.5% and 5.8%, respectively. Moving forward, the differences are expected to become even less pronounced. The experts at Zillow are forecasting a 7.6% increase across New Hampshire and a 7.0% increase across the country.

New Hampshire Median Rent Prices

Rental prices across the country are influenced by home values and are—therefore—subject to market fluctuations of varying degrees. It is worth noting, however, that there is a direct correlation between increases in home values and subsequent jumps in rental prices—and vice-versa. When home prices increase, for example, it’s safe to assume more prospective buyers will be priced out of the market, ultimately relegating them to renters. Consequently, the more people who are forced to rent, the more landlords will be able to charge in rent. The resulting rental demand from increased home prices will simultaneously drive up competition and prices. Markets in the midst of historical appreciation rates have also seen their rental prices increase, and New Hampshire is no exception.

Just as home prices in New Hampshire have increased more than 50.0% over the course of a decade, local rental rates have responded similarly. While not quite as bullish as home prices, rental rates in the state of New Hampshire have increased 13.3% over the same time. For a better perspective, the median rent price in the United States increased at nearly twice the rate of New Hampshire.

Following the prolonged rental rate increase, it’s typically more affordable to buy a home in New Hampshire than to rent one. With a price-to-rent ratio of 15.18, however, the scale is starting to tip in the other direction. While buying should remain more affordable for the foreseeable future, it’s only a matter of time until the pendulum swings in the other direction.

For now, however, it’s relatively expensive to rent in New Hampshire. While tenants may not like the sound of higher rental rates, the New Hampshire real estate investing community is more than pleased with the way things are going. Cash flowing rental properties in the state of New Hampshire are one of the most preferred investment vehicles in today’s high-priced market. If for nothing else, years of attractive cash flow can offset historically high acquisition costs.

New Hampshire Foreclosure Trends & Statistics

The New Hampshire real estate market has a relatively low foreclosure rate. According to RealtyTrac, in fact, only one in every 25,105 homes in New Hampshire is considered to be distressed (default, auction, or bank-owned). At that ratio, the state currently boasts a foreclosure rate of 0.3%, which is below the national average. One in every 13,947 homes in the United States is considered distressed, or a total of 0.7% of the housing inventory. That said, New Hampshire’s foreclosure rate is roughly half that of the national market.

While the New Hampshire housing market may have a lower-than-average foreclosure rate, there are still pockets of distressed inventory spread across the state. That’s not to say the following counties have high foreclosure rates themselves, only that they have high foreclosure rates compared to the rest of New Hampshire:

• Coos: (1 in every 10,746)

• Merrimack: (1 in every 12,890)

• Cheshire: (1 in every 17,652)

• Strafford: (1 in every 17,703)

• Carroll: (1 in every 20,365)

Tax Lien Investing

• Tax Lien or Deed: Tax Deed state

• Interest Rate: Property owner must pay the state 18% to redeem lien or risk losing property to foreclosure

• Redemption Period: Total of 5 years

New Hampshire Real Estate Investing

Real estate investors and homeowners across the country have enjoyed several years of seller gains and attractive ROI (return on investment). According to Attom Data Solutions’ most recent Home Sales Report, in fact, the average home seller in 2019 “realized a home price gain of $65,500 on the typical sale, up from $58,100 last year and up from $50,027 two years ago.” Profits were calculated using the median purchase and resale prices and currently represent a 13-year high.

The report went on to say that profits “represented a 34 percent return on investment compared to the original purchase price, up from 31.4 percent last year and up from 27.4 percent in 2017, to the highest average home seller ROI since 2006.” Simply put, average U.S. home seller profits are higher than they have been in a really long time, and New Hampshire is no exception. Following years of historic appreciation, homes are selling for more in New Hampshire than they have in years past, which bodes well for local investors.

While home values are reaching new highs in the wake of the Coronavirus, the New Hampshire real estate investing community is more than aware that attractive price margins can just as easily be found at the time of acquisition. The cost of acquiring a home plays just as much of a role in calculating one’s return on investment as the sales price. As a result, real estate investors in New Hampshire have made a habit out of dealing in the state’s distressed property market. Distressed properties award savvy investors the opportunity to simultaneously capitalize on attractive profit margins and motivated sellers.

Real estate investors in New Hampshire looking for their next deal should turn to one source before any other: local auctions. According to RealtyTrac, auction homes make up the majority of the state’s distressed inventory. Constituting 92.0% of New Hampshire’s distressed inventory, auction homes are the most abundant source of foreclosures, and the most likely place investors will find deals with the profit margins they desire. Therefore, investors who want to give themselves the best odds of finding a viable deal should look no further than auctions.

Once the deals are acquired, real estate investors in New Hampshire have the luxury of exercising one of any number of exit strategies. Today’s three most popular exit strategies, in fact, are in play: rehabbing, wholesaling, and renting. There’s no reason investors couldn’t consider implementing any one of these strategies. However, thanks—in large part—to today’s high acquisition costs, investing in New Hampshire in 2020 may better be suited to those who wish to build a passive income portfolio. Years of cash flow could easily help offset today’s higher purchase prices.

In addition to cash flow and high home prices, it's never been cheaper to borrow institutional money. According to Freddie Mac, the average interest rate on today's 30-year fixed-rate mortgages rests at 2.78%. Historically low rates will essentially lower monthly mortgage obligations, and increase cash flow for today's landlords.

New Hampshire Housing Market Predictions

The New Hampshire housing market has had a great run, much like the rest of the country. For the better part of a decade, in fact, real estate in New Hampshire has exhibited many of the same characteristics as its national counterpart. Price increases, confidence in the market, and several other indicators are in line with national trends, but what does that mean moving forward? What can the New Hampshire real estate investing community expect moving forward?

• Rochester may receive added attention: As one of the largest cities in the New Hampshire real estate market, Rochester already has a fair amount of demand. However, as the cheaper alternative to large cities like Dover, Nashua, and the state’s capital (Concord), Rochester could easily see an influx of buyers in search of lower home prices. Priced nearly $65,000 less than the median home value in New Hampshire, the median home value in Rochester is a welcome sight to budget-conscious buyers. As a result, it’s reasonable to assume more buyers will turn to Rochester in the coming year.

• Inventory will drive appreciation: Prices in the New Hampshire real estate market have increased for eight consecutive years. While the driving force behind the latest bought of appreciation may be attributed to several factors, a distinct lack of inventory is perhaps the most prominent reason prices have risen so much. The Coronavirus has also prevented builders from adding to inventory, which only compounds the inventory shortage. As a result, expect prices to increase for the foreseeable future.

Summary

In the wake of a vastly improved economy and growing optimism, the New Hampshire real estate market has flourished. Despite the Coronavirus, real estate in New Hampshire has been firing on all cylinders, and it's thanks to several indicators. Mainly, attractive buying metrics and a lack of inventory have catalyzed the entire state. As a result, investors who can get into the market now may find the rest of 2020 to be a great time to invest in New Hampshire.

Sources:

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https://www.census.gov/quickfacts/fact/table/NH/PST045218
https://www.bls.gov/regions/new-england/new_hampshire.htm#eag
https://www.realtytrac.com/statsandtrends/foreclosuretrends/nh/
https://www.realtytrac.com/statsandtrends/nh/
https://www.realtytrac.com/statsandtrends/
https://www.zillow.com/nh/home-values/
https://www.zillow.com/home-values/
https://www.zillow.com/rochester-nh/home-values/
http://www.nhar.org/assets/pdf/marketdata/NHAR_MMI_2019-08.pdf
https://www.attomdata.com/news/market-trends/home-sales-prices/attom-data-solutions-year-end-2019-u-s-home-sales-report/