1. Housing Market Update Dean J. Christon, Executive Director
New Hampshire Housing Finance Authority
October 19, 2016

2. The Housing Environment
Significant economic and demographic shifts
The state is growing much more slowly than in the past
Younger residents - improving job prospects but…
high levels of student debt,
delaying household formation, and
unsure of the benefits of homeownership vs. mobility.
Seniors will occupy a growing proportion of the State’s housing
Not the largest, but the fastest growing, and they want to age-in-place as long as possible, but…
Service needs

3. The Housing Environment
Current housing supply is poorly aligned with preferences of both older and younger age groups
Mismatch between smaller household sizes and larger homes, not near urban amenities and services
Lack of rental units
Retrospective land use regulations, are not geared towards evolving market needs.
Regional differences are more evident
North vs. South
The Housing Environment

4. Homeownership

5. Sales volume has been rising
At 2,099, Sept 2016 sales were 7.7% above the prior year.
The statistics used in this analysis are based on information from NNEREN for the period January 2003 through August 2016 for all towns in the State of New Hampshire. All analysis and commentary related to the statistics is that of NHHFA and not that of NNEREN. This analysis excludes land, interval ownership, seasonal camps/cottages, multi-family property, mobile/manufactured homes and commercial/industrial property.

6. Housing inventory declining A shortage in some markets, especially below $300,000
Sept. = 7 mo.
An inventory of less than 6 months indicates a sellers market.
The statistics used in this analysis are based on information from NNEREN for the period January 2003 through August 2016 for all towns in the State of New Hampshire. All analysis and commentary related to the statistics is that of NHHFA and not that of NNEREN. This analysis excludes land, interval ownership, seasonal camps/cottages, multi-family property, mobile/manufactured homes and commercial/industrial property.

7. Coos
Grafton
Carroll
Merrimack
Cheshire
Hillsborough
Rockingham
Sullivan
Belknap
Strafford
County
Inventory (Months)
Coos
17.2
Sullivan
12.4
Grafton
11.2
Carroll
10.6
Belknap
9.8
Cheshire
8.5
Merrimack
6.5
Strafford
5.8
Rockingham
5.6
Hillsborough
5.4
Inventory varies widely from North and West to South and East. Southern counties are suffering shortages in hot markets.
The statistics used in this analysis are based on information from NNEREN for the period January 2003 through August/September 2016 for all towns in the State of New Hampshire. All analysis and commentary related to the statistics is that of NHHFA and not that of NNEREN. This analysis excludes land, interval ownership, seasonal camps/cottages, multi-family property, mobile/manufactured homes and commercial/industrial property.

8. Median prices have reached the peak from the early 2000’s
Sept 2005 = $249,000 Sept 2016 = $245,900
The statistics used in this analysis are based on information from NNEREN for the period January 2003 through August 2016 for all towns in the State of New Hampshire. All analysis and commentary related to the statistics is that of NHHFA and not that of NNEREN. This analysis excludes land, interval ownership, seasonal camps/cottages, multi-family property, mobile/manufactured homes and commercial/industrial property.

9. New vs. Existing Homes A lack of new single family construction
$344,200
$312,
$225,000
$245,
Source: NH Dept. of Revenue, PA-34 Dataset, Compiled by Real Data Corp. Filtered and analyzed by New Hampshire Housing The Warren Group. Filtered and analyzed by New Hampshire Housing.
The gap between new and existing has grown. New is now 53% higher than existing, but…
New home sales are only 2.5% of the market.
New Home sales in the Northeast are down 25.8% from last year.
Source: Mortgage New Daily.

10. Some increase, but single family building permits are at 1962 levels
CY ,424
1,927

11. Foreclosures are continuing to decline slowly 2016 total is Projected to be 13% lower than 2015

12. NH’s foreclosure initiations, delinquencies and foreclosure inventory are all lower than NE or US
NH = .25% US = .32% NE = .40%

13. NH’s foreclosure initiations, delinquencys and foreclosure inventory are all lower than NE or US
NH = 3.95% US = 4.64% NE = 4.72%

14. NH’s foreclosure initiations, delinquencys and foreclosure inventory are all lower than NE or US
NH = .91% US = 1.64% NE = 2.12%

15. Ownership Market Summary
Homeownership market has largely recovered from the recession
Upward pressure on prices due to limited supply
Despite record low interest rates, limited supply and other barriers to first-time buyers continue to exist
Ownership Market Summary

16. Rental Market

17. Rental costs continue to climb 12% in the last three years
$1,206
$1,076
Results of New Hampshire Housing’s 2016 Residential Rental Cost Survey are consistent with those found on a national level.

18. Highest Rents are closest to the Boston labor market
Coos
$790
Grafton
$1,134
Carroll
$986
Merrimack
$1,120
Cheshire
$1,045
Hillsborough
$1,278
Rockingham
$1,321
Sullivan
$965
Belknap
$996
Strafford
$1,083
Monthly Median Gross Rental Cost
2016 Median Monthly Gross Rent
For 2-Bedroom Units
Less than $900
$900 to $1,100
$1,100 to $1,200
More than $1,200
Highest Rents are closest to the Boston labor market

19. Coos
$790
Grafton
$1,134
Carroll
$986
Merrimack
$1,120
Cheshire
$1,045
Hillsborough
$1,278
Rockingham
$1,321
Sullivan
$965
Belknap
$996
Strafford
$1,083
Monthly Median Gross Rental Cost
2016 Median Monthly Gross Rent
For 2-Bedroom Units
Less than $900
$900 to $1,100
$1,100 to $1,200
More than $1,200
Most of the rental units in the state (77%) are located in Hillsborough, Rockingham, Merrimack and Strafford Counties

20. Grafton is the exception…
For 2016, no rental cost increases in most rural counties
No Increase
Increased Rental Costs
Coos
Grafton is the exception…
Hanover/
Lebanon
Grafton
Carroll
Belknap
Sullivan
Merrimack
Strafford
Hillsborough
Rockingham
Cheshire

21. Vacancy is the lowest since 2002
All 1.8%
2 Br 1.5%

22. Low Vacancy Impact Higher rents
Harder for low income households to find homes
Few available and landlords have a choice
Competition for limited units
Need search assistance
Increase in “doubling up”
Some increased construction of multi-family units, but at the high end of the market
Low- to moderate-income renter households paying a greater percent of their income on housing costs.
Low Vacancy Impact

23. Affordability
Half of all households in rental units earn less than $40,800 per year and the percentage of market rate units that are affordable to them is low.

24. Renter Households By Age Group and Those Paying 30% or More of Household Income for Housing
44% of the state’s renter households are overpaying That’s 66,300 of New Hampshire’s 150,900 renter households
Overpayment affects all age categories.

25. High levels of student debt (highest in the US).
$36,101 per graduating student (2015)
76% graduate with debt
Difficulty acquiring down payment (influencing factors – job quality and high rents).
Competition with older buyers (who have equity) for smaller starter/down-size homes.
Demographic and social factors.
Delayed relationships (HH formation, careers/mobility, jobs)
Challenges for Renter Households – Impeding their ability to achieve ownership

26. Some renter household income growth
Possibly due to the barriers to “buy-out” of the rental market.
May indicate the strengthened influence of factors other that income in the decision to buy.

27. Questions For The Future
Will home purchase prices/market recovery level off?
When millennials form households, will they eventually create more demand for ownership? (and free up rental units)
Will community services be available for seniors, especially as “Family” renters become “Senior” renters?
Will the market respond to the need for more rental housing?
How severe will local resistance (NIMBY) be when or if there is the a resurgence of new construction?
Will a shortage of affordable housing constrain the State’s economic growth (given our <3% unemployment rate and our very low vacancy rate)?
Questions For The Future