Housing Market Update

Transcription

1 Housing Market Update September 2017

2 EXECUTIVE SUMMARY TIGHT HOUSING MARKET CONTINUES, REFLECTS LOW INVENTORY AND HIGHER PRICES Dean J. Christon, Executive Director September 2017 The trend continues in New Hampshire s housing market: a relatively low inventory of homes for sale, particularly in the entry-level range; higher prices for homes that are for sale; and a rental market with low availability of units and increasing rents. To some degree, this trend reflects positives like low unemployment and rising home prices. The data also indicate that finding affordable housing is an ongoing challenge for buyers and renters. This is of concern because our housing market needs to be responsive to shifts in the state s demographics and economy. An adequate housing supply supports business growth and enables the state s economy to grow. The data show that over the past year, much remains the same about New Hampshire s housing market. In more densely populated counties like Hillsborough, Merrimack and Rockingham where most of the state s businesses are located home prices continue to rise. In those areas and statewide, the inventory of homes for sale has decreased and in active markets the lack of inventory likely is slowing the pace of sales. While interest rates are still low, it is likely that they will slowly increase over the next year. Potential entry-level homebuyers are contending with a low inventory of homes near employment opportunities. Their efforts to buy a home may be challenged by high student debt, stagnant wages, and stricter lending requirements for mortgages. And, young professionals and older individuals who are downsizing their households often are competing for similarly sized, priced and located houses and rental units. The state s tight housing market is reflected in the rental market as well as homes for sale. Many low- to moderate-income households continue to rent because there s a scarcity of affordable homes to buy. This is seen in the low vacancy rate for rentals: this year it stands at 1.4% for two-bedroom units (4% to 5% is considered a balanced market). The relative strength of demand in this sector leads to higher rents. For renters, this means they pay a higher percentage of their household incomes for housing, affecting both affordability and housing choice for many households. The 2017 New Hampshire Housing survey of the Granite State s residential rental units found the statewide median gross rent of $1,263 (including utilities) for two-bedroom units increased over 4% since 2016 the fourth year in a row that rents increased. Addressing this clear need for a balanced and adequate supply of housing requires an ongoing commitment from both the public and private sectors. A critical aspect of meeting New Hampshire s housing demand is having regulatory and other public policies in place that allow reasonable opportunities for housing development. Having a range of housing choices supports a strong and growing economy. New Hampshire Housing last year increased access to mortgage funding for low- and moderate-income homebuyers, helping about 2,000 households become homeowners. The Authority also financed the creation or rehabilitation of more than 500 high-quality affordable rental units for working families and seniors, and provided direct rental assistance to thousands of very low-income households. This translates to an investment in the state s economy of almost $700 million last year. New Hampshire Housing is committed to being innovative and working with partners to provide housing to meet the needs of our state s residents and businesses, and to support a vibrant and growing economy.

3 HOUSING MARKET UPDATE - SEPTEMBER 2017 TABLE OF CONTENTS Home Sales Slowing, Home Inventory Down...2 MLS Housing Inventory MLS Inventory by County MLS Current Listings MLS Closed Sales Home Prices Are Rising...4 MLS Median Sale Price FHFA Purchase Only Index Year Over Year Percent Change in Monthly Median MLS Sale Price Comparison of Various Interest Rates Coming Down: Mortgage Delinquencies And Foreclosures...7 Foreclosure Rates for U.S., New England, and New Hampshire Delinquency Rate vs. Unemployment Rate Percent of Loans with Payment Past Due Foreclosure Auctions Publicly Noticed Foreclosure Deeds in New Hampshire The Rental Market Is Tight, Too...10 Median Gross Rent Monthly Median Gross Rental Cost Map 2017 Vacancy Rate by County Household Income Required to Afford 2-Bedroom Rent Percent of 2-Bedroom Units Affordable to Median Renter Household Housing Permits Up...14 Index of Total Housing Permits Authorized New Housing Units Authorized by Building Permit in NH NEW HAMPSHIRE HOUSING FINANCE AUTHORITY Board of Directors Stephen W. Ensign, New London Chair Amy L. Lockwood, Deerfield Vice Chair Kendall Buck, Wilmot John A. Cuddy, North Conway Pauline Ikawa, Manchester Connie Boyles Lane, Concord Mary Beth Rudolph, Dover Stephanye Schuyler, Portsmouth Donald L. Shumway, Hopkinton Dean J. Christon, Executive Director Report prepared by the Policy, Planning and Communications Group For questions about the this report, press inquiries, and permission to reproduce the report, contact Grace Lessner, Public Information Manager glessner@nhhfa.org P.O. Box 5087 Manchester, NH TDD: comments@nhhfa.org 1

4 HOME SALES SLOWING, HOME INVENTORY DOWN The inventory of homes for sale continues to decrease. This reduces the number of potential home sales. Thus, the number of closed sales is down from this point last year although the demand for homes is still high. A high demand and a diminished supply leads to an increase in prices. DECLINING HOUSING INVENTORY Statewide, the June housing inventory has been consistent through the first half of the year. The supply of homes for sale has not trended this low in over a decade. The longer term trend reflects a decline in the number of active listings and an increase in demand. The chart s trend line represents a 12 month moving average. The housing inventory for each county indicates significant differences in the state s regional markets. Southern and Seacoast housing markets benefit from a much more robust recovery and proximity to the Boston labor market area. The low inventories put upward pressure on prices in those markets and may be slowing the sales pace. New Hampshire Housing Finance Authority 2 Housing Market Update - September 2017

5 HOUSING SUPPLY HOME SALES SLOWING, HOME INVENTORY DOWN On a statewide basis, the number of units being offered for sale has been declining. The number of homes for sale at under $300,000 has been declining more rapidly than those above $300,000. The under $300,000 homes are typically in the price range desired by those people looking for their first home. With far fewer choices available to this demographic, many buyers may be shut out of the market. SLOWING PACE OF HOME SALES There was a decline in sales in the first quarter of 2017, however July was up 4% when compared to July of last year despite low housing supply. Cumulative sales are down 8% from the sales volume at this point in

6 HOME PRICES ARE RISING A lack of inventory, as well as low interest rates, are keeping the demand for homes up and forcing prices to rise. Mortgage interest rates have begun to increase, but not enough to put a damper on demand. CONTINUED INCREASES IN HOME SALES PRICES Based on MLS sales in New Hampshire, purchase prices have rebounded past the pre-recession highs. The June 2017 median sale price increased 9.0% from June 2016 and more than 27% since June 2012 (5.4%/yr.). All MLS statistics used in this analysis are based on information from NNEREN for the period January 2003 through June 2017 for all towns in New Hampshire. All analysis and commentary related to the statistics is that of NHHFA and not NNEREN. This analysis excludes land, interval ownership, seasonal camps/cottages, multi-family property, mobile/manufactured homes and commercial/industrial property. New Hampshire Housing Finance Authority 4 Housing Market Update - September 2017

7 HOME PRICES ARE RISING HOME PRICE INDEX SHOWS REGIONAL IMPROVEMENT Home prices in New Hampshire increased by 9.6% over the past year, recovering nearly all of the total 21.8% decline in prices from their most recent peak in 2005 to their trough in Throughout much of this series, New Hampshire and New England outperformed the U.S. as a whole. However, since the end of the recession, New Hampshire and New England have under-performed the nation FHFA Purchase Only Index US, New England, and New Hampshire Source: Federal Housing Finance Agency Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr. 1 US NE NH Monthly prices, compared with the same month in the prior year, have generally increased for the past 2 years. This is consistent with the longer than normal recovery period. 5

8 HOME PRICES ARE RISING MORTGAGE INTEREST RATES Interest rates for 30-year fixed rate mortgages rose from their summer low of 3.44% to 3.97% in July Chances are good that rates will continue to slowly increase Comparison of Various Interest Rates Percent Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Mortgage Interest Rates Fed Funds Rate 10 year Treasury New Hampshire Housing Finance Authority 6 Housing Market Update - September 2017

9 COMING DOWN: MORTGAGE DELINQUENCIES AND FORECLOSURES Mortgage delinquencies are down, as is unemployment; there is a linkage. With delinquencies down, foreclosure auction notices are also down and there are fewer homes potentially going to foreclosure. Additionally, the foreclosure rate is reduced because those having difficulty paying their mortgage will benefit from the tight housing inventory and can sell their home through a short sale or a market sale, avoiding foreclosure. MORTGAGE DELINQUENCY RATES MAY BE LEVELING New Hampshire s delinquency rate continues to decline in The percent of delinquent loans are the lowest they have been since New Hampshire s rate is lower than both the New England and the national rates, but not by much. 11% 10% Delinquency Rates For United States, New England and New Hampshire, through Q Percent of Loans With Installments Past Due In Quarter 9% 8% 7% 6% 5% 4% 3% New England 4.34% United States 4.34% New Hampshire 3.78% 2% 1% New Hampshire New England United States Source: Mortgage Bankers Association, National Delinquency Survey Prepared by New Hampshire Housing New Hampshire Housing Finance Authority 7 Housing Market Update - September 2017

10 COMING DOWN: MORTGAGE DELINQUENCIES AND FORECLOSURES New Hampshire falls right behind Vermont, which leads New England and the U.S. with the lowest percent of loans past due for the second quarter of Rhode Island has the highest percent of loans past due in the last quarter at 4.84%. There is a correlation between unemployment and mortgage delinquency since most households with mortgages that experience a job loss will fall behind in their payments once savings have been exhausted. Steady improvement in the unemployment rate in New Hampshire since the end of the Great Recession has contributed to improvements in the mortgage delinquency rate. 6.0% Percent of Loans With Payment Past Due In Quarter % 4.0% 4.22% 4.34% 3.77% 4.84% 3.78% 4.11% 4.72% 4.74% 3.0% 2.0% 1.0% 0.0% US NE VT RI NH MA ME CT Source: Mortgage Bankers Association, National Delinquency Survey Prepared by New Hampshire Housing New Hampshire Delinquency Rate vs. Unemployment Rate 10% 9% NH Unemployment Rate NH Loan Delinquency Rate 8% 7% 6% 5% 4% 3% 2% 1% 0% Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Percent Source: New Hampshire Department of Employment Security and Mortgages Bankers Assocation Month 8

11 COMING DOWN: MORTGAGE DELINQUENCIES AND FORECLOSURES DECLINE IN FORECLOSURE AUCTION NOTICES Foreclosure auction notices have declined to well under 200 per month. The 1,234 foreclosure notices issued in the first seven months of 2017 is 8% lower that the number of notices issued during this same period in Foreclosure Auctions Publicly Noticed 12 Month Moving Average Source: The Warren Group. Compiled by NHHFA IMPROVEMENT IN FORECLOSURE NUMBERS The cumulative total number of foreclosures for 2016 is 15.5% below the total for 2015, and a lower annual total than any year since Foreclosures are anticipated to decline again in 2017 with the first two quarters decreasing by 3% from the first two quarters in ,500 Foreclosure Deeds in New Hampshire 4,000 3,500 3,000 2,500 2,000 1,500 1,300 Yearly Total 2017 Projection Jan Jun 1, Source: The Warren Group, Compiled by New Hampshire Housing 9

12 THE RENTAL MARKET IS TIGHT, TOO With low vacancy rates and rising rents around the state, a tight rental market trend continues, and affordability remains an issue. All 10 of the state s counties saw an increase in median gross rent, with rents highest in the southern counties near the state s largest cities and close to employers, as well as the Boston job market. New units tend to be on the higher-end of the rental market, further challenging the availability of affordable housing, particularly in the southern tier of the state. RENTAL COSTS ARE UP The statewide median gross rent (including utilities) for two-bedroom units increased by 4.4% to $1,259 from $1,206 in the prior year. The two-bedroom median gross rent has increased for the fourth year in a row. Median Gross Rent $1,250 $1,150 $1,050 $1,259 $1,143 $950 $850 $750 $ Bedroom Median Gross Rent All Units Median Gross Rent 10

13 THE RENTAL MARKET IS TIGHT, TOO Most of the rental units in the state (approximately 79%) are located in Hillsborough, Rockingham, Merrimack, and Strafford counties. As expected, the highest median gross rents in the state are in the southern counties, near the state s largest cities and close to employers as well as the Boston job market. The high median rental costs in Grafton County are driven by the robust market in the Hanover/Lebanon area, which also represents the largest percent of rental units in the county. Monthly Median Gross Rental Cost 2017 Median Monthly Gross Rent For 2-Bedroom Units Less than $900 $900 to $1,100 $1,100 to $1,200 More than $1,200 Coos $818 Grafton $1,147 Carroll $1,040 Sullivan $968 Belknap $1,028 Merrimack $1,176 Strafford $1,156 Cheshire $1,063 Hillsborough $1,384 Rockingham $1,409 New Hampshire Housing Finance Authority 11 Housing Market Update - September 2017

14 THE RENTAL MARKET IS TIGHT, TOO VACANCIES The rental housing vacancy rate continues to decline. Low starter home inventory and an increase in housing costs have slowed the movement of renter households into homeownership. The resulting increase in demand for rental housing has caused a decline in the vacancy rate. New Hampshire s vacancy rate of 1.7% for all units is significantly below that of the U.S. (7.3%) and the Northeast Region (5.2%). 12

15 THE RENTAL MARKET IS TIGHT, TOO RENTAL AFFORDABILITY Affordability (paying no more than 30% of income toward housing costs) for renter households remains a problem in most areas of the state. Statewide, rental housing affordability is limited to less than 15% of the housing units surveyed. Only in certain counties with the highest median income (Grafton and Rockingham) are 15% or more of the surveyed units affordable. Household Income Required to Afford 2017 Median 2-Bedroom Rent Household Income Required to Median 2- Bedroom Rent Support Rent Statewide $1,259 $50,400 Belknap County $1,028 $41,100 Carroll County $1,040 $41,600 Cheshire County $1,063 $42,500 Coos County $818 $32,700 Grafton County $1,147 $45,900 Hillsborough County $1,384 $55,400 Merrimack County $1,176 $47,000 Rockingham County $1,409 $56,400 Strafford County $1,156 $46,200 Sullivan County $968 $38,700 Percent of Est Renter Household Median Income 131% 110% 117% 137% 148% 126% 136% 137% 122% 133% 122% Percent of 2-Bedroom Units In Rental Cost Survey Affordable to the Median Income Renter Household 30% 25% 20% 15% 10% 5% 0% 13

16 HOUSING PERMITS UP The number of housing permits being issued is rising. Newly constructed homes contribute to the inventory that is needed to satisfy the demand. Without sufficient inventory of both rental housing and homes for purchase, rents and home prices will continue to rise, and more New Hampshire residents will be challenged to find affordable homes to live in. HOUSING PERMIT ACTIVITY Permit activity is showing signs of improvement; however, construction activity remains at only half of the level just prior to the Great Recession. New Hampshire continues to lag behind the U.S. on average. 200 Index of Total Housing Permits Authorized Index: 2000 = 100 Source: U.S. Dept. Of Commerce Construction Statistics Division 0 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Axis Title Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 US NE NH Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 14

17 HOUSING PERMITS UP Although not nearly sufficient to keep up with the current demand for rental housing, multi-family permits represent a much greater portion of housing production than was the case prior to the Great Recession. This illustrates the lack of single family construction throughout the recovery. New Housing Units Authorized By Building Permit in New Hampshire 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Single Family Units Multi-Family Units 15

18 New Hampshire Housing promotes, finances, and supports affordable housing for Granite State residents. New Hampshire housing market, economic and demographic data are available at P.O. Box 5087, Manchester, NH (603)