When Brandy Blackinton arranges financing for interested homebuyers these days, the bank executive gives them a word of caution: be patient.
As head of personal loans at Claremont Savings Bank, Blackinton can do everything possible to prepare clients for a sale. It can help them assess their goals and budget. She can walk them through the requirements and get pre-approved for funding. One thing Blackinton cannot do is bring buyers an available home.
“We have a whole host of customers waiting in the wings,” she said. “So they are prequalified for a mortgage, but our prequalifications with our bank are only valid for 60 days. We are therefore in constant contact with our buyers who are only waiting for properties.
Blackinton and his colleagues are doing what they can to find listings. They scour real estate agents’ Facebook pages and rely on local contacts to come up with new deals.
“But really,” she added, “it’s just telling people during this time to keep saving, to keep saving, to keep putting that money aside. So when something opens, OK, you have that extra money if you have to outbid.
The paradox is unavoidable. Homebuyers in New Hampshire — and beyond — have unprecedented access to financing with mortgage rates hitting historic lows. But that easy money made competition fierce, and offers of interest and money from outside closed opportunities to many interested buyers.
Add to that an ongoing New Hampshire problem: Housing remains scarce and it continues to hit new lows.
“In terms of inventory, it’s been the lowest and it certainly is,” said Adam Gaudet, chairman of the board of the New Hampshire Association of Realtors and founder of 603 Birch Realty in Concord.
In 2002, housing prices in New Hampshire reached a milestone: the median price of a single-family home hit $200,000 for the first time.
Today, median home prices in New Hampshire are hovering around $400,000, a threshold first crossed last summer.
This doubling did not happen gradually. It wasn’t until 2019 that median home prices first crossed the $300,000 mark, according to data from the New Hampshire Association of Realtors. But a ferocious, pandemic-induced buying spree helped accelerate the state’s normal rate of increase. In just two years, median prices have climbed another $100,000.
Prices have risen as supply continues to shrink. In January 2022, 706 homes were added to the market. In January 2020, just before the COVID-19 disruptions, the state added 1,083.
Low availability has sparked bidding wars on nearly every listing, made even more visible over the past year with the return of in-person open houses, Gaudet said.
“Now that the open days are happening again, you go there and you’re a little surprised at how many people there are at the open day,” he said. “And it’s not just for the price of $300,000.” This also happens when viewing homes over $1 million, he added.
Yet even with the low supply, the market has been lucrative for those selling homes. While the overall housing stock for January decreased by 35% from 2020 to 2022, the sales volume for that month increased from $298 million to $422 million, an increase of 42%.
Meanwhile, some buyers who need financing feel pressured to act quickly before interest rates rise.
For buyers who don’t have the money to buy a home, financing can be trickier than it looks, Blackinton says. Simply prequalifying for a mortgage is only the first step. If the buyer finds a home they like, they have to compete with cash buyers, many of whom choose to forego inspections.
If the buyer’s offer is accepted, he will have to wait for a bank valuation of the property, a process that can take weeks. State appraisers are scarce and many have been exhausted by the number of homeowners refinancing their mortgages, Blackinton said. These owners are themselves motivated by low interest rates.
Once the valuation is complete, the valuation may be lower than the amount offered by the buyer, especially if they are experiencing a bidding war. This could limit the amount that can be paid through financing, forcing buyers to come up with the extra cash for the sale themselves, a daunting cost.
Even the most prepared first-time buyers can be left out, Blackinton said.
“A lot of them saved up and were pushed to have at least, you know, 5% to 20% down payment,” she said. “But then when you add that extra layer and they have to have all that other money, but the valuation doesn’t come in (high enough), that totally knocks them out of the market.”
And many buyers face another hurdle: selling the home they live in. In the past, buyers could insert an emergency clause in the contract stating that the purchase was dependent on the buyer selling the house. But in the midst of fierce competition for every property, this type of clause can be a no-starter and can result in the buyer losing the offer. If a seller has to wait for a buyer to sell their current home, an offer from another buyer without that stipulation could become more attractive, Blackinton noted.
Amid these complexities, Blackinton and his colleagues work with buyers to arrange mortgages that are better suited to their circumstances, sometimes reducing the down payment amount. But the risk of losing a desired home in the process is always real.
Gaudet has a different approach. For clients who want to sell their home but are worried about buying their next home on time, Gaudet suggests they plan a move-in delay into the home they’re selling. The result: A family that could sell their house but stay there for several months while they look for a new home. And with limited alternatives, the buyer of that home might overlook a move-in deadline in order to lock down the home.
It’s an approach that works in large part because of an overriding truism: in this housing market, sellers are in control.
“Buyers are very flexible right now,” Gaudet said. “If, as a seller, you say, ‘Hey, I accept your offer, but I need you to wait four more months.’ Buyers are like, ‘OK, I can do this.’ ”
Observers and stakeholders say the end of New Hampshire’s housing market boom is impossible to predict.
The Association of Realtors uses one metric above the rest to gauge the health of the housing market, communications director Dave Cummings said. This measure is the time it would take to sell all of New Hampshire’s housing inventory if no new homes came on the market. The hypothetical number — which takes into account both inventory and demand — can tell a lot, Cummings said. A healthy market would take six months to sell all the houses. Currently, New Hampshire sellers would only take 26 days.
But Cummings argued it was only a matter of time before the trend reversed, if only because the state’s housing stock can’t come down much.
“You know, we always see him leveling, leveling, leveling,” he said. “It can’t be too low, because you would essentially have no inventory.”