Analyzing the Seacoast real estate market in spring 2022, Jason Goodrich uses a fairy tale metaphor to describe the pandemic-long local housing boom: A beanstalk can only stretch so far into the sky.
Goodrich, who works for Dow Realty Group, reflected on the continued real estate market trends: High demand, record high single-family home prices and scarce inventory. Seacoast real estate data shows those trends are still alive.
But Goodrich, a sixth-generation Portsmouth resident, is beginning to notice a shift in the way homebuyers are acting in the current market. Homes his clients were viewing were getting 30 bids nearly two years ago. Now Goodrich is seeing homes receive about half as many offers.
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Fifteen bids, often coming from buyers willing to go above asking price and pay purely with cash, is still a sizable amount. However, Goodrich believes the market is starting to change course, at least partially.
“Not that total sanity is returning, but I think we’re seeing a little more space, a little more breathing room for logic and rational thinking to at least enter the picture a little bit,” he said. “Not fully, but a little. Cooler heads.”
Goodrich’s anecdotal evaluation of the market includes recognition the trends aren't disappearing. Statistics show homes all across New Hampshire are being sold quicker and for more money.
All-cash buyers still exist and the demand is still present, he said, but Goodrich is seeing more and more buyers who need financing come back into the homebuying picture. For months, he added, those buyers were being outbid and pushed to the back of the line.
Do Goodrich's observations signal bigger changes could be coming?
“Prices are still higher than they have been since I’ve been in the business, and others who have been in the business a lot longer will tell you the same,” Goodrich said. “Anecdotally, I don’t sense the same anxiety with everybody scrambling to get offers in and not even having time to look at a place.”
Here’s how a few local real estate agents are viewing the present state of the Seacoast real estate market.
Seacoast homes selling for more money, spending less time on the market
Data compiled by John Rice, the Seacoast Board of Realtors' statistician, comes from 13 communities in the Seacoast: Exeter, Greenland, Hampton, Hampton Falls, New Castle, Newfields, Newington, North Hampton, Newmarket, Portsmouth, Rye, Seabrook, and Stratham.
Between Jan. 1 and April 30 of this year, Rice reported, there were 181 Seacoast single-family home sales with a median sale price of $610,000. Homes were staying on the market for an average of 28 days, two weeks less than the year prior over the same period.
In the same span last year, Rice noted there were 249 single-family homes sold, with the median sale price topping out at $580,000. Houses were staying on the market for an average of 42 days between Jan. 1 and April 30, 2021.
Rice’s year-over-year comparison further showed that there was a slight decrease in homes listed on the market by the start of May. Last year, on May 1, there were 66 homes listed, compared to just 58 this year.
The regional real estate market will “take care of itself” and eventually see prices deflate, Rice assured.
“I think if prices continue to escalate and interest rates go up, it’s going to affect the middle of the market. I think there will come a point that people just won’t see the value of paying astronomical prices for real estate,” he said.
But Rice said that conditions of the current Seacoast market, specifically properties receiving multiple bids far over a home’s asking price, haven’t “changed dramatically.”
Asked whether he believes the market is reverting back toward its pre-pandemic shape, Rice said, “You can’t predict that. You just don’t know. It varies with individual properties. You'll go crazy trying to figure that one out.”
Rockingham County, statewide real estate trends mirror Seacoast
Recent county-level and statewide real estate data from the New Hampshire Association of Realtors reflects the same trends seen across the Seacoast.
In April there were 949 homes sold statewide, a more than 20% decrease in total sales from April 2021. Similar to the Seacoast, single-family residences also spent less time on the market, with homes selling at an average of 23 days after being listed, a 28.1% decrease in time compared to the year before.
However, the median price of homes sold statewide last month sat at $440,000, a 14.7% jump from April 2021.
In Rockingham County, 195 homes sold in April, spending 22 days on the market on average. Prices escalated 16% in a year’s time as the county-level median single-family home price hit $549,900.
“It’s unsustainable for prices to escalate like this,” Rice said. “At some point, it’s going to cool off.”
When that day will come, however, is anyone’s guess.
“As long as we're a bargain compared to Boston, we won’t see that point yet,” he added.
Where do mortgage rates stand?
This spring, for the first time in a decade, home mortgage interest rates hit 5%.
According to Bankrate, a personal finance website, the average rate for a 30-year fixed mortgage was 5.48% on Thursday.
A Time Magazine financial analysis published last month called inflation and interest rate increases by the Federal Reserve the “primary culprits” for the large jump in rates, which sat below 4% for about two years.
“I think that it’s impacting the middle to lower (income) ranges big time,” Rice said of the mortgage rate increases’ impact on homebuyers. “The people that have to finance, you’re seeing some impact.”
The rate hike combined with the long-standing intense demand for Seacoast real estate means purchasing a home is even more complicated for some local buyers.
“It’s no longer a bargain to finance real estate, so people who have to finance real estate have to really pay attention to what they can afford,” Rice said.
Lack of home inventory a national trend
Seacoast Board of Realtors President Jessica Ritchie, of Great Island Realty, summed up the state of the local market by stating the biggest challenge is a lack of single-family home inventory.
"It’s a brutal cycle of homeowners being too afraid to put their homes on the market because they have nowhere to go,” she said. “Most agents right now are having difficulty finding homes for their buyers, especially (Federal Housing Administration) and VA (loan) buyers.”
Though existing home sales rose 1.5% in the Northeast region in April from the previous month, the National Association of Realtors reported nationally home sales were down both month-over-month and year-over-year.
The national report states existing home sales decreased from March to April by 2.4%, Compared to April 2021, last month’s nationwide home sales dropped 5.9%.
Realtor describes highs, lows of working with buyers and sellers
Kelsey Marden, a Realtor with Portsmouth’s Proulx Real Estate, said average-priced homes are typically receiving three to 15 bids once listed on the market, varying based on condition and location.
The primary tip she has for both buyers and sellers is to work with experienced real estate professionals and form a game plan.
“On the buyer agent's side, we rejoice in celebrating winning a bidding war that had more offers than you can count and getting to the closing table on your new home that you never dreamed could be yours,” Marden said. “Or we feel the low of losing another bidding war because even though you put the absolute best offer together that you could muster, there was just something in the other offer that was chosen that was a better fit for the seller.”
When working with sellers, Marden said, Realtors feel success when receiving multiple offers after working to fine-tune a home before a showing, only to have it countered with the anxiety of trying to find their clients a new home in a demanding market.
“As Realtors, we have these conversations every single day and do our best to guide our clients in each individual situation," she said.
With the level of local single-family home inventory hitting low points month after month, Goodrich, like many real estate agents, has tried to create opportunities for his clients. Some of the homes he’s finding and helping them purchase have not even been listed on the market, but their owners are willing to listen to an offer.
Thanks to the Seacoast's natural amenities, Goodrich believes the high demand for housing in the region will carry on indefinitely.
“Because of all the wonderful lifestyle things we have, we are going to show up on the radar,” he said of Seacoast-seeking homebuyers.