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Worst affordability not putting a big dent into housing market - Adam Dow In the News

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By Michael Cousineau Union Leader Staff
 Updated 

September marked the most difficult time for people to afford a house or condo in New Hampshire, according to one group’s 17-year scorecard.

Many homes for sale are still getting multiple offers, but not as many as earlier this year or 2021, according to real estate agents.

“There’s still so many people that didn’t win the (house) lottery the last three or four years, they’re still out there and they still want to buy,” said Realtor Rachel Eames.

The statewide affordability index showed that the median household income in New Hampshire would cover only 69% of what was necessary to qualify for the median-priced home under current interest rates, according to figures from the New Hampshire Realtors.

Two years ago, people made more than enough to afford such a house, 122% of what was needed. Even a year ago, it was 104%.

“There are plenty of people who can still afford a house in this market,” said Bedford real estate agent Greg Powers.

Home prices and interest rates are both higher than a year ago or two years ago.

Interest rates are running around 7% for a 30-year mortgage compared to 3% a year ago and around 2.8% in October 2020 — adding hundreds of dollars each month to a mortgage.

The median-sales price for a house has jumped nearly $90,000 in two years and $40,000 in the past year alone.

There is still limited inventory with less than a two-month supply of houses on the market, according to the Realtors group.

“This is still a seller’s market,” said real estate agent Adam Dow. “It’s hard to have prices drop in a sellers market.”

Condos also saw a record low affordability in September with the median household income in New Hampshire covering only 87% of what was necessary to qualify for the median-priced condo under current interest rates.

A year earlier, people made more than enough, 139% of what was required, according to figures from the New Hampshire Realtors.

The previous worst affordability readings for homes and condos happened last June.

Powers, a Realtor with Keller Williams Realty Metropolitan in Bedford, said he has anecdotally seen some asking prices trimmed.

“I just think a lot of those price reductions are very optimistic sellers thinking the market was going to go on forever and you could get any price,” he said. “That has changed a little bit, and buyers are a little more discerning these days.”

He said he’s working with fewer buyers.

“A couple (of buyers) got priced out of the market, either by prices or by interest rates,” Powers said. “Two of my buyers ended up buying houses from family members … because it’s convenient, not because they were getting a deal.”

Dow said people relying on financing have been at a disadvantage over the past few years. Cash buyers held the edge.

“The people who needed to get a mortgage, they weren’t getting the house anyway,” said Dow, CEO of the Dow Realty Group at Keller Williams Realty, which covers the Seacoast to the North Country.

“Yes, the folks that need a mortgage that have been challenged the last two years by competition are now challenged by interest rates,” Dow said.

Powers said the market seems to be softening.

“I’d say we are still in a seller’s market, although things are loosening up a bit,” he said. “Anecdotally, I’m hearing of fewer multiple-offer situations. A property might get two or three offers instead of 10 to 15, and some buyers are able to get some concessions from sellers. For sellers, pricing is crucial. No more let’s price it high and see what happens.’”

Prices in September were up about 10% from a year ago but off their all-time highs.

“We have plateaued and prices are slowly, slowly kind of decompressing,” said Eames, owner/broker at Eames Realty Services, based in Concord. “They’re slowly becoming more palatable for buyers, but we are talking a little smidge. It is not going to be a buyer’s market.”

While the market has gone from “red hot” to “strong,” Dow doesn’t expect a market crash like one during the Great Recession.

Housing problems around 2009 were “caused because there were too many loans given to people who couldn’t afford the loans,” he said.

Today, many people have equity built up in their homes, so they won’t be foreclosed upon. They might need to sell if they can’t keep up with mortgage payments, Dow said.

“There’s too much equity in the market for 2009 to happen again,” Dow said.

And “if you’re paying cash for a house, you’re the bank,” he said.

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