The True Story Behind the New Hampshire Foreclosure Market

One may think after reading the newspapers or turning to your favorite national news syndication that the housing market is like the cowardly lion walking through Oz, frightened of his own shadow. However in looking through the numbers in New Hampshire we have found things not to be as alarming as one may think. To begin with, lets look at how most national models look at foreclosure data. Most of them source foreclosures as the number of foreclosure notices  per total housing units. In August of this year RealtyTrac reported that 1 in every 570 housing units had a foreclosure filing.  This, as you will see, is a flawed argument.

To begin with, a notice does not a foreclosure make. While many homes are given notice that they are going to be foreclosed upon, the reality is that in New Hampshire over the past 24 months less than 60% of those homes actaally get foreclosed upon. While notices may be a harbinger of what is to come, it must be discounted down because some homes end up selling short, or the lender and home owner work something out. In short we believe  the total number of properties actually foreclosed upon is what should be tracked.

The second misdirection that the national media uses is that they use the total housing inventory for a state, rather than the number of total deed transfers. We feel it is better to look at what has been foreclosed upon against the total number of transfers, rather than the housing inventory. While the numbers may sound worse when done in this fashion, we think it is a more fair indicator because it pegs against what else is going on in the market such as normal warranty and quitclaim deed transfers.

Consider the chart below. The red idicates the actual number of foreclosres in the state of  New Hampshire (not notices). While the blue indicates the percentage of foreclosure deed transfers divided by the total number of transfers (Quitclaim, Warranty and Foreclosure) over that same period in the state.

You can tell that over the last few years The Granite State has remained fairly flat on both foreclosures and foreclosure percentage. There is seasonal fluctuation but within reason. One can even note that in the last four quarters, with the exception of the 2^nd quarter of this year, there is a drop in foreclosures that goes beyond seasonality.   For points of reference in 2010 there were 4,007 total foreclosures in the state with a rate of 16.26%. In the last large real estate recession in 1991, we had 5,244 foreclosures and a rate of 19.68%.

Times are tough out there, don’t get us wrong. Foreclosures are not going away tomorrow. However New Hampshire is doing much better than the rest of the nation and we even see trends for improvement. So don’t always believe the man behind the curtain, sometimes the Wizard is just not what you expect him to be.

New Hampshire Housing in the 3rd Quarter… Where do we stand?

Every night when you turn on the six o’clock news you can hear the “ding, ding, ding” of the closing bell of the New York Stock Exchange. While you make your dinner and glare at the instability, the people on the screen are clapping courteously as if they are on the 18^th green at Augusta.  In case you did not get the update on your phone, the six o’clock news is your daily snapshot of your investment portfolio. Housing is not nearly as transparent. For the largest investment most people make in their lives we do not have a chance to look into the lens and understand it on a daily basis. So here is our closing bell, glove claps not included.

In October, the National Association of Realtors released some national statistics, which cited that the total number of existing home sales nationwide for September 2011 was 11% greater than September of 2010. In taking a look at a sampling of Southern New Hampshire towns (Amherst, Bedford, Goffstown, Hollis, Hooksett, Hudson, Manchester, Merrimack, Milford, Mount Vernon and Nashua), we found that upward trend to be the same that in September 2011 there were 18% more homes sold than 2010.

In looking at the graph for the last few years we can trend the number of homes sold in the above mentioned towns for the first nine months of each year. Blue represents 2009, Red 2010 and Green 2011.



Home Sales in Target Towns 2009 through 2011 by Month



In looking at July, August and September, it appears that there is an upward trend in terms of the total number of homes sold. Skeptics or statisticians (aren’t they one and the same?) may say that three months is too small of a sample size to say there is an upward trend, but our team of professionals believes this trend to be real, “People who have been on the sidelines are now seeing a time to jump in.” noted Thom Nofsinger, manager of the Nashua office.

But beyond the numbers there is still a suppression of sales price. In our target markets listed above, median sales price in September have declined 5% over the same month last year. Why is that? “There are buyers out there,” noted Deirdre Hewett of the Real Living The Norwood Group team in Amherst, “but they are cautious. They are not going to put in an offer unless they see a long term value in the home.”

What does all of this mean for the balance of 2011 and into 2012? Hewett noted that, “…there is activity in markets that I am tracking. Properties that are priced right will find buyers who are active.” For buyers and sellers out there, don’t watch the news, follow the stock market or read the national blogs… know that here in The Granite State, we are following the national upward trend of units sold. In addition, like the national picture our pricing has slightly declined.  But beyond the numbers there is demand for home buyers looking for that next purchase.

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