The Holidays and 2011 has come and gone. Leap Year Day and the New Hampshire Primary and has
come and gone. Housing was used as
a wepon by both encumbants and hopfulls this primary season, but as the snow
settles, lets now look back at what really is going on in the state and around
the corner.
To do this, lets pull the lense back. Back a few years to
1986, not because of the great year for Boston sports, but because it was a great
year for New Hampshire Real Estate. With 58,000 total real estate deed
transfers in the state that year, it was the highest on record and the lowest
foreclosure percentage in the 35 years, we have had this statistic measured. In
the five years that followed we saw the foreclosure rate rise (to higher levels
than our current challenges) and the transfer of property seize up. From 1991
through 1996 our real estate market expanded. Total property transfers
increased by almost 20%; the total percentage of foreclosure transfers dropped
from a peak of just under 20% to almost 6%; interest rates dropped for a 30
year fixed by 2.5% and our state created almost 50,000 jobs.
So what does this history lesson tell us? What does where we
are today have in common with our non so distant past of the early ninties?
What is different?
For starters consider the graph below. While the total
transfers of real estate in the state is not the only measure of recovery it is
a good indicator of what consumers and corporations are feeling in terms of
confidence to make a long term purchase. What we feel is similar is the
increase in total transfers of real estate from 2009 through 2011.
Real estate is a reaction to stability and the comfort
people have in choices. Not shown on the above graph is the 20,000+/- jobs that
have been created in the state since December of 2009. Also not show is the
decrease in a 30 year fixed interest rate by about a half of a point over that
same span. We see this all as a positive indicator. Recessions and recoveries
are cyllical and we see this year as a turning point for that recovery in the
state.
No analysis would be complete, however without a look at
some of the differences in the cycles. In 1986 the decline in the market was
like slamming on the brakes, but we arrived at our current condition by pumping
them. Our recovery beyond 1991 was shown with a spike in foreclosures up to 20%
and then a slow recovery year over year, but because currently we had no spike
we have remained around 15% foreclosure rate for the past few years.
Overall we believe that the recession and recoveries of two
decades ago share more in common that what they are apart. However because this
go around did not have the “shock” decline effect, we feel that it will be a
bit slower to recover as there are still issues to work out. Surely no one in
2012 is slamming on the gas, but we feel that people are staying away from the
brake petal.
