Hard Winter For Region’s Home Sales
West Lebanon — The Upper Valley residential real estate market has just come through a brutal winter that mostly saw a decline in the number of homes listed for sale and lower prices for those homes that did sell.
Bur real estate’s winter of discontent has blossomed into the uncertain glory of an April day.
That was the word from two veteran Upper Valley real estate agents, Ned Redpath and Buff McLaughry, who presented their semi-annual real estate market update Friday as part of the Upper Valley Housing Coalition’s Spring Business Leaders Breakfast at the Fireside Inn in West Lebanon.
“April’s been a banger, it’s been great,” Redpath declared before unveiling some decidedly gloomy statistics of real estate activity during the January-March period. The lower first-quarter results were caused largely by the amount of snow the region received, he said, and buyers being tough on what they were willing to pay for a home.
The sole bright spot during the quarter was the lower end of the market — homes priced under $300,000 — which is dominated by first-time buyers. In that segment of the market, the average sale price rose 11.3 percent, to $178,000, up from $160,000, compared with the same three-month period a year ago.
The total number of homes sold for less than $300,000 in the 14 Upper Valley communities of the survey (which excluded Claremont) ticked down to 78 from 83, likely reflecting fewer homes on the market as overall listings were down throughout Windsor and Orange counties in Vermont and Grafton and Sullivan counties in New Hampshire.
“Millennials are the largest demographic buying houses, surpassing boomers,” Redpath said. “They are very hungry to buy.”
Redpath said one reason people in the 18-to-34 age bracket are driving the lower end of the housing market is because a mortgage payment on a $178,000 home purchase is comparable to the rent for an apartment. And, given the perennial shortage of rental housing in the Upper Valley, coupled with the tax advantage of deducting mortgage interest expense, younger people have decided that buying an entry-level home makes economic sense.
Meanwhile, the average price for homes in the $300,000 to $600,000 range was down 3.6 percent to $407,000. In the $600,000 to $1 million range, prices were down 2.1 percent to $741,000, and in the $1 million-plus range, prices were down 12 percent to $1.5 million.
In Hanover, Lebanon and Hartford, the number of homes listed for sale during the first quarter declined 15 percent from the prior year, while the number of days the homes were on the market rose 16 percent, to an average of 127 days.
The numbers in the 11 outer area towns — Thetford, Hartland, Norwich, Pomfret, Sharon, Woodstock, Enfield, Lyme, Cornish, Grantham and Plainfield — were less severe: The number of homes listed for sale fell about 4 percent, and the number of days they were on the market fell 17 percent, to an average of 153.
Redpath and McLaughry tied the softness in the market to the region’s wage scale and paucity of higher-paying jobs. Although unemployment in New Hampshire and Vermont is below 4 percent, which compares favorably to the national unemployment rate, underemployment — in terms of permanent, secure work and upwardly mobile better-paying jobs — nonetheless is a big problem.
“The reality is there are not a lot of (good paying) jobs,” McLaughry said. Redpath picked up on the issue: “We’ve got to be a little worried My kids, Buff’s kids, can’t come back because they can’t earn enough money,” he confided. (Redpath has one daughter who did return to the Upper Valley and now works in his real estate business.)
Spring real estate sales, however, are looking a lot better.
“March and April — wow,” Redpath said. “Fifty years (in the business) and I’ve never seen something like we’re seeing right now.”
In an interview after his presentation, Redpath said he thinks the inclement winter was largely to blame for the decline in home listings and sales for all but the lowest segment of the market. “We had the most snow of anywhere in the country,” he said, and this kept both house sellers and house buyers on the sidelines.
But home sales have snapped back in April. Redpath said his firm, Coldwell Banker Redpath & Co., has recently been “selling three homes a day.” He termed home prices “realistic,” which he attributes to the post-recession environment that reset seller’s expectations. The effects of the recession on the housing market, he said, “will never leave us.”
Nor does it appear that the Upper Valley’s shortage of rental housing will leave anytime soon. Lynne LaBombard, chair of the Upper Valley Housing Coalition, said the rental situation has reached crisis proportions. When she asked attendees at the breakfast to raise their hands if they agreed with the “crisis” assessment, nearly everyone did.
LaBombard said the Upper Valley Housing Coalition, which advocates for affordable “workforce housing” in the Upper Valley, gets “calls every day, hundreds over the year,” from people looking for an affordable apartment to rent.
This has been especially true in the wake of the disclosure by the owners of Pine Tree Lane Apartments, a low-income housing complex in West Lebanon, that the federal subsidy for the 50-unit building is expiring and the owners will have to raise the rents, putting it out of reach for occupants and forcing them to find new homes.
“These people are calling up and sobbing,” LaBombard said, noting that “we have less than 1 percent vacancy rate in workforce affordable housing. … We have the lowest inventory in five years.”
LaBombard called the current rental situation — added to “unchanged” wages and utility bills that add $300 to $600 a year in expenses — “a recipe for disaster.”
LaBombard also said she feared unscrupulous landlords might use the market shortage to extract higher rents from already financially strapped tenants. “My fear is landlords are happy with the Upper Valley rental crisis,” although she didn’t cite any specific examples.
Instead, she stressed the need for the community — and, pointedly, the real estate professionals in the room — to work together toward affordable housing solutions, noting that such efforts are too often stalled or blocked by the NIMBY, or “not-in-my-backyard,” mentality, and the more pernicious CAVE approach taken by “citizens against virtually everything.”
LaBombard said it is important for the community to have a young, vibrant workforce whose members can afford to live here and pay the taxes that help support the schools, the government and the infrastructure used and enjoyed by everyone.
“We cannot be ‘CAVE’ if we want to retire here,” she said.
John Lippman can be reached at 603-727-3219 or firstname.lastname@example.org.