I don’t know about you, but anytime we get to celebrate a holiday weekend twice is a good thing in my book. When Independence day falls on a Wednesday, it tends to spread out the festivities and gives us a reason (excuse?) to fire up the grill, have friends over and enjoy the kick-off to Summer; twice! This past week marked a couple of other fun “twos” as well. Mother Nature supplied us with her own fireworks on Wednesday night doubling up the booms and brilliant flashes of light. And the fireworks in Lincoln got interrupted by an apocalyptic rain storm around 9:30pm but started up again around 10, offering two fireworks shows for the price of one! Last, but most fun, I was treated to some beautiful sights near the dual rock faces of Cathedral and Whitehorse ledges while enjoying a yummy wrap and some blueberry wine with a fellow scenery-phile.
The rule of two’s applies to the North Conway NH housing market as well. At the most basic level it comes down to supply and demand. As we all witnessed a few years ago, the demand (or perceived demand) was far greater than the supply. This creates a bit of an unbalance in the system and the proverbial pendulum swings a bit too far to one side. Wait, give me a minute… I just want to enjoy that memory for a minute! Now, snapping back to reality, we see the demand has settled to more palpable levels and the supply is adequate to fulfill those needs.
The National Association of Realtors have a bevy of number crunching folks whose job it is to make sense of national trends and keep a finger on the pulse of the market. I came across a headline implying that home sales were being slowed by limited supply. The main reason being that we did not see the typical Springtime upturn in inventory this year but the rate of sales has remained solid. Although I’m always cautious about applying national statistics to our local market, I thought many of these were both interesting and encouraging.
The main number I liked was the increase in total existing-home sales. These are completed transactions that include single-family homes, town homes, condos and co-ops. This number jumped 9.6 percent to 4.55 million in May. As we’ve said before, people are still buying homes and it would appear that they are buying them at a greater pace than just a year ago. This marks the 11th straight month that home sales have been higher than the same month a year earlier.
Realtors like to talk about inventory in terms of “supply”. For example, if 10 homes sell every month and you have 50 homes on the market today, you have a 5 month supply. On a national level, we have just over a 6 month supply of homes at the current sales pace. Last year at this time, the inventory was 20 percent higher and the supply was over 9 months. Moving all the way back to July of 2010, there was over a 12 month supply of homes based on inventory and sales. This certainly does not mean we are in danger of running out of homes to sell, but it speaks volumes about the trend back towards higher consumer confidence and a stronger market.
We all know that interest rates are at record lows, but the other side of that coin, home prices, are finally starting to see some significant gains. The national median existing-home price for all the different types of homes rose nearly 8 percent over May of last year to $182,600. This marks the third consecutive month of year over year price gains. This third month statistic may seem trivial, but the last time there were three back-to-back price increases over the previous year was in 2006.
We can’t talk about the market today without throwing “distressed” homes in the mix. Foreclosures and short-sales accounted for a quarter of the sales in May. That number is down from 31 percent in May of last year. Foreclosures sold for an average discount of 19 percent below market value and short-sales were discounted 14 percent. Those numbers are tolerable for a strengthening market as long as the median price keeps trending up along with the number of homes sold.
If we focus on specific types of properties, the number of single family homes sold has increased 10.4 percent over May of last year and the median sale price is up 7.7 percent to $182,900. Condominiums are enjoying more modest increase of units sold at 4.2 percent and an increase of 8.8 percent in sale price to $180,000. Regionally, we seem to be faring quite well. In the northeast, our home sales (all types) are up 7.3 percent over last year and the median home price inched up 3.8 percent to $250,700. Once again, thanks to the National Association of Realtors for all the statistics.
Overall we are seeing more activity in the market on both sides of the table. Sellers are seeing the increased activity and want to throw their hat in the ring and Buyers are starting to get off the fence and take advantage of the opportunity the current market offers. I’m not here to say that the pendulum is racing back in the other direction, but the obvious signs of a strengthening market are hard to ignore. There’s a good chance we are “in” or approaching a level playing field for buyers and sellers. You knew it was coming and I have to say it. It’s a Win-Win! Happy (2nd) Independence Day Weekend.