For the fifth year in a row home prices have slumped in New Hampshire (and the Nation). The first quarter home sales of 2011 show pretty clearly, that median selling price is lower than they were in the first quarter of 2010.
One of the biggest issues is sellers are in a negative funk, they own a home and they’re quite upset that it won’t sell for anywhere near what they think it’s worth , which makes it hard for them to see buying a replacement home when they lack equity in the home they wish to sell. Buyers on the other hand have read about all the bank foreclosures nationally and may be expecting to buy at an unrealistically low price. These situations are holding back both buyers and sellers from pulling the trigger on a sale.
The baby-boomer generation is a blessing and a curse to the real estate industry. As they approach retirement age they start making decisions to sell the nest and look for smaller or recreational style housing to accommodate the new life-style. These potential sales are good for the economic growth cycle in the housing sector. But what of the First time home buyer who we need to purchase the retirees empty nest? Will they, Can they, are they – going to step up and acquire these homes allowing the natural progression of a new generation of home ownership? This replacement buyer is the fuel we appear to be lacking in our housing industry’s engine.
The Baby Boomers are my clients and we rely on them buying second homes and retirement homes as well. This sector of the population may be getting older, but they still control most of the assets in our country. In a recent NAR publication it was noted sales in my direct market place (Grafton county New Hampshire) where one quarter of all homes sold were second homes. This means the buyers don’t have to sell something before they buy…this has been a blessing in the second home and resort business as many sales are being acquired as cash purchases.
This is not rocket science, in order to stimulate growth in future home sales, New Hampshire and the Nation needs more young people who will become first-time home buyers. Young People must be able to afford a good education, that allows them to become our future home owners and we need to preserve the Mortgage interest tax deduction to continue to see real estate investment at all price levels. These two factors can either keep our children as life long tenants (paying rent) or allow quality home ownership in the future. Note to the U.S. Government: Make a college education affordable and preserve the mortgage interest deduction – or else!