What do we do Now?

-by Peter Francese

Since October of 2007, the value of an index fund based on the Dow Jones Industrial Average has fallen 40 percent. But a great many stock funds are down at least 50 percent from a year ago, and hardly anyone is suggesting that this is the bottom.

By comparison from October of 2007 to this past October, the median sale price of a New Hampshire residence (not including condominiums) has fallen just 13 percent. All homeowners can rightly be distressed about the drop in home prices in our state, but over the past year it’s pretty clear which was the better investment.

Considering the sharp drop in retail sales and the general economic situation, it’s likely to be some months before consumer confidence climbs up from its all-time low point. The president of Best Buy recently said, “In my 42 years of retailing, we’ve never seen such difficult times for the consumer. People are making dramatic changes in how much they spend, and we’re not immune from those forces.”

The fact that, despite their problems, Best Buy is so much better off than their chief competitor, Circuit City, which has filed for bankruptcy, offers some insight for REALTORS®. The biggest difference between those firms is that Best Buy invested a great deal more in their website, and they invested more heavily to understand how customers for electronic goods were changing.

There is no doubt that this is an extraordinarily difficult time for New Hampshire REALTORS®. But it is my belief that when the economy recovers, the most successful ones will be those who invested in upgrading their website and increasing their knowledge of today’s home buyers.

Results from the monthly survey which we ask you to complete will provide more information about home buyers (October survey results are described below).

But improving your website really requires some technical assistance. Here are three suggestions for the next time you upgrade your site:

1. Make the print bigger. More of the people visiting your site are older and have trouble reading small print.
2. Use as many virtual tours or video tours of homes as you budget permits. More site visitors will expect to see some type of video presentation rather than just small still photos.
3. Describe in more detail a home’s benefits in terms that matter to prospective buyers. More buyers, for example, want to know if it has broadband access, how close it is to town or if it’s handicap accessible and/or energy efficient.

Almost a thousand homes were sold in our state in October, according to NNEREN, about 1 percent more than in October 2007. But we only have 265 completed surveys, a 27 percent response rate. That’s much better that the 10 percent of the previous month, but still not high enough to say that the sample is representative. The more responses we get, the more useful it will be to you, so please take a moment to go to the website below and take just a few minutes to tell us about the homes you sold in the past month.

Here are some results from the October survey of New Hampshire REALTORS®:

• 70 percent of homes sold were single family dwellings; only 15 percent were condos
• 18 percent of sales were due to foreclosure and 12 percent of sales were new construction
• 26 percent of buyers were from out-of-state, about a third of them from Mass.
• 78 percent of homes were purchased for a primary home, and 10 percent for second home
• 37 percent of buyers were first time home buyers and 12 percent were age 65 or older
• 35 percent of buyers were families with kids, 25 percent of buyers were single people

The table below shows that while unit sales were up in several counties, prices were between 12 percent and 33 percent below last year everywhere except Carroll County. It’s also taking longer (4.6 months) to sell a residential unit and over five months to sell the average condominium.

The median condominium sale price in October was only 25 percent below the median residential unit sale price. That relatively small difference makes it more difficult to sell a condominium (YTD condo sales are 34 percent below same period last year). That suggests condo prices may go lower in future months. 

October 2008 NH residential (non-condominium) sales

Source: Northern New England Real Estate Network (NNEREN). Statistics are based on information from NNEREN for the respective periods shown for the respective regions in the State of New Hampshire or all towns in the State of New Hampshire. All analysis and commentary related to the statistics is that of the New Hampshire Association of REALTORS® and not that of NNEREN.

Finally, here are a couple of economic indicators just published by the Boston Federal Reserve Bank. The New Hampshire unemployment rate last September was just 4.1 percent. That’s by far the lowest in this region and well below the New England-wide rate of 5.7 percent and the national rate of 6.1 percent.

Our state’s September index of economic activity was 198.7, which is again the highest in this region and 20 percent above the national index of 159.3. Since September of last year, New Hampshire’s index has risen by 2.9 points compared to a one point rise for the nation. By contrast, Rhode Island’s September index of economic activity was just 156.6, and that was nearly six points below September of last year.