The rising importance of second home owners

—By Peter Francese

There are some benefits to getting old – despite the late-night TV jokers.  One key benefit is that, on average, older people have more money.  For example, here in the Granite State the median household income of those between ages 45 and 64 is about $71,000, and about one-third of households that age earn six-figure incomes.

Why is that so important to New Hampshire Realtors?  It’s of vital interest because by far the two most rapidly growing age groups in New Hampshire are those 45 to 54 and 55 to 64 (up 20 percent and 50 percent, respectively, since 2000).  The older of those two age segments should be of particular interest, because over the next 5 to 10 years, that fast-growing and relatively affluent age segment will be the most likely to buy a second home.

I estimate that there are about 75,000 homeowners ages 55 to 64 living in New Hampshire today.  But there are nine times that number living in the other New England States.  According to Bureau of Labor Statistics surveys, between 10 percent and 15 percent of them should be owners of two or more homes.

Combining their very high growth rate and high income, along with their high propensity to own more than one home, suggests that this type of buyer will be a big part of our state’s economic recovery.  New Hampshire is already third in the nation in the percent of dwellings that are seasonal or vacation homes.

The Census Bureau estimates that our state already has almost 60,000 seasonal or occasional use dwellings, compared to about 370,000 year-round owned homes.  Given the large number of potential second home owners in New England, it is not unreasonable to think that over the next year or two they could represent as many as one in every three sales.

That trend in combination with the substantial tax credit for first-time home buyers (who are also rising in number) makes me a great deal more optimistic about home sales in New Hampshire over the next year.  However, I am not so optimistic about other states that do not share our combination of high quality of life combined with economic opportunity and a low cost of living.

The latest Northern New England Real Estate Network data on May home sales shows that while median prices for May were still below May of last year, the price difference was small in some places and smallest in Merrimack County, where unit sales jumped 28 percent.

May median sales prices statewide were up about 5 percent over March, but unit sales were 25 percent higher.  Rising interest rates may put a damper on some sales, but I think the fact that median home prices are below $200,000 in eight out of 10 New Hamsphire counties is a powerful attraction to buyers, particularly from other more expensive states.

Since I know all of you will be quite busy this summer, my next column will be early in September, when I will discuss the sales and other trends that develop over the summer.  Between now and then please do not hesitate to email me with your questions or comments.  I can be reached directly at peter@francese.com.

Residential (non-condominium) sales May 2009

  Residential (non-condominium) sales Year-To-Date (January-May) 2009

Source:  Northern New England Real Estate Network