May 2023 Spring Market Watch by Andy Smith, Broker Owner of Badger Peabody & Smith Realty

As I write the Spring 2023 Market Update, it's clearly apparent that the adage I often quote, "All Real Estate is Local" is as true today as it ever has been. National news and dramatic headlines are important and relevant to pay attention to, so let's take a broad look at what's happening, and then look at the real numbers in our marketplace in real time perspective. 

There are warning signs that the recession that has been lurking in the shadows for quite some time is closer to reality than it was a few months ago. Despite some significant support from very large banks over the last month, First Republic Bank was not able to survive the current market conditions and was taken over by the FDIC and opened again as part of J.P. Morgan Chase. As happened in the last two bank failures, no depositor's money was lost. However, as the 2nd largest bank failure in US history, it does warrant some level of awareness and concern.  

This serves as a backdrop for the question as to what is happening, and what do we expect to happen to the real estate market. On a national level, the average price of homes sold are 2.8% lower than they were a year ago. In some markets, that's a much larger number: Austin, Texas is down 13.7%, Oakland, California is down 13.5%, and San Francisco, California is down 12.3%. Contrast that to New Hampshire, which shows a $445,000.00 median sales price at the end of March, which is 1.1% HIGHER than it was a year ago. Looking even closer, the graph below shows the average sale price in Carroll County is up 16.7%, 8.3% in Coos County, and 11.2% in Grafton County.

Meanwhile, demand continues to be strong, and is not showing signs of dropping off this year. After hitting a low of less than 2 months' supply, we are seeing a small increase in supply, and are now seeing it leveling off in the 3 month supply range, which is the beginning of a normal market.

This is good news for home buyers that have been frustrated trying to find a home in the last few years. The graph below shows increases across the board in our market area as more homes are available as the spring/summer market gains momentum.

Lastly, the graph below shows that recession does not equate to prices falling. In 4 of the 6 last recessions, prices rose. The only significant drop was the real estate fueled recession of 2008-2010.  None of the factors that were present then are present now.

The last graph is also good news for Buyers, in the event of a recession, there is historical evidence that mortgage rates will fall. Current rates for a 30-year fixed mortgage are in the low 6% range, with adjustable rates in the mid to high 5% range.

In 2023, market experts say mortgage rates will likely stabilize below the peak we saw last year. That's because mortgage rates tend to respond to inflation. And early signs show inflation is starting to cool. If inflation continues to ease, rates may fall a bit more, but the days of 3% are likely behind us.

The big takeaway is you don't need to fear the word recession when it comes to housing. In fact, experts say a recession would be mild and housing would play a key role in a quick economic rebound.

Increasing inventory, and stabilized interest rates bode well for a healthy, sustainable real estate market in 2023. As always, I invite you to reach out to any one of our 60+ full-time real estate professionals for a personized, confidential discussion on whether the time is right for you to buy or sell.

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Andy Smith has over 32 years experience in the Real Estate Industry. In 2004 he was designated as a Certified Commercial Investment Member (CCIM), a recognized expert in the disciplines of commercial and investment real estate. He is a founding Member of the NH Commercial Investment Board of Realtors, having served as a Board member, Treasurer, and President. In 2004 he was named the board's Realtor of the Year. Additionally, he is a Trustee for the Society for the Protection of New Hampshire Forests, a past Director of the Northern New England Real Estate Network, is a member of the Littleton Rotary Club and serves on the Board of Directors for The Guaranty Bancorp/Woodsville Guaranty Savings Bank. Andy was awarded the Littleton Area Chamber of Commerce 2007 Business Leader of the Year. In his spare time he can be found on the tennis or squash courts, skiing, or riding one of his motorcycles. Andy lives in Twin Mountain with his wife Jackie, and enjoy spending time with their son and grandchildren in Colorado.