December 02, 2021LITTLETON — Housing prices have reached a record high and consumers can expect inflation to rise over the next year or longer, said industry leaders at the Littleton Area Chamber of Commerce's 29th annual Economic Luncheon on Nov. 22.
Bank of NH CEO Chris Logan said the current inflation rate, based on the consumer price index, was 6.2 percent — the highest it's been since 1999.
"We've all gone to the grocery store and had gas. The numbers are much higher than [Federal Reserve] Chairman Powell suggested. The feds now say it's expected to be transitory. That means they're expecting inflation to last for at least a year. It's definitely affecting our pocketbooks, and I think it's going to affect supply chain structures," stated Logan.
The bank official said supply chain issues would also last through much of 2022, if not longer. He also noted that current numbers showed the stock market was overheating and could potentially be overvalued.
"Half of the members of the Federal Open Market Committee expect mortgage rates to go up by 50 basis points next year; the second half believes it'll stay the same. But they all believe it will go up by at least 1 percent in 2023. My quick conclusion is 2022 promises to have its own challenges, like the past two years, and for all of us. COVID, inflation, supply chain disruptions and staffing will continue to be a challenge for us. I believe interest rates will move up in the second half of 2022," added Logan.
Andy Smith of Peabody and Smith Real Estate provided a local housing market update, reporting a solid market, manageable prices and low inventory.
"I think everybody was a little surprised going into COVID at just how strong the real estate market has been," stated Smith.
One of the industry's biggest challenges, said Smith, was the lack of housing inventory in the area. Listings were often selling after only a week on the market - a much faster turnaround than the typical three to six-month time span, he added.
Smith also noted that while the median house price had risen, so had wage rates.
"Although we are seeing some fairly staggering price increases, the wages have been keeping up. But you'll also see that affordability has continued to be very strong because of the low-interest rates. The income is still very manageable, but we're going to see that change a little bit," said Smith.
The average days on the market for homes statewide was 24 days, a 41 percent decrease from the previous year. Sales volume was down because realtors don't have as many homes to sell as last year.
The median sale price in Grafton County is $315,000, a 65 percent decrease from one year ago. Approximately five years ago, the median sale price was $389,000, said Smith. Likewise, land sales have increased by 130 percent.
"Although we are seeing a little bit of downturn in the inventory levels right now, sales year over year continue to be very strong. It's somewhat of a misnomer that there's nothing on the market. You've just got to be ready to act very quickly," stated Smith.
The broker cited a COVID urban exodus and climate refugees as the driving forces behind local house sales.
"The rural areas have been affected by the urban buyers seeking safety, quality of life and a sense of community. There have been a lot of people coming up from the warm urban areas to our rural areas from the Lakes Region north all through COVID. And they've stayed. This has changed what used to be a second home market."
Smith continued," The Northeast continues to be looked at as a kind of a safe haven from climate change. People are moving from Texas, Colorado and California. They're running from forest fires, mudslides and other things like no water because they're worried about what's going to happen."