As the Winter starts to take hold here in the North Country, it is time to take a look at trends emerging in the Conway NH real estate market, according to this seasoned, local Keller Williams agent. The definition of this market varies, mostly due to the many niche markets overlapping the general Carroll County NH and Western Maine region that could be considered part of the same general real estate market. The goal of this update is to provide perspective on factors that influence the general market as well as causing ripple effects in the niches within the market.
Factors affecting the Mt Washington Valley are shifting in the larger economy. As Margie MacDonald once told me almost 2 decades ago, “Pay close attention to the Boston real estate values.” This area is directly influenced by the gain in real estate values in the Boston – Providence metro area, but not as directly as one would think.
The property values don’t rise in Carroll County because people are spreading north due to the outpricing of MA and Southern NH’s real estate. Property values rise because second home buyers are plentiful when homes in the metro Northeast are rapidly gaining value and there is plenty of equity to tap into and a feeling of robust real estate wealth. All boats float on the rising tide….. However, even at the height of consumer confidence, the purchase of a second home satisfies a “want” but is not a “need”. The closing rate on timeshares in Cancun is probably higher than that of a Northeast vacation home shopper. This lack of a need based buyer is also underscored by the very recent trend of buying a vacation home to use as a short term rental property. While this trend is fueling sales it is also a sign of a less confident consumer and often a less wealthy buyer than the vacation home owner of the past. 90% financing for second home isn’t rare and “rental history” is a standard request from even the least interested of buyers. I may go down the rabbit hole of the short term rental crisis aka Airbnb problem in another post, but for the sake of this market trend update, I just want to point out that the need for rental income to fund a purchase indicates that the typical buyer is on shaky enough ground that only a small shift is needed to make the long distance ownership market less attractive. The vacation and short term rental home (and condo) purchases within 20 miles of North Conway Village outnumber the primary home purchases at least 4 to 1. An audience that only wants to buy when their own wealth (outside of the Mt Washington Valley) feels good or needs vacation rental income to get comfortable with a vacation home mortgage, can shift in a moment’s notice. That notice may have been delivered before the snow started falling.
Affordability for the local population to buy homes in the Mt Washington Valley has gapped the home values for years. As one travels “out” from the North Conway – Bartlett – Jackson epicenter of the Mt Washington Valley, homes get more and more affordable but the cost of commuting and vehicle care and being in the mountains can take their toll in other ways. This isn’t an article about the local economy overall, but there is both a positive and negative effect of a tourism based economy. This applies to the real estate market trend in an odd way. There are just enough people that can afford to buy a home that there is competition at the entry level, which bumps right up against the vacation home buyers’ interest in minimizing their investment exposure. In other words, our most vibrant price sector (under $225k) is the most vibrant because it crosses the appeal of the local buyer and the second home/investment buyer, creating the illusion that the entire market is experiencing unsurpassed demand. I would call it more of a perfect storm.
This brings me to my market outlook; Currently, the only people I hear professing that the Boston metro market is still booming are the folks that own property they now want to sell. Realtors all around New England are grouping up in teams and tribes and (the smart ones) are battening down the hatches. You can test this yourself… The next time you see a real estate agent that you know, ask them how the market is performing. The speed of their positive response, especially using reflexive terms like “amazing”, is in a direct correlation to their stress. Ready to answer before you ask? Time to start canning the vegetables! Fortunately, the Mt Washington Valley is buffered from the outside a little bit and the average visitor comes here to forget about the outside world, at least for a little while. This summer was brisk and probably the peak of activity for the near future. Rising interest rates and a slow down in the metro markets are likely to suppress consumer confidence in large, often heavily leveraged, purchases like second homes.
False confidence on behalf of sellers will create a longer than normal lag-time in adjusting price expectations, especially with older sellers that don’t see their primary residences as having lost any value (yet) because they are not selling and the equity margin is not so tight that they need to keep an eye on the rising water levels. Meanwhile, those that purchased in those same metro areas, especially the suburbs, that have skyrocketed are acutely aware of the line that puts them underwater in their homes. Slack in consumer confidence in their own home values, the beginnings of a shaky economy resulting from the previous factor and sellers in denial are all factors that put me in a position to see that values are already trending downward. Homes under $225k are sitting for more than 2 months without selling and homes in the upper pricing layers are barely visible with all the noise created by unrealistic agents.
Moving forward, sellers will need to understand that the needle may already have tipped from just-about-a-real seller’s market to a buyer’s market overnight, or as the leaves fell, and I can’t emphasize enough that we were just barely to the seller side of a balanced market, in a location that is almost predominantly buyer biased. It is a very easy business to be in when the news is all good. Many of the newer agents have never experienced the need to sell real estate and actually market their portfolio, and almost none are good at delivering a true picture. Perpetual optimism is supposed to outweigh experienced advice. If you decide to sell, make sure you have an experienced agent at your side.
-Posted By Bill Barbin, a Conway NH real estate agent with Keller Williams in North Conway NH. Licensed in NH and Maine.
