But need for employees, supply shortages remain
New Hampshire’s economy, which came to a screeching halt last spring, is not only revving up this year but seems to be going full throttle on at least four cylinders.
The unemployment rate is 2.5%, and there are more jobs available than before the pandemic.
The median single-family home price, which rose 25% in May, topped $400,000, and homes are selling in an average of 25 days, at 4% more than the asking price.
Bankruptcies are at an all-time low, and when it comes to business startups, there have been 25% more new business filings year to date than before the pandemic. Business tax revenue is 29% greater than expected.
Page views on visit.nh.gov, the state’s website, are up by a quarter for the coming summer, not from last year but from 2019. Hotel occupancy is almost back to normal.
Yet, in the midst of plenty, there is scarcity. There are more than 20,000 fewer workers than there were before the pandemic. There is half as much single-home inventory. And there’s a severe shortage of supplies and materials. Exports may have increased, but imports so far have declined 17% — one of the sharpest drops in the country, reflecting severe supply chain problems.
For
instance, there’s Plymouth Ski and Sports, which, among its products,
sells bicycles, but won’t be able to get one until the summer of 2023,
said Daniel Masera, owner for the last 26 years. Nor does he have that
many who can do the selling to customers. He once had 15 people working
for him but now can only get three.
During
the summer of the pandemic, “there were hordes here buying anything we
had.” They are still coming, but so much of his inventory is gone. It’s
“like raining soup and all you have is a fork in your hand,” he said.
Finding workers
Folks
are driving again, so manufacturers are making cars again. They need
those rubber seals for auto doors. But Paul McDonald, general manager of
Hutchinson NA, a Newfields manufacturer that makes them, couldn’t find
people to work at $14.50 an hour during the pandemic, or $580 a week,
when they could get $727 on enhanced unemployment. So he did the math,
took a deep breath and upped the hourly pay to $17.50. That’s on top of
paying about 20% more for supplies. But it has worked — he is now
staffed up to 225, some 25 more employees than before the pandemic.
It
is employees, in the end, that will decide the state’s economic future.
For more than a year now, the government encouraged them to stay home.
Now, the push is to get them back to work.
“That
is our overwhelming issue,” said Brian Gottlob, director of the
Economic and Labor Market Information Bureau at New Hampshire Employment
Security. “It all depends on how we get people working again, because
there are more jobs out there than before the pandemic.”
The
unemployment rate just fell from 2.8% in April to 2.5% in May, dipping
below the pre-pandemic level of 2.6% in February, and early diminishing
weekly unemployment claims numbers indicate there is a good chance the
official rate will be even lower for June.
But
just focusing on the unemployment rate “would be misleading,” said
Gottlob, since many workers have taken themselves off the market and
won’t be counted until they rejoin it.
In
March 2020, before the pandemic fully slammed the state’s economy,
there were 24,000 more workers than there were in March 2021, with 9,000
of them in the leisure and hospitality sector, where one out of eight
workers has disappeared.
A
labor shortage has become a labor crisis. Alarmed, business
organizations called for an early end to federal unemployment benefit
enhancements that once enabled people to stay at home. Gov. Chris Sununu
obliged, along with about 20 other Republican governors around the
country. He brought back job search requirements in May and announced
that on June 19, the state would end the $300-a-week enhancement as well
as unemployment benefits for gig workers, those with Covid-related sick
days and family leave, and those collecting benefits for over 26 weeks.
He also offered a signing bonus — $1,000 after eight weeks for newly
signed full-time workers.
Gottlob
thinks this will have an impact, especially for those on the lower end
of the wage scale who saw the greatest benefit in not returning.
But
not everyone agrees. “The early discontinuation of federally expanded
unemployment benefits in New Hampshire may further limit” the ability of
lower-wage earners “to recover and achieve economic stability, and may
slow the overall economic recovery,” wrote the New Hampshire Fiscal
Policy Institute shortly after Sununu’s announcement.
Time will tell, said Gottlob. “We have a natural experiment. As a data nerd, I’m so looking forward to it.”
Inventory, inventory, inventory
When
Adam Gaudet, a Concord Realtor with 603 Birch Realty, saw that the
median price of a single-family home in May went over $400,000 for the
first time, he said he was “stunned.”
It
wasn’t the figure. After all, he sold one house for $752,000, some
$92,000 over the asking price. It was the sheer price acceleration that
surprised Gaudet.
The
median home price — $402,000, to be exact — was $20,000 above April’s,
which was $17,000 more than March. Homeowners have seen a $50,000 growth
in equity since January.
There
is no mystery behind the surge in prices. There is hardly any supply,
combined with pent-up demand and an increase in outof-state buyers.
There
were 1,517 homes for sale in the entire state in May, less than half
the number of a year ago. Some 2,000 came on the market in May, but they
were snapped up in an average of 25 days, exactly half the time it
would have taken to sell them a year ago. And they are going for more
than 4% over asking price.
While
the increase in the number of out-ofstate buyers is small (from a few
points under 30% to slightly over), they often come with big-city
salaries and inflated stock portfolios, allowing many to pay in cash.
Nowhere have prices gone up faster than in the northern part of the state.
Homes
in Coos County more than doubled in price, to $245,000, and that’s the
low end of the market. In Carroll County, they went up 38.6%, to
$395,000, and in Belknap County, 36.7%, to $410,000.
“I’ve
never seen anything like it. All I know is that everybody wants to be
here,” said Adam Dow of Dow Realty Group in Wolfeboro.
Dow
recently sold a property for $6 million that sold for $4 million just
two years ago. Some 200 families come to one open house in a weekend.
“Sellers
are upset if it doesn’t sell on the first day,” Dow said, and buyers
“are sick of having their written offers not accepted.”
Things may be slowing down, however.
Sales have increased, but only by only 6.1%. And pending sales are up only 4.4%.
“Twenty
percent year over year is not sustainable,” said Bill Weidacher of KW
Metropolitan in Bedford. “Wages aren’t increasing 20% year over year. We
are going to see a stall in the market in late 2021.”
There aren’t that many
homes for sale anyway. In Goffstown, there were five on the market. “You
could look at that entire inventory in an afternoon,” Weidacher said.
But you can’t create more inventory if you can’t buy the land to put a house on it or the lumber to build it.
“Land
is massively overpriced,” said Dehann Desharnais, owner of Spruce
Building and Development in Candia. “And some materials are three times
the price of what they were six months ago — anything in steel, and
sheet-rock mud is getting hard to get. It’s crazy. The cost of material
is going through the roof. At some point, something is going to give.”
You
would think that loggers have been benefiting from all this, but that
isn’t the way it works, said Jasen Stock, executive director of the New
Hampshire Timberland Owners Association.
Sawmills
are fetching a pretty penny for the lumber that they process, but they
can’t get the logs. That’s because loggers are reluctant to cut because
most biomass plants are shut down, resulting in the “worst low-grade
market I have even seen. If they can’t sell two-thirds of everything
that’s growing on a lot, is it worth it to harvest the other third?”
said Stock.
Work (and
shop) from home has made residential space more valuable. The opposite
can be said for non-residential space. But, said Chris Norwood of
commercial real estate firm The Norwood Group, “it is unfair to say
office space is dead.” Although he admitted, “It is soft.”
Retail space is also not in much demand, but long leases
have cushioned a depressed market, and there is some space-shifting
going on. Some former retail sites are being converted to apartments,
others to grocery stores.
Warehouse space, however, is another category entirely.
“It’s more about cubic feet than square feet,” said Norwood. There is plenty demand for that space, just not much supply.
A tale of two hotel markets
Ed
Butler, co-owner of The Notchland Inn in Hart’s Location, stepped down
from his Democratic Party leadership position in the House of
Representatives to keep his business alive. Now he is having trouble
keeping up with all the work.
“Advance
reservations are better than they have been in five years, and I’m
hearing the same from others in the area,” he said. “Things started
picking up in mid-April, and the phone hasn’t stopped ringing.”
The
problem is finding employees. “There are no people,” he said, saying
that even with family pitching in, he is two employees short.
Tourism
is back, but how much back remains to be seen, especially after a soggy
start on Memorial Day weekend. But nearly 935,000 people visited the
New Hampshire Division of Travel and Tourism Development website from
March through June 7, compared to 438,000 last year, and 648,000 in
2019. And what they are viewing is a lot different from a year ago. Last
year, it was campgrounds. The year before it was mainly day trippers,
looking at the events calendar and for swimming holes. This year, it is
road trips and cabins and cottages.
Website
traffic doesn’t translate into actual auto traffic, of course, though
that has picked up. The tourism agency, usually pretty optimistic, is
being cautious in predicting near-2019 levels, which wasn’t bad — there
were 3.45 million visitors that summer who spent $1.8 billion.
At
the Hilton Garden Inn in Portsmouth, which just opened up its bar/lobby
for the first time since the pandemic, things are returning to normal.
“Getting there,” reported general manager Troy Bergeron. “Weekends sold out, weekday at 50%.”
Statewide,
weekday hotel occupancy was 53% in April 2019. Last April, when hotels
were closed to all but essential workers, it plummeted to 19%, but so
far this year it has bounced back to 44.2%.
But Steve Duprey, whose Concord hotels mainly handle business travel, will tell you things are still slow.
“The hotel business is the tale of two markets,” he said.
His
Grappone Conference Center at the Courtyard by Marriott — which opened
April 16 — is doing a quarter of the business it was doing before
closing in March 2020. The hotel does capture some folks stopping on the
way up north and participating in local events, with NASCAR racing
coming up in July.
“We are grateful that business has picked up since last year,” Duprey said. “But we have a long way to go.”
Bob Sanders can be reached at bsanders@nhbr.com.