New Hampshire’s housing affordability index sank to an all-time low in September. And two new reports — one from the NH Association of Realtors and the other from real estate data curator ATTOM — show the struggles associated with affording to purchase a single-family home or residential condominium in the Granite State.
The NHAR report for September showed the affordability index statewide was 69 for a single-family house, an all-time low; it was 87 for a residential condo.
The ATTOM report from the third quarter of 2022 shows homes in New Hampshire’s four largest counties by population (Hillsborough, Rockingham, Merrimack and Strafford) have become less and less affordable over the years. That report showed it is more difficult to buy a house in Merrimack and Rockingham counties than it is in Strafford or Hillsborough counties.
The measure is called the housing affordability index. A value of 100 indicates that the typical median-income family has exactly enough money to qualify for a home.
The lower the value, the greater the struggle to afford the mortgage.
According to ATTOM, a California-based curator of real estate data nationwide, the Q3 affordability index in Merrimack County was 70, while the index was 71 in Rockingham County. In Strafford County, it was 73 and in Hillsborough it was 74. The national average was 76.
The affordability index is determined by calculating the amount of income needed to meet major monthly home ownership expenses — including mortgage (at prevailing rates), property taxes and insurance — on a median-priced single-family home. It assumed a 20 percent down payment and a 28 percent maximum “frontend” debt-to-income ratio. That required income was then compared to annualized average weekly wage data from the U.S. Bureau of Labor Statistics.
Home median prices are declining, but they are still much higher than they were, and as prices are moderating, mortgage rates are climbing. They’re pushing toward 7 percent, the highest rates since 2008.
“At this point we need incomes to rise, not the interest rates,” said NHAR President Adam Gaudet, owner/broker of 603 Birch Realty in Concord, when asked about what needs to happen in order for homes to become more affordable.
Gaudet did say he’s “noticing an increase in price reductions, signaling sellers need to be realistic when pricing their home. Buyers are taking more time looking at homes, and they have a higher expectation for what their dollar will get them.
Sellers are receiving fewer offers, and the offers they’re receiving are back to asking for home inspections. We also do not see buyers offering to cover a potential appraisal gap. The playing field has evened out a bit.”
“We’re seeing many more price reductions. We’re seeing less multiple offers than I saw last year,” said Chris Ware, owner/broker of the Ware Group, affiliated with Keller Williams Realty Metropolitan, in Bedford. “It’s slowing down greatly and a lot has to do with interest rates. We have some buyers that just now can’t afford what they previously could.”
— PAUL BRIAND
