Transcript Market Update - New Hampshire Housing Finance Authority

New Hampshire Housing is a
self-supporting public benefit
corporation established by the
state legislature. We
administer a broad range of
programs designed to assist
low and moderate income
persons and families with
obtaining decent, safe and
affordable housing.
Housing Needs in New Hampshire
A recently completed three part study of New Hampshire’s housing
needs and preferences in light of our changing demographics. Prepared
for NHHFA by the New Hampshire Center for Public Policy Studies.
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New Hampshire’s population growth is slowing down, with fewer
new migrants
Job growth is slow and job quality is poor
Elders are an increasingly larger share of owners and renters
Young home buyers are challenged by slower economic growth
and stricter lending standards
Recent trend away from ownership and towards rental housing
Dichotomy of NH growth means different regions have different
problems
General public, town officials and business are not aware of issues
affecting NH’s housing
Based on Current Population Projections Growth Remains Slow….
…And We Continue to Age
Age Range
Range
Age
Age
Range
2030
2020
New Hampshire Population By Age in 2025
2015
2005
2000
2010
85
plus
yrs plus
85 yrs
80
yrs
84 yrs
to 84
80 to
75
yrs
79 yrs
to 79
75 to
70
yrs
74 yrs
to 74
70 to
65
yrs
69 yrs
to 69
65 to
60
yrs
64 yrs
to 64
60 to
yrs
59 yrs
to 59
55 to
55
50 to
to 54
54 yrs
yrs
50
yrs
49 yrs
to 49
45 to
45
yrs
44 yrs
to 44
40 to
40
35
yrs
39 yrs
to 39
35 to
30
yrs
34 yrs
to 34
30 to
25 to
to 29
29 yrs
yrs
25
yrs
20 to
to 24
24 yrs
20
yrs
19 yrs
to 19
15 to
15
yrs
14 yrs
to 14
10 to
10
yrs
to 99 yrs
55 to
to 44 yrs
yrs
00 to
80,000
80,000
60,000
60,000
40,000
40,000
20,000
20,000
0
20,000
20,000
0
Population
Population Count
Male
Male
Female
40,000
40,000
60,000
60,000
80,000
80,000
New Hampshire Job Growth Has Also Slowed
Annual job growth in New Hampshire has been less than 1% each
year since the end of the recession. By comparison, Massachusetts
has grown at about 1.4% in each of the past three years.
The Quality of New Hampshire Employment Has Changed
Average annual employment in Manufacturing declined by 35% between
2000 and 2013, while employment in Education and Health Services
increased by 28% and Leisure and Hospitality increased by 11%.
The Home Ownership Rate in New Hampshire Remains High
In 2005 after more than a decade of economic growth the home ownership
rate in New Hampshire had reached a peak of 73%, with renter households
making up the remaining 27%. Since then the ownership rate has declined
slightly.
But, Recent Growth Has Been in Renter Households
The growth in renter households in New Hampshire has been
significant in recent years, growing by nearly 13% since 2005, after
declining by 5% between 2000 and 2005.
After Age 34 New Hampshire Households Have Predominantly
Been Owners, And Will Remain Mostly Owners Into Old Age
65% of households age 35 to 44 are owners, 77% of households 45 to 54
are owners, and more than 80% of households age 55 to 74 are owners.
For Households 75 to 84 the percent of owners declines slightly to 77%. But,
even for households 85 and over, the ownership rate is 61%.
Between 2010 and 2025, age 65 and older households, both
owners and renters, experience strong growth; but, remain
a minority of all households.
Near Future Production Needs Vary Dramatically by
County
The number of home sales has slowed seasonally, but total sales for
2013 increased 11.5% from 2012.
New Hampshire Home Prices are Again Showing Signs of Appreciation
Median Purchase Price in 2013
Less Than $100,000
$100,000 to $150,000
$150,000 to $175,000
$175,000 to $200,000
Coos
$92,500
$200,000 to $225,000
More than $225,000
The median purchase price is
highest in Rockingham County,
and lowest in Coos County.
63 percent of owner occupied
housing units in the state are in
Hillsborough, Rockingham and
Merrimack Counties.
Grafton
$190,000
Carroll
$180,000
Belknap
$169,900
Sullivan
$145,000 Merrimack
$202,500
Hillsborough
Cheshire
$225,000
$162,500
Strafford
$200,000
Rockingham
$267,000
County Inventory
Rockingham
Hillsborough
Strafford
Merrimack
Cheshire
Belknap
Carroll
Grafton
Sullivan
Coos
Months
5.2
5.5
6.7
7.9
9.6
10.1
10.9
11.1
12.0
23.5
7.5 Mo.
New Home Construction Remains Low
While showing some improvement since the end of the
recession, construction activity remains at about 38% of the
level a decade ago.
And New Home Sales Account for Only a Small Portion of All Sales
New home sales which accounted for as much as 18% of the
market in 2004 and 2005, accounted for less than 8% of all
sales in 2012 and 2013.
Source: Real Data Corp.
The number of purchase mortgages in 2013 increased over the prior two
years due to improving market conditions and a release of some pent-up
demand. With slowly rising interest rates, refinance mortgages have been
declining since the 2nd quarter of 2013.
Mortgage Market
Short term
• Purchase mortgage activity continues to grow especially in the southern tier.
• Some pent-up demand, and cross border activity has returned.
• The inventory of good quality homes is already limited in the south.
• Refinance activity has declined significantly.
• Mortgage interest rates are at a 40+ year low, but are unlikely to remain there.
Mid term
• Continued growth in purchase mortgage activity will require much stronger job growth
and a return of the single family home construction.
• Refinance activity will continue to decline as interest rates climb toward +/- 6%.
Long term
• Demographics (the aging of the baby boom generation) and economic growth will
determine what happens.
Affordability
For Qualified Buyers it may be a good time to buy.
Since 2009 the monthly PITI for the median priced home has been very close to
the median gross rental cost for a three-bedroom unit. However, when the
costs of utilities and maintenance are included in ownership, there remains an
additional $400 to $500 monthly cost for ownership.
Affordability -
Price, Income and Mortgage Terms
• Income is influenced by other assets and debts.
•
Equity in an existing home, savings, or other family assets can increase
affordability.
•
Consumer debt, car loans, student loans and other financial obligations can
diminish affordability.
• Mortgage credit terms have more influence.
•
Credit score and down payment requirements can influence the interest rate and
may make credit unavailable.
•
Mortgage insurance can add to debt and reduce affordability.
• Other factors also influence affordability.
•
Real Estate Taxes, Hazard Insurance, and Utility costs.
•
Location / transportation or proximity to income.
The cumulative total of foreclosure deeds in 2013 was 26% below the
total in 2012, and lower than the total in any year since 2007.
For New Hampshire, New England, and the US this 3rd quarter
delinquency rate decline breaks the typical pattern of 3rd quarter
increases for only the second time in recent years. However, this rate
remains stubbornly high.
New Hampshire’s delinquency rate compares favorably with most
other New England states.
At the current pace of foreclosure deed recordings, it could take
nearly 12 months to clear this inventory, without any new
foreclosure initiations.
New Hampshire Housing Annual Rental Cost Survey
2 Br $1,076
All $1,018
16% increase
At $1,076 the stateside 2-bedroom median gross rent remains above
the $1,000 mark for the eighth year in a row.
2013 Residential
Rental Cost Survey
Monthly Median Gross Rental Cost
2013 Median Monthly Gross Rent
For 2-Bedroom Units
Preliminary Results
Statewide Median Gross Rent for
2-Bedroom Units - $1,076
Less than $800
$800 to $1,000
$1,000 to $1,100
More than $1,100
Coos
$657
Rents are highest in the Southern Counties
of the state, closest to the Boston labor
market. Most of the rental units in the state
(73%) are located in Hillsborough,
Rockingham, Merrimack and Strafford
Counties
Grafton
$985
Carroll
$964
Belknap
$1005
Sullivan
$925
Merrimack
$1064
Cheshire Hillsborough
$1147
$1039
Strafford
$981
Rockingham
$1224
.
What else does
New Hampshire Housing do?
Housing counseling and education programs.
Fixed-rate mortgage products to participating
lenders.
• A variety of programs to assist low and
moderate income buyers.
• REALTOR® and lender training statewide.
• Over the last 30 years, we have helped more
than 38,000 families to purchase homes,
contributing more than $200 million per year to
the State’s real estate economy!
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Home Flex
FHA, VA or RD
0-point
Home Flex Plus
0-point with
3% Cash Assistance
Home Preferred
Conventional loans
with low mortgage
insurance premiums
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FHA 203ks
Repairs must add value
$35,000
60 days for work
completion
• NHHFA disburses
• NEW disbursement
requirements effective
with reservations as of
4/1/2014
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RD Purchase Rehab
Repairs must add value
$35,000
60 days for work
completion
• NHHFA disburses
• NEW disbursement
requirements effective
with reservations as of
4/1/2014
• Repairs must meet FHA and RD guidelines and loan amount calculations.
• Appraisal must be done as if all work completed and the “as is” value must be
stated within the appraisal.
The Home Start Homebuyer Tax Credit makes
homeownership more affordable for first-time
homebuyers.
 To qualify, eligible homebuyers must receive a
Mortgage Credit Certificate (MCC) from New
Hampshire Housing.
 The Homebuyer Tax Credit can decrease the
income taxes they owe and boost their take-home
pay, which helps qualify for a mortgage and make
mortgage payments.
 The Homebuyer Tax Credit is not a one-time credit
– it is an annual credit for the life of the original
mortgage, as long as the home is the principal
residence.
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Example
1. $150,000 mortgage x 5% interest rate = $7,450 paid
in annual interest
$7,450 x 35% Homebuyer Tax Credit rate =$2,607
$2,000 Maximum annual tax credit
Borrower may be able to boost take
home pay by $167/month.
Calendar Year 2013
•Average family size – 2.3
•Average price -$156,400
•Average income-$56,000
•Average age – 37 years
•Average credit score – 710
•Lending in 131 different towns
www.GoNewHampshireHousing.com
• Homeownership market is recovering slowly as inventories
decrease and the economy continues to improve slowly.
• The southern part of the state is strongest.
• Foreclosures are down as the economy and housing market
improve.
• Lenders appear more willing to negotiate short sales.
• Delinquencies continue to decline but are still historically
high.
• Foreclosures will continue to moderate purchase price
increases and add pressure to the rental market.
• Rental costs have leveled at a high rate.
• Vacancies remain low.
• Some new production in the southern part of the state.
• A significant portion of rental households are cost
burdened.
• The economy is improving slowly. Slow growth is expected.
• Demographic shifts will have a more significant impact on
the state’s housing market than growth.
• In the next 10 to 15 years there will be significant need
for services and housing to satisfy the down-sizing
demand and aging in place.