Having the ‘hottest housing market’ means you don’t have enough houses
New Hampshire has the top two hottest housing markets in the country, as rated by real estate search website realtor.com. These ratings should be taken with a grain of salt, as they’re based in part on search queries on a single listings website. But even if the rankings are an accurate representation of the market, that’s not really great news for Granite Staters, as it’s further confirmation that the state suffers from a severe housing shortage.
Having the “hottest housing market” based on realtor.com‘s system doesn’t mean your community is the most desirable in the country. It’s a proxy to measure the intensity of the housing market. Demand is just one side of the coin. Supply is the other, and that’s a big reason why New Hampshire has claimed the top two spots on the list.
The demand side of the realtor.com rankings is based on unique viewers per property on that website only (which is a serious limitation). Concord tops the list at 3.2 views per property. Manchester is second at 2.6.
The proxy for the supply side of the ranking is based on how long homes stay on the market. Median time spent on the market in Concord is 13 days, according to the site. For Manchester it’s 12 days.
Rochester, N.Y., has a median time on the market of 12 days, making it the only other community in the site’s list of top 20 hottest markets that is close to the Concord and Manchester numbers.
Such a short time spent on the market indicates not just high demand, but an extremely low supply. A balanced market is considered one that has at least six months of inventory. It would take less than a month to sell every home on the market in New Hampshire, according to the New Hampshire Housing Finance Authority.
The realtor.com ranking shows Concord and Manchester to be in the top four communities for price, behind two other New England metropolitan areas. That’s another sign that our supply is extremely low.
The top median listing prices were Portland, Maine, at $549,000, Burlington, Vt., at $484,000, Manchester at $478,000, and Concord at $457,000.
Concord and Manchester had higher median asking prices than Worcester, Mass., Springfield, Mass., Hartford, Conn., and New Haven, Conn.
A housing growth map published this week by Axios helps illustrate the underlying supply problem. It shows the percent change in housing units from last July to this July, by county.
Only three counties in New England experienced at least a 1% increase in housing units in the last year. Grafton County was the only one in the Granite State.
The New Hampshire Housing Finance Authority’s annual Housing Market report, released last month, again noted that it “would take at least 20,000 housing units to achieve a balanced market” in the state.
New Hampshire is indeed a highly desirable place to live. The combination of remote work and the pandemic have boosted demand for homes in the Granite State. With remote work now a permanent and growing feature of white collar employment, and blue state refugees seeking low-tax jurisdictions from which to live and work, demand for homes in New Hampshire is likely to remain elevated for years.
But it’s important for policymakers and voters to understand that this is not the cause of New Hampshire’s housing shortage or high prices. Housing prices in the state have risen steadily since 2012. The recent bump in demand just adds to the previously existing imbalance.
New Hampshire was in a housing shortage long before the pandemic. That shortage will remain, as will the resulting high prices, until supply is increased enough to balance demand.
Being labeled home to the nation’s “hottest housing market” would be nice if that term measured demand only. In reality, it’s further confirmation that we don’t have enough housing.
