Guest writer: Jim Lee
As the Portsmouth, NH housing market continues to draw attention, residents and potential buyers are naturally concerned about the possibility of a housing market crash, fluctuating mortgage rates, and whether it’s a buyer’s or seller’s market. Local real estate experts Ann Cummings and Jim Lee shed some light on these critical issues.
Will There Be a Housing Market Crash in Portsmouth, NH?
The concept of a housing market crash in Portsmouth, NH, or the broader New Hampshire Seacoast area has been a topic of discussion for some time. The term “housing crash” often invokes memories of the 2008 financial crisis, leading to fears that history might repeat itself. However, the current market dynamics tell a different story. The number of months of housing supply indicates whether we’re in a seller’s market or a buyer’s. A six months supply of homes is considered a balanced market, favoring neither buyer nor seller. Under six months is a seller’s market and over six months favors buyers. Portsmouth and the NH Seacoast has been in a seller’s market since around 2012. At the end of July 2024, Portsmouth had a 3.1 months supply of homes for sale.
One of the main reasons a crash is unlikely is the low inventory of homes available for sale. In Portsmouth, the demand for homes continues to outstrip supply, creating a seller’s market. The low inventory is driven by a combination of factors, including fewer new constructions and homeowners holding onto their properties longer due to mortgage rate lock-in.
Portsmouth’s economy remains strong, with low unemployment rates and a growing population. The local job market, bolstered by industries such as healthcare, education, and technology, continues to attract new residents, further fueling housing demand.
Unlike the pre-2008 era, today’s mortgage market is governed by much tighter lending practices. Borrowers are required to have higher credit scores, and lenders are more cautious, ensuring that only those who can afford their mortgages are approved. This reduces the risk of widespread defaults, a key factor in the previous crash.
The Myth of Home Price Depreciation
Another prevalent myth in the Portsmouth housing market is that home prices are set to depreciate. While the rate of appreciation may slow, the notion that prices will drop significantly is largely unfounded. Historically, Portsmouth has seen consistent home price appreciation as the chart below shows. At the end of July this year, Portsmouth’s average sales price was $998,339.
So what’s driving this appreciation? As mentioned earlier, the imbalance between supply and demand is a significant driver of price appreciation. With more buyers than available homes, sellers have the upper hand, pushing prices higher.
Portsmouth’s appeal as a historic, coastal city with a high quality of life attracts buyers from across the country. The New Hampshire Seacoast, known for its scenic beauty and vibrant communities, remains a sought-after location for both primary and secondary homes.
Buyer confidence in the Portsmouth market remains strong. Many buyers see purchasing a home in Portsmouth as a sound long-term investment, further driving demand and sustaining price appreciation.
Is 2024 a Buyer’s or Seller’s Market in Portsmouth, NH?
For 2024 to date Portsmouth has been firmly in a seller’s market. The limited inventory and strong demand mean that sellers have the upper hand, often receiving multiple offers on their properties. This trend is expected to continue throughout the year.
Guest columnist Jim Lee works with Ann Cummings work together at Jim Lee and Ann Cummings Real Estate. Their expertise in the New Hampshire Seacoast area can help clients navigate the complexities of the market, making informed decisions that align with their financial goals. https://www.newhampshiremainerealestate.com/
