For homebuyers and sellers in the Upper Valley, understanding how the Market will likely change over time is critical to making informed decisions about housing needs. This blog post will provide a detailed forecast of the current trends shaping the Upper Valley real estate market as they are expected to evolve over 2023. By analyzing both macroeconomic factors affecting housing markets nationwide and specific conditions within the Upper Valley, you'll better understand where prices might be headed and what opportunities may lie ahead so that you can plan accordingly.
Factors impacting real estate markets in 2023
Across the board, the number of available homes on the Market Is likely to remain far lower than demand
. Over the past two years, the continued lack of homes for sale has been the primary driver of rising prices. In the first half of 2022, enough qualified buyers were still looking for real estate, which resulted in prices continuing to grow throughout the year…a simple matter of supply and demand. However, prices started to moderate in the last few months of 2022 due in considerable measure to the increase in mortgage rates. The rate of price appreciation was +2.3% nationwide in December, but this was slower than in November. Price moderation is likely to continue throughout 2023.
In the second half of 2022, the pandemic housing market boom began to slow as mortgage rates doubled compared with the start of the year. These increased costs reduced the size of a mortgage that buyers could afford. For every increase in rates of 1%, a buyer loses approximately $100,000.00 in purchasing power. In some markets nationally, this trend resulted in sellers reducing their asking prices to meet buyers' abilities to obtain financing. Many purchase contracts were canceled outright, and some sellers left the Market. Since then, mortgage rates have declined somewhat, providing some relief for potential buyers.
Forecasting mortgage rates in 2023 just became a bit murky. On February 2nd, 2023, the Federal Reserve raised the reserve rate by a relatively modest ¼ point, predicting that 2023 will likely bring slower economic growth, continued inflation challenges, and higher unemployment. The next day, the latest jobs report was released, showing an increase of 517,000 jobs far outstripping all expectations. If the Fed eventually turns out to be correct, it bodes well for real estate in 2023
. Historically, weaker economic growth has correlated with lower mortgage interest rates. If this latest jobs report portends what's to come, the Fed will have to rethink its strategy, which could lead to higher mortgage rates as inflation continues to fluctuate in 2023.
Is there a bubble?
There's been chatter in financial circles about the Market's similarity to the 2008 recession and the fear that this may foreshadow a significant market correction. However, the difference between 2022 and 2008 is that most homeowners have enough home equity to deal with financial setbacks. In 2023, it is more likely that foreclosures will come in a trickle
since delinquency can be resolved by selling due to the favorable equity positions most homeowners enjoy today. It is also true that lending standards are much stricter now than in 2008, resulting in far more solvent homeowners.
Looking at Upper Valley Market Trends
With its stunning autumn foliage, mountain views, rolling rivers, cultural amenities, educational opportunities, and varied employment opportunities, it's no wonder the Upper Valley of Vermont and New Hampshire has been a popular area to live in for many years. As a result, the Upper Valley has historically bucked the trend of national as well as state-wide real estate trends. An analysis of two notable towns in the area — Hanover, NH, and Norwich, VT — gives insight into how the Upper Valley's real estate market has been doing and what buyers and sellers can expect in 2023.
According to recent data, the median list price
over the past two years has fluctuated due to limited inventory. Median Prices have ranged from a low of $562,500 in March 2021 to $2,724,500 in December 2021, with most months' median listing prices ranging between $500,000 and one million dollars over the past two years. In addition, there have not been more than 30 homes available for sale per month during these two years. Finally, the median days on the Market have ranged between five and 124 days from January 2021-October 2022, although most months' medians have clocked in around 20-50 days.
2022 versus 2021: The Trend
In Hanover, the Median Selling Price in 2022 was $920,000, a 32.23% increase over 2021, despite sales decreasing by -19.09% year-over-year. Is the expectation that in 2023 prices will grow an additional 32% in Hanover? Very unlikely, but it is fair to speculate that selling prices will not sink much below current levels, primarily due to the continued lack of inventory for sale. Days on Market is a good barometer of how active buyers continue to be. Nineteen days is historically relatively fast for a home to go under contract. Also, the Selling vs. Original List Price has remained steady, indicating that sellers are getting their asking price far more often than not.
Norwich benefits from the same characteristics as Hanover. It is famous for its stunning scenery, quality of life, schools, and nearby outdoor activities. As a result, it offers Norwich home sellers solid buyer demand and steady valuations for determining list price. Over the past couple of years, there have never been more than 15 homes available for sale per month. Given high demand, Median Days on Market remain remarkably low, with most months clocking between 20-55 days.
2022 versus 2021: The Trend
In Norwich, VT real estate, the Median Selling Price in 2022 was $735,000, a .82% increase over 2021, despite sales decreasing by -39.66% year-over-year. Given such pricing stability, it is fair to speculate that selling prices will remain flat, if not slightly down, in 2023. Lack of inventory will continue to be an issue which will help keep pricing stable. Days on Market for most listings will likely continue to grow in 2023. Also, the Selling vs. Original List Price has also remained steady, indicating that sellers in Norwich are getting their asking price far more often than not.
For buyers looking to purchase a home, condo, or land in the Upper Valley this year, you should keep an eye on mortgage rates. If the current moderating trend in rates reverses, it would be wise to get pre-approved (not pre-qualified) and lock in a rate sooner rather than later. You should also anticipate limited inventory and the need to act quickly when a desirable house, condo, or parcel of land comes to Market.
For sellers, it's safe to say that the Market will continue to be a seller's Market in 2023. The key is to price your home with the expectation that prices will not continue to rise in any meaningful way and may even lose ground this year. To overprice this year will more than likely result in months on Market, not days, and, just as likely, no sale unless a proper price adjustment is undertaken.
Resources for buyers and sellers in 2023
As any experienced home buyer knows, scoring your dream home in the Upper Valley in 2023 will require careful consideration, diligence, and preparation. Please visit The Buyer Resources page
on my website for some helpful ideas.
Selling your home in the Upper Valley in 2023 can be rewarding. It takes awareness of market trends and ensures your home is prepped for maximum appeal. For instance, before placing your house on the Market, consider getting a home inspection to identify any issues that may need repairing or upgrading. Addressing any problems upfront will make your home far more attractive to potential buyers than a home with multiple issues. Please visit The Seller Resources page
on my website for more helpful ideas.
Partner with Alan DiStasio
The Upper Valley of New Hampshire and Vermont offer attractive opportunities for buyers and sellers. Both regions offer a unique quality of life while providing homeowners with stability and market predictability regarding their real estate investments. With the right resources and strategies, buyers and sellers can expect a successful real estate transaction in either area. When you are ready to make a move in the Upper Valley, reach out to Alan DiStasio
for expert advice and assistance through every step of the buying or selling process.