Bedford, NH --Maine and New Hampshire are attracting home buyers from around the country, drawn by the lower cost of living and higher quality of life in Northern New England. The increased demand from out-of-staters has contributed to a rapid rise in home prices and record-setting lows in inventory throughout the region. If this trend continues through 2021, it could bring significant economic growth to Northern New England, changing the face of communities large and small across these states.
Real estate data from the National Association of Realtors show that the median home price in the Northeast during February was $356,000, up 20.5% from February 2020. Year-to-date numbers for 2021 indicate the increase is part of a longer, recent trend. Home prices thus far in 2021 are 23% higher than all of 2020 for single-family homes and 16% higher for condos.
The price increase is driven by higher demand, and not just from the typical sources. Historically, people move to a new home within 10 miles of their current home. But since Q3 2020, Masiello Group real estate agents have seen an increase in home buyers from major Eastern Seaboard locales like Connecticut, New York, New Jersey and Washington, DC. There's also been an increase in the number of people from Sunbelt regions like Florida and Arizona, and expensive West Coast cities such as Seattle and San Francisco.
Buyer data collected by the Better Homes and Garden The Masiello Group, which has 33 real estate offices throughout Northern New England, found that 35% of people who bought homes in New Hampshire and Maine during the latter half of 2020 came from outside Northern New England.
What's behind the move?
While there is no hard data yet to confirm that the COVID pandemic had a direct impact on people moving to Northern New England, the timing of the increased in-migration points to a connection.
A survey conducted by the University of New Hampshire Carsey School of Public Policy found that people have been moving to New Hampshire to be closer to their family, for work, and to enjoy a higher quality of life and better lifestyle. This bolsters the anecdotal evidence many agents are hearing from people moving here from outside the region.
"Home buyers today are less restricted on where they can live, thanks to more liberal remote work policies. Given the choice, people often go with the location that's safer, offers more home for the price, and has the highest quality of life," said Chris Masiello, President and CEO of the Masiello Group. "What many of us who have made Northern New England our home already know is that the lifestyle here can't be beat. We have much of the same infrastructure and amenities as larger metro areas, yet we have a lower cost of living and close proximity to the outdoors. It's a place you can truly live, work and play."
The increase in home sales by out-out-state buyers tracks with the timing of announcements made in 2020 from major companies like Twitter that they would move to a permanent remote work model. For people unrestricted by location, they can opt to move somewhere that offers a better quality of life, larger home, bigger yard and closer-knit communities.
"Both Maine and New Hampshire are a great choice for these amenities," said Masiello. "They have more affordable housing than locations further south, they have safe communities, modern infrastructure and are still close enough to urban centers that you don't feel too isolated. On top of that, New Hampshire has a low tax burden and business friendly climate."
Potential economic boom on the horizon
High demand from home buyers outside of the region means it's never been a better time to sell a home in Northern New England. According to Tom Cole, 2020 President of the Maine Association of Realtors and Broker with Better Homes and Gardens Real Estate The Masiello Group in Brunswick, Maine, residential real estate activity in his state "is vigorous."
"In most markets across Maine, Realtors are reporting multiple offer situations on move-in ready listings. The increased competition for historically low for-sale inventory availability is resulting in price appreciation," Cole said.
What makes this in-migration trend so noteworthy is that it appears to be happening across all residential property types throughout Northern New England, not just for single-family homes or in isolated communities. People who are thinking of buying a bigger home in a more affordable town nearby are surprised to find home prices are rising there too. This trend also comes after a period of community investment throughout the region, funded by a healthy pre-pandemic economy. Communities are investing in basic infrastructure and amenities that attract residents, such as revitalized downtowns, park renovations, and hiking and biking trails.
These investments, combined with an increase in home prices, are likely to spur development, resulting in overall growth in these communities. If demand remains high for an extended period, it could launch an era of substantial economic growth across the region as the economy begins to open again.
Commercial properties are also highly desirable
Increased interest in real estate in downtown areas is further evidence an economic boom is on the horizon. Having a row of storefronts instead of vacancies will certainly boost a community's downtown revitalization efforts, in addition to the jobs and economic activity it brings.
Another emerging trend is out-of-staters moving to Northern New England—and bringing their businesses with them. "Commercial agents saw an increased interest in 2020 from business owners looking to relocate from major metropolitan areas," said The Masiello Group VP of Commercial Sales, Chris Pascucci. Business owners from big cities create opportunities for new businesses that provide services city dwellers have come to expect, such as take-out and delivery services, ethnic food, and personal care services.
"People from places like New York want to be somewhere safe and to have a better work-life balance," said Pascucci. "Relocating to Northern New England offers the connectivity, more affordable home prices, and plenty of opportunity for businesses to open and grow."
Where this economic boom could face some pressure is if nothing is done to alleviate the region's low inventory rate and competitive, fast-paced market. In Rockingham County, New Hampshire, average time on the market in February 2021 was 35 days, down 52% over February of last year, and new listings of homes in New Hampshire were down 31% in February 2021 when compared to the same month last year. According to the Maine Association of Realtors, home values and sales volume is outpacing last year thus far, however, "a continuing positive trajectory for 2021 is dependent on homes for sale coming onto the market." If there are not enough homes to supply-demand over the long term, it could discourage some home buyers from entering the market at all.
Northern New England is fortunate to see signs of a strong economic future in rising home prices and increased demand. How long this trend will continue and the degree to which prices continue to rise is somewhat uncertain as major cities begin to reopen and return to normal. However, we're confident the market will remain strong, thanks in large part to the desirable location that Northern New England offers.