What a difference a few years makes.  The Hudson NH real estate market, much like the Merrimack NH real estate market and the Nashua NH real estate market have gone through some turbulent times.  The odd part is that not all price bands or developments for that matter react differently to the shift in the real estate market.  Some types of properties have taken only a slight correction in price while others have been hit heavily, many times because of all the foreclosure properties entering the market.

For instance, there is a condo complex called Elmwood Village in Hudson, NH.  One of Elmwood Village’s biggest benefits was that it allowed buyers to get into a townhouse for the price they would have to pay for a garden style condo somewhere else. Also, it was convenient for someone who wanted to work in either Massachusetts or commute up to Manchester or over to Nashua.  Back in 2005, there were more than a few that sold in the $160,000s and there were hardly any foreclosure properties to be found in the complex. 

Unit 202 In Elmwood Village just sold for $100,000 in March. 

If we say that fair market value in 2005 for one of the Elmwood Village townhouses was $160,000 and fair market value today is $100,000, then that means that prices have come down in Elmwood Village a whopping 37.5% in the past three years. 

When property values drop that much, new opportunities arise.  There was a certain segment of the population who couldn’t qualify for a $160,000 mortgage back then but could qualify for a $100,000 mortgage now.  When the prices dip that low a new pool of buyers are unlocked that can own instead of rent.  What is helping this situation now is that buyers can still buy these properties with as little as no money down.

Secondly, one of the byproducts of a market that ascended very quickly was that it frequently created a gap between what the monthly payment would be from owning and what rent you could get from the townhouse.  For instance, if you finance a property at zero down and are paying $2000 a month but it only cost you $1500 a month to rent the townhouse, then you would have a $500 gap between what it would cost to rent and to own (well, it would be less because of the tax benefits of owning).  Either way, it was harder to justify owning than renting because of this gap.

Today, rents haven’t moved all that much but the monthly cost of ownership of some  properties have dropped significantly.  From a monthly payment perspective there is an equilibrium that gets created when the market rent number intersects the monthly mortgage payment number.  If you can rent for $1500 a month and own for $1500 a month, then it really doesn’t make sense to rent any longer, especially when the tax advantages come into play along with not having to deal with a landlord. 

Many of these properties that are driving the cost of home ownership down are distress sales that offer some fantastic deals.    Who knows, you might be able to find that perfect place and have it cost you less each month than you are paying in rent!

Andy Benjamin
REMAX Properties I
603-674-5864 (cell – best way to reach)

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.