Steve DeStefano has been a realtor in Concord since 1985, but he’s rarely experienced a real estate market like this one, for both buyers and renters. John Mattes caught up with him to find out how long it might last and what could possibly derail it.
John Mattes: You’ve been doing this for 35 years. Have you ever seen a market this hot?
Steve DeStefano: Well, I guess it depends on what you call “hot.” It’s hot for sellers. It’s not so hot for buyers. Unfortunately, you get a listing . . . and I’m not making this up . . . I had one listing in Bow. We had 62 showings in three days.
SD: And we had 30 offers.
JM: Holy . . .
SD: And that’s an anomaly. It’s not that much of an anomaly, but it is. So it’s very good for the sellers, but you feel bad for the buyers. A lot of them are nice kids and they just can’t get into houses.
JM: So put it in perspective for me. When you think about the demand on the buyers’ side, how does it fit in within the last 30 years. Is it among the most difficult markets for them?
SD: I think it probably is. I got into the business in ’85 and I’ve never seen inventory this low. I live in Bow and I check the inventory pretty much every morning. This morning, I think there were four houses for sale in Bow that were not under contract.
SD: And one of them was for over a million bucks, so you’re not going to have a lot of people looking in that price range. There’s just not much available. So if you get a listing, and it’s priced relatively close, there’s just a boatload of people coming to look. So it’s a hot market. If you’ve got listings and if you’ve got buyers, you’re writing 10, 12 offers for these kids and they’re not getting anything.
JM: Wow. What’s driving it?
SD: You know, this is just a guess. I think there’s a lot of things. I think a lot of people from Connecticut, New York and Massachusetts have decided they don’t want to be in urban areas. They’re selling their 2,000-square-foot house for $500,000 and they’re coming up here and finding they can buy a 4,000-square-foot house for $500,000, and they’re coming up and buying them. And I think that’s one of the bigger things. And a lot of people can’t move. So they want to put their house on the market, but they have to have somewhere to go. They can’t find a place to go. Even rentals . . . they can’t find a rental. So they say, if we’re going to put our house on the market, and these are the key words, it’ll be subject to finding suitable housing. And a lot of people can’t find suitable housing. So they either don’t put it on the market, or they put it on the market for a month or two and, say, “You know what? We’re just going to stay.” So, I think that it’s that, and I’m jumping around here, but I also think it’s the people coming from out of state are arriving with pockets full of cash and pushing the prices up. And the poor New Hampshire kids, the normal New Hampshire buyers, are getting bumped . . . because they don’t have the cash, or they don’t have 30 percent [for a downpayment]. These other folks do, so good for the sellers. But it’s an influx of people wanting to get out of the urban areas because they’re finding out, hey, I don’t need to drive to Boston every day, I don’t need to live near a city, because I can work from home.
JM: Is that COVID related?
SD: Yeah, a lot of it is, yes. And I think it’s going to change the commercial market, too, and soon, because a lot of employers are saying, you know, I don’t need 10,000 square feet. I can get away with 2,000 or 3,000 square feet or less and have most of my people work from home.
JM: Is your business principally private homes?
SD: Yes, it’s largely residential, probably 90 to 95 percent.
JM: Can you project for us from your perspective whether this influx of new people is increasing the population of Concord, or is it a zero-sum game?
SD: I think the increase is more up north. I think it may be a little bit here because if it’s growth, it’s one house growth. But what I’m hearing up north is that people are changing summer cottages into year-round homes, or they’re buying a piece of land and building up there. And it’s adding to the population. . . . Building is very expensive, and you’ve really got to want to build [in order to] to build. That’s the only opportunity for a lot of people. But you’ve got to have a pocket full of money.
JM: But you’d think that that’s got to be the way to go with inventory so low.
SD: Right. But it gets to a point, I was talking to a builder this week and he told me the cost of lumber in the last year has gone up 200 percent.
JM: I’ve heard that, too. And that goes to a side-by-side category . . . The rental availability, or lack thereof. What’s driving that?
SD: Let’s look at Concord, for example. The vacancy rate in Concord has always been very low. And I think now the rental market is more difficult than the sales market because there’s just nothing out there. I mean nothing. And the kids that are getting squeezed are the ones living paycheck to paycheck because, as a landlord, you can raise the rent when the lease is up and sometimes these kids can’t afford it. And there’s just nowhere for them to go.
JM: Can you look into your crystal ball and try to figure out how long this is going to last?
SD: Well, there’s two feelings on this and they’re both in different directions. If you talk to a lot of financial people, and talk about the speed of the economy in miles per hour, they say that the economy is running at about 60 mph when it’s usually running at about 70. And it’s because a lot of the middle class Americans are not back working to their full potential yet because they were laid off. And they’re saying that once we get through this, that’s gonna really drive the economy up because they’ve been spending at about 40 or 50 percent of what they normally do. So they’re saying that this is going to go on for another couple of years. The other side is concerned that prices have gone up so fast, I mean I lived through the ’90s, but what are we up to? Is it $320- or $330,000 as the average sale price of a house in New Hampshire? That’s a huge increase. I think we’re up 15 percent in the past year. It’s going to get to a point where, just like 2000, or 2008 and 2009, or 1989-90, it gets to a point where it has to pause. And then it’s a question of how long the pause is. In the late ’80s and early ’90s, it was a short pause because it went down so quickly. But the one in 2000, it was seven years. It went down for seven years until it finally hit rock bottom, and then it surged back to higher than where it was in ’05 or ’06. I don’t know if that answered your question.
JM: That’s as good as most people can surmise at this point. What’s going to make a difference on the positive side? For instance, is infrastructure going to be able to keep up with more and more people coming to the state?
SD: I think it’s going to have to, at least on the federal government side. I think that they’re thinking that through, because there’s a lot of stuff that’s been put on hold. Going back 20 years, people would live in Franklin or Northfield or Tilton and drive to Boston. And it was because it was the cheapest way to go. Then as the economy shrunk, people moved closer to the city. I think [infrastructure] will help because the white-collar workers are going to be working from home. They’re not going to be driving to Boston each day. They may go to Boston or Nashua one day a week and work from home three days a week. I think that infrastructure is going to help, but I don’t see it being a driving force.
JM: Do you see the immediate Concord area growing in the next 10 years?
SD: I’m a Concord native, and I think the cool thing about Concord is we don’t’ go up as much, and we don’t go down as much. Ours is a very stable market. And I think Concord’s going to grow but it’ll grow as it always has. Twenty years ago [the population] was 30,000. What are we now? 40,000? It’ll be like that. It won’t be like Lononderry, or Derry, or Bedford, where the growth has been huge. I think it will grow, but it will be more stable, and that’s because of the state workers. It’s a stable market.
JM: Do you think the rental market, the pricing, will continue to go up?
SD: I think what’s going to end up happening, and again this is just Steve talking, I think some of the commercial space is going to become apartments. It’s going to happen in Concord, if you have just so much commercial rental space, how much is it going to cost to refit it, to turn it into a two- or three-bedroom apartment? And I think that’s going to help. And I think some of the towns, and I know it’s a tough word, but workforce housing. They’ve got to find people or get the tax incentives for people to build affordable housing. Look at the Hanovers and Portmouths. The blue-collar workers can’t afford to live in those towns. They just can’t. If you go up to Dartmouth-Hitchcock and you talk to people, “Where do you live?” “Well, I live in Vermont, about 40 or 50 minutes from here.” “Well, why’s that?” “I can’t afford to live in Hanover or Lebanon.” I was in the Legislature for 14 years. They’ve got to find a way to not make workforce housing a bad name.
JM: Give me some perspective on that. Is this the highest you’ve ever seen rental valuations and the lowest inventory?
SD: Oh, yeah. Oh, yeah. Absolutely. There’s always been inventory, but there’s virtually none. I’ve owned rental properties since 1983. This is definitely the highest [prices], but everything else is higher, too. But it is high.
JM: What might burst the bubble?
SD: Well, interest rates. If something happens with interest rates. There was an article in one of your competitors six or eight months ago, and don’t hold me to these numbers, they compared two years ago, the average sale price was $270,000 and the interest rate was 5 percent. Now, the average sale price is $320,000 and the interest rate is 2.5 percent. And the mortgage payment was almost identical. It was $1,401 versus $1,402, or something like that. Almost identical. But the thing is, now you’ve got a $60- or $80,000 bigger mortgage, so if the interest rate goes up, or something doesn’t go your way and you need to refinance, it’s going to be a real problem. The federal government has tried to keep the interest rates as low as possible, and as long as that continues we’ll be OK. But if they let their foot off that a little, and inflation creeps in, it’s going to have a real effect on the values.
JM: So you’ve been doing this for 35 years. How much longer are you going to do it?
SD: That’s a good question (laughing). I’m surprised I’ve made it this far to be honest with you (laughing). I don’t know. I’m a very Type-A person. I want to remain busy, although I’m busier than I want to be right now because I sell and list and run a business. I have two offices, one in Concord and one in Epsom. I’m going to be 65 next month, so that day’s probably coming. I don’t know when, but it’s probably not too far down the road. I think I’ll always be involved though. I’m just not one to sit around. u