Comparing Q1 vs. Q2 Multi-family market in NH

[Andrew Bosco]

Hey everyone,

It's been a while! I decided to let some of the data build up a bit so I could show a comparison of Q1 2023 Q1 vs. Q2 2033. I was also on vacation during the month of July so I am a bit delayed 🙂. As you know, interest rates for 30 year mortgages has steadily held between 7-7.5%. Commercial banks are also getting a bit skittish right now and murmurs of commercial financing have fallen through. It's good to consider other creative finance options like DSCR loans, hard money lending or other varying types of loans. All that said, NH continues to stay a hot market. Sellers are still asking for higher priced properties, buyers are struggling with the interest rates, but the common ground is slowly being found between the two. Additionally, single family properties continue to stay hot in NH as the state has been the highest immigrated state in the NE (due to numerous reasons that I won't have time to discuss here). Needless to say, NH is a hot market for both single family and multi-family properties. If you're struggling to buy, then make sure you work with an investor agent (be it me or someone else) and also make sure they are prospecting off market (I have 1 VA for SMS system of 5K contacts a week and 2 cold callers who call 4K owners per week). Direct to seller communications are best in these ambiguous times. Now, let's get to the details!

Today’s write up will focus on Q1 vs Q2 of 2023 (January - March, April - June). July had only 50 transactions in the entire state of NH for multi-family properties, so I will hold off to compare Q2 2023 to Q3 2023 until the Fall. Here are some write-up reminds;

1. Variance - shows asking price vs. listing price. High variance = overbid. Low = underbid.
2. Low DOM show high demand. Compare DOM vs. Variance for a good look.
3. These are just popular counties in NH. If you want to see more counties or zip code data, then please feel free to make a copy and get granular yourself. I can also show you how to use this document. NH Multi-family data dashboard
4. 2-4 family properties vs. 5+ commercials are entirely different beasts. It’s important to not directly compare them as they both have different requirements and underwriting.
5. Here are my underwriting standards for analyzing properties. These are good rules of thumb. I use Biggerpockets to analyze most of my deals as I really like their calculator.
6. Inventory is a classic topic. NH hasn’t built many new homes in the last 10 years. We continue to see property owners hold for longer and we show a sale history of less inventory year after year.

IF YOU WANT TO SEE SPECIFIC DATA, THEN MAKE YOUR OWN COPY OF THE DASHBOARD. IF YOU WANT ME TO WRITE UP A SPECIFIC ZIP CODE/HELP YOU ANALYZE, THEN LET ME KNOW

Summary: Low inventory per usual and a lot of demand. Strafford and Hillsborough continue to show desirability, but not without longer DOM pain points. High priced properties are showing a much higher DOM with the slightly higher interest rates. Seeing longer DOM properties, but good deals are swallowed up in under 3 days. Expected inventory for the remainder of the year will be low, but expect a slight push in October/November (potentially listing in September). Commercial properties are arguably more affordable than small multi-family properties.

Avg DOM & Variance

2 Unit Overview I am often asked “where can I get a 2 family?”. I will ALWAYS tell everyone that Hillsborough County (Manchester) has the most 2 family sales. Stats don’t lie. 2 family prices in Hillsborough averages around 230K per unit. For context, it was 160-180K sometime last year. Rockingham (Portsmouth area) per usual is expensive. Belknap and Strafford county are affordable areas for multi-families.

3 Unit Overview Most First time house hackers want a 3-4 unit. For context, the inventory is much less than a 2 family and more competitive. The price per unit in Hillsborough is around 171K per unit. Hence, the desirability of Strafford and Belknap county at around 100K in Belknap and 140K per unit in Strafford.

4 Unit Overview 4 units are incredibly difficult to find and buy in NH. Inventory is always low and they are coveted properties. Same story of affordability as above. That said, the inventory in Strafford/Belknap county is incredibly low. Only 2 properties in each county sold in either quarter.

5 Unit Overview Again, 5+ units are tough to compare as any commercial building could be 5 units, 10 units , 20 units, etc. This is a wide range of potential here so take this with a grain of salt and a rough overview of the commercial market. Belknap, Strafford and Merrimack are great affordability areas for commercial properties. Manchester performs well, but is very expensive. Almost rivaling Rockingham county.

Cost per Square Foot I really like looking at the cost per square foot of properties that I buy. It gives me an idea if I am getting a deal or not. When evaluating multi-families - you should always look at if there is unused square footage, potential to add more bedrooms or get creative. Strafford data was incomplete so excuse Q1. In terms of buy box/affordability - Belknap continues to be a good cheap low cost entry across the quarters and historically.

# of Units per County I’ve been talking about inventory and the spread in each article. This shows you just that of each county. 2 families are the most common. 4 families are the least common of the 2-4 units. Hillsborough has the most inventory, but it’s important to see the spread. If you want an affordable 3-4 family, then the most inventory you’ll find is Hillsborough county or look at Belknap county or even Merrimack County. There are enough of the pool in inventory to potentially start that 3-4 family house hack journey.

Year by Year Comparison This shows sales volume in purchases comparing YOY. If you’re expecting this wave of sales to come and potential unload of inventory, well - it’s not looking good. There’s a good chance October/November will have some potential unloading for sellers to unload before the tax year ends. Otherwise, inventory is expected to be quite low.