By THOMAS P. CALDWELL, LACONIA DAILY SUN
Meredith residents learned this week that their property assessments have risen by an average of 9 percent, with lakefront properties seeing double-digit increases. That is no aberration, say Lakes Region real estate professionals.
“We still haven’t caught up with the southern part of the state,” said Roy Sanborn of Four Seasons Sotheby’s International Realty, “but it’s definitely a sellers’ market.”
Frank Roche of Roche Realty Group agreed, saying the real estate market has jumped 10 percent in value.
Assessors determine the taxable value of property by reviewing recent sales, and what they are seeing is a rapid rise in price for lakefront property with other classes of property also selling at higher values. The exception is manufactured housing, which has waned.
“Properties that need work, where the owners have deferred maintenance, or if they need cosmetic work, are tough to sell,” Sanborn said. “People don’t want to come in and have to do work right away. Sometimes wallpaper is the kiss of death; people don’t want to have to strip it off.”
In contrast, “Developers are into some projects that focus more on vacation homes and high-end development, and that’s a good trend. We’re going to see more of that,” Sanborn said.
Statistics show that 60 percent of Moultonborough’s housing stock is in second homes, and that keeps the town’s tax rates low. Tuftonboro has 53 percent of its housing stock in second homes; Alton, 45 percent; and Laconia, 25 percent. Those numbers compare to 10.5 percent statewide.
“The state since 1940 has been transitioning to a much higher stock of secondary housing,” Roche said. “The highest concentration is in the Lakes Region — Carroll and Belknap counties. Combined, they have 72 percent of the second homes in the state.”
Nevertheless, Roche was surprised at how quickly the units at the former Christmas Island property sold.
“It was an antiquated motel that needed to be upgraded,” he said.
The duplex townhomes that replaced it were priced in the $600,000 range, with square footage ranging from 2,200 to 3,000.
“What’s happening is there are people who come, flush with capital, who are looking for property on the lake, or with a view of the lake, but are finding a shortage of inventory, which is causing prices to spike up,” Roche said.
Sanborn said, “It’s still very much a discretionary market, with a lot of vacation home buyers who don’t need to buy on layaway. There are a lot of people looking for a forever home, who are still working but are looking to retire in a couple of years. It’s a strong trend.”
Roche traces the trend back to the “artful execution of quality development” in South Down Shores and Long Bay.
South Down Shores is a private gated community with about 490 properties off Parade Road in Laconia, with single-family homes integrated with 19 condominium villages. The community has 4,000 feet of shoreline on Lake Winnipesaukee with sandy beaches, a beach house, two tennis courts, a basketball court, a sand volleyball court, a skating pond, cross-country ski trails, walking trails, and a children’s playground.
Long Bay is a newer development associated with South Down Shores, with single-family homes on 100 acres, with 1,500 feet of shorefront on Paugus Bay.
“It’s taken 30 years for the community to mature out,” Roche said. “The good news is that property generates $3.4-$3.5 million in revenue to the Laconia tax base, or 9 percent of Laconia’s tax value. Without that, Laconia would never have been able to do the new police station, fire station or middle school.”
He added, “These were all, for the most part, second-home owners without any impact on the school system or on the roads, which are privately maintained in the development.”
He said the residents there also contribute to the community through their dining and purchases, as well as contributing to cultural events.
Other high-end properties that contribute to the tax base are Broadview, Samoset, and Misty Harbor and Barefoot Beach Resort in Gilford, Land’s End, Jonathan’s Landing, and Windward Harbor in Moultonborough, and Meredith Bay in Laconia.
Despite all of that real estate, Roche said the lack of inventory to satisfy customers began last year and became obvious in 2017.
“Last year, we sold 13 units at Misty Harbor, and we sold the last one this year,” Roche said. “We’re riding high right now. We had our highest record of sales last year, and this year is going ahead of last year, but the question we all worry about is whether this could be a repeat of the past, where the economy soon tanked.”
Sanborn shares that view. “We have a good, strong market this year, and the trend will continue for the next few years. I don’t see that changing unless something happens with the economy.”
“This might have some legs different from other cycles,” Roche observed. “There’s not a lot of over-leveraging, banks are more conservative, and more cash is being invested in the transactions. There are safeguards from Dodd-Frank, but there are geopolitical risks ... something could could trigger a selloff in the stock market, and we have a record deficit. The economy has been on an upswing for nine years, and the question is, if we’re taking the child off the training wheels, are they going to function on their own or fall over?”
Sanborn says there is a good overall mix of properties, with well-maintained lower-end properties also selling very strongly. Those in the middle, he said, are selling better than they have in a long time.
“The local homeowner isn’t going to afford a $500,000-$600,000 condo,” Sanborn said. “There are nice properties in all price ranges that are going to sell.”
Roche said there is a strong demand for modest “semi-retirement” homes.
“That’s what families are looking for right now,” he said. “They’re easier to heat, and people feel they don’t need the big trophy homes with large lawns to mow.”
Nature’s View is such a development, with 51 homes off Massachusetts Avenue, Laconia. The property is surrounded by 18.3 acres of open space conservation land, and there are views of Lake Winnipesaukee, Paugus Bay, and Port Way.
Another is Willow Pond in Long Bay, with 38 lots bordering on all three of the Long Bay ponds.
Roche also noted that there are “decent values” on the smaller lakes where kayaks are popular.
Apart from the housing units themselves, Roche said people are looking for boat slips and beaches. That is what makes Weirs Beach a prime location for development, in his view.
“It has all the makings for not just honky-tonk establishments, but also a family fun gathering place,” he said.
He praised developer Al Mitchell for his foresight in buying and improving Weirs Beach properties, including the pending purchase of the Weirs Drive-In.
“I’m happy he’s buying into Weirs Beach,” Roche said. “He’s doing it right. He’s experienced in development and site work, and wants to make the place better. Enthusiasm is contagious, and when you’ve got somebody with an idea, others will follow,” he said.
Roche said Laconia’s investment in Lakeside Avenue “hit the ball out of the park” in terms of value for the dollar.
“I’m amazed at how many good comments are coming back from people down there,” he said, adding that families with children are going there to enjoy the beach, the boardwalk the Winnipesaukee Scenic Railroad, and the MS Mount Washington.
“The viewscapes are the best, and what Laconia has to realize is that the golden goose is in The Weirs, and not downtown. The city has finally stepped up and realized the potential to raise the assessment values there. The infrastructure is there, and they just need to enhance it,” he said. “The eyesores are being replaced.”
What Roche would like to see is a condominium-hotel similar to Misty Harbor that would allow people to buy units and rent them out when not in use. A reservation desk would handle the rentals, giving visitors a place to stay while in the area and providing the owners with money to help pay their taxes.
“It would be a win-win for The Weirs,” he said.
A mini-convention center and wedding venue that Mitchell is considering also would be a welcome addition to The Weirs, Roche said.
“It’s time to start building some new units. The housing stock in the Lakes Region is getting tired,” Roche said. “The buyers coming here want new appliances, granite counters, tiles and flooring, and architectural designs that have energy efficiency.”
Adam Drapcho photos/Laconia Daily Sun