Transcript Water in New Hampshire

Board of Directors
James Putnam, Chair
David Alukonis
Eric Herr
Dianne Mercier
Catherine A. Provencher
Todd I. Selig
Michael Whitney
Daniel Wolf
Martin L. Gross, Chair
Emeritus
Directors Emeritus
William H. Dunlap
Kicking into a
Higher Gear
Economic Update to
NEW HAMPSHIRE GOVERNMENT FINANCE
OFFICERS ASSOCIATION
Friday, May 8, 2015
Sheila T. Francoeur
Stuart V. Smith, Jr.
Donna Sytek
Brian F. Walsh
“…to raise new ideas and improve policy debates through quality
information and analysis on issues shaping New Hampshire’s future.”
Anecdotal evidence from
Fed Bank of Boston,
April 15, 2015
• Business activity continues to expand in New England, although
contacts are not quite as upbeat as in the previous round.
• With a few exceptions, retailers, manufacturers, and selected
business services firms report increases in revenue compared with a
year earlier.
• Commercial real estate fundamentals continue to improve across
most New England markets; residential real estate sales were
slowed by severe winter weather, but contacts expect the effects to
be temporary.
• Aside from ongoing energy price increases associated with limited
natural gas capacity in the region and the effects of the strong dollar,
contacts say non-labor costs and prices are steady.
• Only a few firms experiencing strong demand are doing any
significant hiring; one retailer is raising its entry-level wages.
New Hampshire Job
Creation – Region and US
Percent Change in Payroll Employment Over Previous Ten Years
The Great Convergence
70%
60%
New Hampshire
50%
40%
United States
30%
20%
10%
New England
0%
US
NE
NH
Jan-13
Jan-11
Jan-09
Jan-07
Jan-05
Jan-03
Jan-01
Jan-99
Jan-97
Jan-95
Jan-93
Jan-91
Jan-89
Jan-87
Jan-85
Jan-83
Jan-81
Jan-79
-10%
2011-2013 job growth still leans
toward below average wage jobs
Change in NH Jobs from 2011 to 2013 by Average Wage Paid
8,000
7,089
7,000
6,000
5,803
5,000
4,000
3,000
2,000
1,000
0
Above Average Wage
Below Average Wage
Source: NH Economic and Labor Market Information Bureau
NH Residential Real Estate Sales and Prices
NH Single-Family Residential Home Sales and Price (MLS)
Source: NH Association of REALTORS
25,000
20,000
$300,000
Decline from the Peak:
Sales -40% from 2004
Price -25% from 2005
Median Home Price
$250,000
$200,000
15,000
Number of Units Sold
$150,000
10,000
$100,000
5,000
$50,000
0
$0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Units sold
Median Price
2014 YTD thru Dec.
5
Home Prices Return to the Long Term Trend:
NH Single-Family Residential Home Price (MLS)
Source: NH Association of REALTORS
$300,000
Median Home Price
$250,000
$165,482
$162,622
$151,504
$154,410
$169,787
$170,164
$187,954
$216,598
$226,354
$237,976
$227,807
$188,089
$170,158
$0
$141,372
$50,000
$134,749
$100,000
$152,500
$150,000
$206,266
$200,000
Inflation Adjusted Price
1998
1999
2000
2001
2002
2003
2004
2005
Median Price
2006
2007
2008
2009
2010
2000 Inflation Adjusted
2011
2012
2013
2014
NH Foreclosures – Worst is
Over
NH Monthly Foreclosure Deeds
600
500
Actual
Trend
400
300
200
100
Source: Real Data Corp. compiled by NH Housing
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
0
0
01/69
01/70
01/71
01/72
01/73
01/74
01/75
01/76
01/77
01/78
01/79
01/80
01/81
01/82
01/83
01/84
01/85
01/86
01/87
01/88
01/89
01/90
01/91
01/92
01/93
01/94
01/95
01/96
01/97
01/98
01/99
01/00
01/01
01/02
01/03
01/04
01/05
01/06
01/07
01/08
01/09
01/10
01/11
01/12
01/13
01/14
Twelve Month Average At Annual Rates
New Hampshire Home Building
Monthly Housing Permits in New Hampshire January 1969 to July 2014
Grey boxes represent
recessionary periods
25,000
20,000
15,000
10,000
5,000
Declines in Prices and Interest
Rates Affect Affordability
But…….
• NH’s Young households are burdened by highest level of
student debt in the Nation;
• Lending standards are more rigorous—Qualifying
Mortgage, 43% debt to income limit, etc.;
• With rents rising and mediocre job quality, more difficult
to save and qualify;
• Nearly 20,000 foreclosed units in past several years in
the state—some will not qualify;
• Lack of liquidity is keeping boomers in larger houses
than they need;
• Prices and interest rates are rising in past several
months, blunting recent affordability improvements.
The Aging Bubble …
11
12
Migration slowed in last decade
Net Migration Into and Out of New Hampshire
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
-5,000
-10,000
-15,000
-20,000
NH Population growth
anticipated to be slower
Ten Year Percent Change in New Hampshire Population by Decade End
Actual
Forecast
24.8%
21.5%
20.5%
13.8%
11.4%
8.5%
6.5%
3.3%
3.8%
1.1%
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
While NH Dept of Employment
expects increasing jobs
Change in Employment (ELMI Projection)
Central NH Planning Commission
Lakes Region Planning Commission
Nashua Regional Planning Commission
North Country Council
Rockingham Planning Commission
Southern NH Planning Commission
Southwest Region Planning Commission
Strafford Regional Planning Commission
Upper Valley / Lake Sunapee Regional Planning
New Hampshire
2012 to 2022
PctChange
9.2%
6.3%
9.5%
4.8%
14.7%
14.1%
4.8%
9.5%
10.2%
10.5%
15
Working Age Population Will
Decline in Every Region
Working Age Population (age 25 to 64)
Central NH Planning Commission
Lakes Region Planning Commission
Nashua Regional Planning Commission
North Country Council
Rockingham Planning Commission
Southern NH Planning Commission
Southwest Region Planning Commission
Strafford Regional Planning Commission
Upper Valley / Lake Sunapee Regional Planning
New Hampshire
2010 to 2025
PctChange
-6.8%
-9.2%
-3.0%
-12.9%
-1.2%
-1.5%
-4.1%
-0.5%
-6.8%
-4.0%
16
Combined with labor force participation
reality (declines by age)
New Hampshire Employment to Population by Age Group
100.0
90.0
80.0
Ratio Employment to Population
70.0
16 to 19 years
60.0
50.0
20 to 24 years
25 to 34 years
35 to 44 years
40.0
30.0
45 to 54 years
55 to 64 years
65 years and over
20.0
10.0
0.0
17
Populations aging into lower labor
force participation rates 
702,000
689,313
All else equal, workforce will decline
18
While Elder Workforce Portion
is Projected to Increase
New Hampshire Employment by Population Group (Forecast)
200
180
Thousands of Jobs
160
140
16 to 19 years
20 to 24 years
120
25 to 34 years
100
35 to 44 years
45 to 54 years
80
55 to 64 years
60
65 years and over
40
20
0
2010
2015
2020
2025
2030
2035
2040
What to do if you want a
growing workforce?
• Increase residents?
– Increase Birth rates – how?
– Increase in-migration to the state.
• Increasing longevity (decrease death rates,
improve health of older population – how? )
• Increase Productivity – (workforce training, skills
development, substance abuse)
• Increase labor force participation rates for our
fastest growing populations (those over the age
of 65).
20
New Hampshire Municipal
Finances
State Aid per Person Level
Funded
New Hampshire State Aid to Municipalities Only
$70
$61
$60
State Aid per Person
$52
$50
$45
$42
$48
$55
$64
$58
$49
$45
$44
$44
$43
$40
$30
$20
$10
$0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Schools Drive Property Tax
Property Taxes by Function 1997 to 2014
$4,000
$3,500
County
State Education
Local Education
$3,000
$267
$260
Municipal
Millions of Dollars
$242
$202
$2,500
$194
$181
$1,500
$116
$116
$133
$1,481 $1,478
$452
$1,331
$421
$1,145
$420
$1,000
$1,101
$0
$1,695
$1,773
$1,371
$1,212
$638
$729
$827
$500
$438
$1,517
$1,569 $1,612
$940
$1,174
$508
$417
$363
$363
$364
$362
$431
$453
$119
$363
$362
$256
$349
$162
$156
$364
$363
$252
$362
$173
$2,000
$362
$217
$245
$248
$492
$510
$533
$560
$621
$654
$712
$771
$824
$876
$909
$939
$974
$994 $1,013 $1,043
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Municipal Expenditures Hold
the Line
Per Capita Gross Appropriations for New Hampshire Cities and Towns
2001- 2014
$5,000
$4,500
Bars=Nominal
Line=Adjusted for Inflation (2014 Dollars)
$4,197
$4,000
$3,771
$3,566$3,695
$3,362 $3,447
$3,500
$3,000
$3,860 $3,853
$3,939 $4,011
$2,881
$3,010 $3,061
$2,664
$2,500
$2,000
$1,500
$1,000
$500
$0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
NEEP Forecast for New
Hampshire October 2014
• The Granite State will add only a few hundred manufacturing jobs
over the next five years. However, it is expected that Granite
State manufacturing output will continue to increase in the
forecast period as it has in the past five years.
• In the private services sector employment will increase by about
2.0 percent annually in the forecast period. The fastest rate of
growth will occur in Professional and Business Services, followed
by Leisure & Hospitality, and Education and Health Services
employment.
• The New Hampshire real estate market has finally seen a return to
normal (pre housing bubble) price appreciation and sales growth,
according to state realtors. Foreclosure recordings declined
steadily over the past year. The state rental market remains strong
with rental costs leveling and vacancies remaining below 5
percent in most areas.
Look to an Improving National
Economy, Pushed by Housing
and Low Energy Prices
Labor Market Slack
Disappearing
Labor Market Improves
Employers Facing Increasing
Labor Cost
Businesses Have Never Been as
Profitable…
After-tax corporate profit margin, %
Sources: BEA, Moody’s Analytics
…And Have a Significant Energy
Advantage
Industrial electricity
prices, $ Mwh
Italy
Japan
Germany
China
France
U.S.
U.K.
India
Korea
Natural gas price, $ mmbtu
Sources: Country sources, Moody’s Analytics
31
Households Have Delevered…
$ tril
Sources: Equifax, Moody’s Analytics
Housing Will Provide the
Catalyst…
Vacant homes for sale, for rent and held off market, ths
Sources: Census, Moody’s Analytics
…Meaning More Homebuilding
and Jobs
Millions of jobs
Source: Wall Street Journal, Moody’s Analytics
New Hampshire Center
for Public Policy Studies
Board of Directors
James Putnam, Chair
David Alukonis
Eric Herr
Dianne Mercier
Catherine A. Provencher
Todd I. Selig
Michael Whitney
Daniel Wolf
Martin L. Gross, Chair
Emeritus
Directors Emeritus
William H. Dunlap
Sheila T. Francoeur
Want to learn more?
• Online: nhpolicy.org
• Facebook: facebook.com/nhpolicy
• Twitter: @nhpublicpolicy
• Our blog: policyblognh.org
• (603) 226-2500
Stuart V. Smith, Jr.
Donna Sytek
Brian F. Walsh
“…to raise new ideas and improve policy debates through quality
information and analysis on issues shaping New Hampshire’s future.”
35