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Foreclosures affect Hampstead housing market

Though Hampstead is experiencing loss of tax revenue and a decrease in home values due to foreclosures in the area, the town council has decided to maintain the current property tax rate of 20 cents per $100 of assessed value, said Mayor Chris Nevin.

"The town has been experiencing an economic upturn during the first quarter of 2012," Nevin said. "We are hoping for continued improvement and have decided not to burden our residents with increased taxes. The property tax rate has remained the same since the late '90s."

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As the members of town council develop the budget for fiscal year 2013, Nevin said they are working around a slow housing market, taking into consideration the effect of 53 local homes in foreclosure. This refers to vacant homes not listed for sale, he said.

According to

, a Hampstead-based real estate company, 2.8 percent of the homes in Hampstead are vacant, compared to the 3.1 percent of vacant homes in Manchester and the 3.9 percent of vacant homes in the county.

Manchester currently has 19 homes in foreclosure, said Manchester Town Manager Steve Miller. However, Hampstead has more units of housing such as apartments, town houses and homes, he said.

The number of foreclosed homes in Hampstead has decreased from 61 units in fiscal year 2011 to 53 units in fiscal year 2012, Nevin said. Ho wever, the remaining homes still have a number of impacts on the town.

"The vacant homes result in about $11,000 annually in lost water system revenue and when these vacant units are sold at foreclosure they will likely cause a lower assessed value, directly impacting property tax income," Nevin said. "These vacant homes will likely lower the value of your home based on their appearance and the reduced price achieved in foreclosure."

The lower the house value is, the less property tax the town collects, Nevin said. This means the town earns less revenue and has decreased funding to complete capital projects in the future, he said.

In fiscal years 2006 and 2007, prior to the recession, the town had two to three vacant units annually, Nevin said. While there has been a slight improvement since fiscal year 2011, there is still a significant number of homes that need to be absorbed, he said.

According to Sherri Fales, of Fales Realty, banks originally did not use foreclosures as comparables when assessing the value of homes around it. With the continued increase in foreclosures over the years, however, banks began to use the foreclosure value when calculating the worth of neighboring houses, she said.

"Foreclosed homes are usually put on the market for 10 percent less than market value," Fales said. "They can greatly affect the value of neighboring homes after sitting vacant for long periods of time and remaining unkempt."

Recently, home buyers have taken an interest in new homes rather than foreclosures because the market price is so low, Fales said. Buyers prefer to live in a home that has been take care of, but that means homes in foreclosure continue to sit vacant, she said.

The town gets a share of the building permit fees associated with constructing new houses, adding attachments or home improvements, Nevin said. But improvements are not needed when no one lives in the house, he said.

The demand for construction work and home improvements has decreased considerably, said Robin Ford, president of Robin Ford Building & Remodeling Inc., a Hampstead company that specializes in custom-crafted houses.

"There is extreme strain on our business," Ford said. "The foreclosures bring the market down and people aren't willing to pay for custom homes or remodeling. When we do get jobs, it's difficult to negotiate a price that is profitable."

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Only two new homes were built in Hampstead during fiscal year 2011, said Town Manager Bradley Plante. There were 23 home improvement permits issued in fiscal year 2011 compared to the 18 issued so far in fiscal year 2012, he said.

"We charge 50 percent of what the county building permit fee is and get 10 percent from the county fee," Plante said. "The total fee is based on the size of the project."

During the first eight months of fiscal year 2012, the town has collected $393 in permit revenue, Nevin said. That figure doesn't compare to pre-recession income of $15,008 in fiscal year 2006 and $11,847 in fiscal year 2007, he said.

"I am hopeful the vacant housing inventory continues to be reduced ... and that the residential home market improves," Nevin said. "All these factors have a direct bearing on our town's budget and our ability to continue delivering quality service."

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