Lakes Region's Future: Balancing Natural Beauty and Urban Growth

Lakes Region's Future: Balancing Natural Beauty and Urban Growth When you drive around the Lakes Region, you will see a considerable amount of new construction and remodeling taking place in the towns and cities throughout the region. A lot of new single-family homes and condominiums have popped up, and the lumber yards have been bustling. Laconia, for example, has seen a major increase in the number of new condominium developments and subdivisions approved, with many of them well underway. I personally counted 11 new projects underway or approved, plus 3 more going up for approvals. In total, it represents close to 800 new housing units; if you add this total to the new proposal planned for the 217 acres at the former Laconia State School with 2,000 housing units proposed conceptually, the total could reach 2,800 housing units. That’s a lot of proposed activity for a city the size of Laconia which brings into question what the absorption will be. The Lakes Region's charm lies in its natural beauty and its small-town atmosphere… Qualities that are threatened if development is not thoughtfully managed, we have multiple lakes and mountains in the region that we all should strive to protect and preserve for future generations.

Laconia, over the years, has attracted many developers because it’s the hub of the beautiful Lakes Region. The availability of city, water, sewer, and higher-density zoning ordinances makes the city attractive to developers. Additionally, Laconia’s newer performance zoning regulations allow for more flexibility in development projects, and as a result, the overall density of projects can increase considerably.

West End Yards in Portsmouth is an example of a higher-density neighborhood destination. Tuscan Village in Salem, with 170 acres, is proposing a total of 1785 housing units which includes a mix of condominiums & apartments with retail, restaurants, etc. Woodmont Commons in Londonderry is another example of higher-density neighborhoods, with 1,485 housing units proposed on the 600-acre site. The land plan also includes retail stores, restaurants, office space, and amenities.

So, Laconia is at the cusp of seeing higher-density developments similar to the above projects at the former state school land. More input is needed from the residents of our communities to ensure that growth comes responsibly.

Since 1976 I have been involved in the marketing and sale of over 100 different developments and resort properties. Totaling 2,486 housing units and over 600 resort rooms. Roche Realty Group has been involved in over 10,000 real estate transactions throughout New Hampshire. I’ve also experienced the cycles that came with growth and economic expansion.

It’s been rewarding to see; the various communities unfold that I’ve been involved in. The Grouse Point Club, South Down Shores, Long Bay on Winnipesaukee, Samoset Condominiums, Broadview Condominiums, Windward Harbor, Wildwood Village, Meredith Bay, Mallard Cove, Country Club Shores, Dockham Shore Estates, Hillside Inn, Lakeside at Paugus Bay, Waukewan Village, Havens at the Summit, Natures View, Highland Ridge, Waldron Bay, Windover, Brookside Crossing, Stonecrest, Stonewall Village, Country Village Way, and so many other developments plus 9 marinas and the conversions of 4 of them into condominiums and a large number of cottage colony and motel conversions into a condominium form of ownership. Every time I drive by each of these projects, I feel a sense of accomplishment but, most importantly, a contribution to the overall appeal of our Lakes Region.  The evolution of balancing development and growth while preserving the very essence that makes it special.

I’ve learned a lot over close to five decades of real estate experience in the Lakes Region and the many cycles that followed each decade. For example, The 1980s were dynamic and a lot of fun for many real estate professionals in the Lakes Region. The decade let off with a recession, high unemployment and business failures at their highest levels since 1932. The decade became known for its outrageous greed, with lots of free and easy capital and higher doses of leverage. Leverage can magnify gains as well as losses. The result was the creation of one of the best buying opportunities I’ve seen in real estate or one of the worst real estate depressions in history.

Imagine paying 18% interest on a 30-year variable rate mortgage with a five cap over the life of the loan. It’s almost unthinkable, but that was the reality for homebuyers throughout the Lakes Region in October 1981. In the early 1980s, the Federal Reserve was waging a war with inflation. In an effort to tame double-digit inflation, the central bank drove interest rates higher to epic levels topping out at 18.4%.

Because of the tough economic conditions in the early 80s, Ronald Reagan and Congress passed the Economic Recovery Act in 1981… Period. As a result, real estate became a favorite tax shelter, and many syndications, real estate, trusts, and developments proliferated throughout the country. At the same time, the Federal Reserve lowered the interest rates to stimulate real estate activity. Deregulation of the saving and loan industry allowed thrifts to lend out money in a more aggressive manner, and at the same time, commercial banks were feeling the effects of competition and increased their allocations to real estate, including leverage financing of residential development and commercial projects. By the end of the decade, real estate amounted to approximately 35% of commercial bank assets. 

The influx of money translated into incredible development activity surrounding Lake Winnipesaukee. In my 48-year real estate career, I have never seen so many new developments and condominium projects start up throughout the Lakes Region. I went back and counted a total of 45 new condominium developments which were started in the 1980s. They were popping up like dandelions in the spring. Because of the huge demand for workers contractors were coming up from Texas, Florida, and Mexico. It was literally an unparalleled housing boom. Sufficient to the coin phrase, “The go-go 80s”.

New Hampshire’s success throughout the 1980s seemed invincible, in 1986, New Hampshire housing starts increased to a high of 22,000 units. In the Lakes Region, we were selling condominium homes to clients benefiting from the Reagan administration‘s defense buildup and the remarkable rise of the Boston-based computer industry.

The real estate market, however, was built on frail earth. The pipeline of high-tech jobs slowed dramatically, and there were two other national events that caused the real estate boom to flat and take a nosedive. The first event was the Tax Reform Act of 1986, The second event was black Monday, the stock market crash of 10/19/1987. leveraged developments throughout New Hampshire and Massachusetts were painful to watch. The year was 1988 and 1989, and what happened next was a real estate bust just as epic as the boom that proceeded it, jobs vanished, banks failed, and unsold condos littered the market.

With increased real estate loan defaults, a large number of northeastern banks failed (111 banks from 1990 to 1992.) I think five of New Hampshire‘s largest banks closed during this time. Growing up as a kid in Manchester, I always remembered the huge neon Amoskeag Bank sign at the corner of Elm and Hanover Street. It was right across the street from my father‘s law office. To see that sign go down was a shock to everyone in New Hampshire. It was not fun, meandering through the foreclosure process that followed. Instead of real estate ads, the papers were littered with foreclosure notices and real estate auction ads. The speed and tenacity of the auction process ultimately led to a quick deacceleration of real estate values. Which literally took a decade to rebalance.

So where are we now? During the past 10 years, we haven’t seen the huge new construction build-up we experienced in the 1980s, and we haven’t seen the same leverage either. Basically, what we are doing today is we are reselling in recent selling all of the product that was built in the 1980s, plus some new projects. We have a stable market with limited inventory for certain types of properties. Yes, prices have increased substantially since the 1980s that’s a natural phenomenon; we’ve been blessed with an extremely low-interest rate environment during the last decade. Yes, the Federal Reserve has slowly increased interest rates in order to harness a strong economy and dampened inflation worries. Boston right now is providing us with a strong headwind, and we’ve been fortunate that their strong market has been a great incubator for second home sales surrounding Lake Winnipesaukee. Have we learned from our mistakes during the 1980? Only time will tell.

This article was written by Frank Roche. Frank is president of Roche Realty Group in Meredith, NH, and can be reached at (603) 279-7046. Please feel free to visit www.rocherealty.com to learn more about the Lakes Region and its real estate market.