Amid record-low inventory and record-high median home prices, more than a quarter of those surveyed in the NH Housing Affordability study are concerned that if they had to move, they couldn’t find an affordable home.
“In August, we hit a record median sale price of $305,000 and inventory is at an all-time low,” says Bob Quinn, government affairs director for the NH Association of Realtors (NHAR), which commissioned American Strategies to survey 500 registered voters, ages 18 or older. Participants were asked about housing costs and availability and overall satisfaction with the housing landscape. The survey also covered policy issues, including the type of housing people want to see built.
Survey respondents are generally pleased with their current living situation and most are satisfied with the housing options in their area. But the survey also found 55% of 18- to 34-year-olds—a sought-after workforce demographic—would like to move in the next few years.
Mark Drapeau, a Realtor with Hourihane, Cormier & Associates in Rochester, says if NH is going to keep the economy moving forward, the state needs affordable housing options or younger workers will move elsewhere. “I would listen to what the consumers want, such as tiny houses,” he says.
Quinn says when young people cannot find an apartment or buy a single-family home, the decision to leave NH is easier as the skills younger workers possess tend to be highly transferrable, making them more mobile. To attract and keep younger workers, the state needs a variety of housing options, including accessory dwellings (apartments or homes within or attached to a single-family dwelling), which Quinn points out are a good option for retirees.
“They are popular with younger people but also could help older residents age in place, either by renting the accessory unit to help cover expenses, such as property taxes, or by living in the unit themselves and renting the main home,” says Quinn.
The increase in home prices along with a shrinking inventory is especially challenging for first-time homebuyers. With homes selling faster than ever and so few on the market, this group is often at a disadvantage, says Ryan Hvizda, a Realtor with Keller Williams Metropolitan in Concord and Bedford.
“I have a client, a first-time homebuyer, who can spend up to $300,000 if they do a multifamily, but they have lost out on multiple bids because the competition comes in with cash or minimal contingencies,” she says. “As a first-time homebuyer, they don’t want to waive inspection. I have to tell them it will take longer and we may need to find something off-market.”
Off-market is a home that isn’t listed but fits the needs of buyers in terms of size and location. “We are doing a lot of prospecting,” Hvizda says. “We have a lot of buyers looking for the same thing, so we pull the data to find potential homes, then call or mail the owners and even go door-knocking to see if they are thinking about selling.”
She says the low inventory feeds on itself, holding people back from listing their property. “I have three sellers right in downtown Concord who want to upgrade. They have been searching but what they want is not out there, so they hold off because if their house sells in a weekend, where will they go?”
Hvizda says when houses sell quickly homeowners may have to rent but the rental market has only a 1% vacancy rate. She says finding a rental has to be done in advance and if homebuyers sign a one-year lease, they need to begin the new home search about halfway through. All of this can make staying put seem like the best option.
Interest rates also affect the market. Dan O’Halloran, Realtor, broker and owner of O’Halloran Group, Keller Williams Lakes & Mountains Realty in New London and president of the NHAR, says that for the past seven years mortgage rates have stayed under 4% and many who purchased homes when rates were at 5% or higher have most likely refinanced. As a result, there is less financial pressure or incentive to make a move.
“To further complicate things, home values are at historic highs so even though rates are still fantastic, it is harder for sellers to make the financial decision to move,” he says. “Add in the inventory challenges and the decision to sell definitely becomes a lot more complicated.”
Policies and Politicians
Survey respondents also noted the need for elected officials at all levels to focus on housing affordability. More than half consider affordability a high priority, with 83% saying local and state officials need to do more and 59% looking for more to be done at the federal level.
“Housing development is a local issue but it needs to be a state concern. If one town places insurmountable obstacles to housing development then it will place greater market demand on neighboring communities to provide for that housing,” says O’Halloran. “The state needs to ensure that all communities are making appropriate efforts to provide adequate housing to workers and their families.”
O’Halloran adds that mandates on housing—no matter how well intentioned—tend to increase prices and even a few thousand dollars in added costs can push a potential buyer out of the market. “Some condo and homeowner associations are going to get hit with significant mitigation bills with the new water mandates on arsenic and PFOAs,” he says. “They did nothing wrong and are not responsible, but the state’s bill greatly impacts associations and they are now finding themselves in a difficult position outside of their control with no funding. This will simply exacerbate the housing crunch.”
Hvizda, who serves on policy and advocacy committees for NH Businesses for Social Responsibility, Stay Work Play and the Housing Matters Workgroup of Housing Action NH, says people know more housing is needed. She notes recent legislation that supports broader development, but proposed developments often encounter “neighbors showing up to complain.”
“If all the neighbors rally and say we don’t want this, the local [land use] boards are reluctant to approve projects,” she says. “People think development is bad but we are lacking sufficient housing by 20,000 units. We have never fully recovered to pre-recession levels. There is a stigma that affordable is bad but affordable is something under $300,000.
These are the people that make our world work. They need to be able to afford housing.”
Research by the NH Housing Finance Authority shows that only 43% of home listings in NH are under the statewide median of $305,000 and depending on the county, the number of high-end homes on the market may be more than double the number of affordable ones.
O’Halloran says balancing housing needs and local control has long been a topic at NHAR. “We have always struggled to find the perfect solution to those challenges,” O’Halloran says. “It is key to have the best information available so that you can make the most informed decision. To this point, we are gathering data, tracking issues and providing support to our local boards of realtors whenever possible.”
He says the NHAR is comprised of 14 boards across the state and the best way to tackle the issue is to make sure local realtors are aware of the challenges in their town and armed with the best information.