The spring market, the busiest time of year for home sales, will challenge many potential buyers. Winter, the slowest time of year, saw little inventory and plenty of competing buyers, combining to produce even more record-high prices.
The lack of an expanded and diversified housing stock is among the greatest long-term threats to NH’s economy. Most employers are acutely aware that the lack of housing limits their ability to hire and retain a workforce. Many have spoken out on the issue, and more need to keep sounding the alarm.
The lack of housing is driving up the cost of living for all residents, stagnating the state’s population and leaving employers scrambling for workers up and down the wage scale. Soaring home prices block many younger residents from becoming homeowners, and this threatens to leave NH without much of workforce in five to 10 years as young residents leave for better opportunities.
Rockingham County saw a record-high median price of $550,000 for single-family homes sold in February, beating the previous record of $539,950 set in January. Rockingham is NH’s priciest county. Hillsborough County’s median in February was $435,000, followed by Belknap at $425,000 and Strafford at $372,500.
Since many potential buyers are unable to become homeowners this spring, expect continued pressure on NH’s apartment vacancy rate. It currently hovers around 1%, far less than the 5% considered a balanced market. Renters are paying for this lack of inventory. New Hampshire Housing’s 2021 Rental Survey Report showed the statewide median gross rent, including utilities, at $1,498 for two-bedroom units, up 6% from 2020. It’s $1,672 in Rockingham County and $1,643 in Hillsborough County.
Homeowners face their own rising costs in higher tax burdens due to rapidly increasing housing costs. For example, the median price of a single-family home in Portsmouth in 2022 is $693,000, up from $465,000 in the city’s last revaluation in 2019. The spike in home prices dwarfs the appreciation of commercial properties, meaning homeowners will pay a larger share of the overall tax levy. Residential property owners currently pay about 56% of Portsmouth’s tax burden, a share expected to increase. This is playing out across NH.
Gains are being made. New Hampshire Housing reports the number of single-family permits issued increased from 2019 through 2021, but last year’s high of around 300 was about half the peak seen in 2002. Multi-family permits also rose in 2021, but the approximately 120 permits are about half the peak number seen in 2004.
New Hampshire needs a much greater increase in housing. New Hampshire Housing says the state needs 20,000 new single-, multi- and special-needs homes to achieve a balanced market. Gov. Chris Sununu’s Council on Housing Stability has a goal of 13,500 new units by 2024.
New Hampshire policy leaders know there’s a problem and are taking steps to find solutions. Among the most important current steps is a $100 million housing fund paid for by federal money from the American Rescue Plan. Gov. Sununu announced the plan in March. According to the governor, $60 million would go toward flexible matching grants for developers producing multi-family housing projects ready to move to the building stage, and $30 million in grants to towns that can approve permits within six months of application. The remaining $10 million would help towns demolish vacant and dilapidated buildings and go to planning grants to help towns update zoning regulations.
Financially rewarding municipalities that understand the connection between housing and economic opportunity can produce a significant increase in housing, particularly in the highly sought-after “missing middle” market. Outdated restrictive zoning regulations contributed to NH’s housing shortage. The state’s population increased just 4.6% between 2010 and 2020, the lowest in a century. This followed 6.5% growth between 2000 and 2010 and 11.4% in the 1990s. The 1960s, 70s and the 80s each saw increases of more than 20%.
The lack of starter homes and other low- and moderate-income housing will rob NH of its ability to attract the families and working-age population needed to support a growing and prosperous economy.
Rick Fabrizio is director of communications and public policy for the Business & Industry Association, NH’s statewide chamber of commerce. For more information, visit Biaofnh.com.