New Hampshire, like much of the nation, is suffering from a housing shortage that ranges from serious to severe.
The apartment vacancy rate in the state is under 1%. Strong demand for shelter has allowed landlords to raise rents and be picky about prospective tenants. Making matters worse, investors, in the wake of the 2008 recession, began buying up millions of what were once entry-level homes and turning them into rental units. Rental costs are outpacing the ability of many people, including older adults and young families, to pay them.
The country is short at least a million housing units, according to the National Association of Homebuilders. Economist Russ Thibeault of Applied Economic Research in Laconia estimates that the state is short 10,000 to 15,000 housing units. The lack of supply, and high housing and rental costs, are hurting the state’s ability to attract employers and retain employees.
Late last month, Gov. Chris Sununu announced the formation of a task force to address the problem and backing for legislation designed to both remove barriers to affordable housing and provide incentives to increase the housing stock. We applaud what is a bipartisan effort that includes tax incentives to induce developers to build workforce housing and changes to zoning regulations to permit more housing units on less land.
The task force, in its initial assessment released by the governor’s office, said, “In light of the threat posed to our economy by low vacancy, inventory, and affordability, our view is that the State must acknowledge that we face a housing crisis and that, without statewide action, we put our economic sustainability under unnecessary stress and threaten the current positive trends in our economic health.”
That summation of the problem would fit the housing situation in communities on both the nation’s coasts and every other city or town in between that’s been determined by popular demand to be a desirable place to live. It’s why, in a return to what was once known as “company housing” Facebook and Google recently announced that they intend to spend several billion dollars to subsidize the building of workforce housing in the California communities they call home.
The recommendations of the housing task force, and legislation proposed by New Hampshire lawmakers, are likely to help. But we’re under no illusions that they’ll do more than dent the housing shortage.
The economics of housing in America no longer work. They can’t work when home prices, for a host of reasons, continue to rise while wages remain essentially flat, as they have for the past four decades. In fact, real wages declined last year and more than 60% of workers got no pay raise in 2018, according to the financial websites Marketwatch and Bankrate. Meanwhile, ever-increasing health care costs ate away at the ability of households to save for a down payment on a home. Student loan debt makes saving even harder.
The cost of land, labor and construction materials, the latter higher thanks to Trump’s tariffs, means that developers can no longer afford to build a $200,000 or even $250,000 home and make much of a profit, if any. The median sale price of a home in New Hampshire last month was $315,000.
The housing shortage afflicting New Hampshire and the nation won’t be eliminated until the wage shortfall afflicting most Americans is fixed first.