Fifteen years ago, in these pages, I warned that New Hampshire was in danger of becoming “The Geezer State.” Rising home prices, the explosion of over-55 housing developments and the exodus of young adults priced out of the housing market posed a threat to the state’s economy and the well-being of its aging population.
In 2006 the state’s median age, the Census Bureau reported, was 39.3 years, making New Hampshire the sixth oldest state. The median age now is approximately 42.4 years and the state is the nation’s second-oldest.
As headlines announce routinely, New Hampshire, like much of the nation, has a housing crisis. Even if the state and its cities and towns do all they can to spur home construction, prices are likely to continue to increase beyond what most families can afford to pay.
Why? I could be wrong, but New Hampshire, I believe, has become one of the “Goldilocks” states.
The Granite State is generally neither, in this time of a rapidly-changing climate, too hot or too cold. Parts of the state flirt with drought but most of the time water is plentiful. Earthquakes are rare and mild. It’s been a geologic age since a volcano erupted, flooding has increased, but hurricanes and wildfires pose little threat. Heat waves, so far, are manageable and the air is usually breathable and fair.
People from elsewhere, many of them people with money, are on the move. Earlier this fall, one Manchester realtor told a reporter that she has had more home buyers from California in the past year than she’s had in her 15-year career. The apartment vacancy rate in Concord and much of the state is under 1%. Very few homes are on the market. The state is short some 20,000 housing units, its housing finance authority estimates.
Supply and demand mean rents have outpaced even pandemic-related wage increases. Companies are struggling to grow because new hires can’t find anywhere to live. To make matters worse, house hunters now must compete against Wall Street investors for property. Nationally, investors bought one in six homes last summer.
The biggest addressable driver of the housing shortage was identified earlier this month by political scientist Jason Sorens in conjunction with the Concord-based Josiah Bartlett Center for Public Policy. Sorens is the director of the Center for Ethics in Society at St. Anselm’s College and the founder of the Free State Project.
The project, and the Bartlett Center, tend to see government regulation as at best, a necessary but overly-large evil. They’re right. Zoning and building regulations are outdated, overly restrictive and drive up housing prices. But fixing those by, for example, eliminating single-family zoning, won’t end the housing crisis. Bigger forces are at work and they bode ill for working folks hoping to buy a home or find an affordable place to live.
The median price of a home in New Hampshire has hit $400,000. The median sale price of a home in smoky California tops $800,000. Closer to home, the median sale price in Somerville, Mass. was $999,000; in Mattapan, south of Boston, roughly $600,000; in Dorchester, $625,000. Owners who cash out in such places can move north, buy an equivalent house and pocket a big chunk of change. And then there’s a sweetener.
Massachusetts, the source of the majority of the migrating buyers competing for New Hampshire homes, has a 5% income tax. New Hampshire’s rate is zero. The Bay State has a 6.5% general sales tax. New Hampshire’s rate is zero unless the tax is on rooms and meals, real estate sales, tobacco, alcohol and a few other things.
Granite State property taxes are a burden but, thanks to Gov. Sununu and a Republican-controlled legislature, they are, for the wealthy, being offset by the gradual elimination of the state’s 5% tax on interest and dividends.
The tax nets the state about $370 million annually, nearly half of which is paid by people with unearned income of more than $200,000 per year. For them, eliminating the I&D tax means saving $10,000 or more per year, enough to offset the property taxes on a pretty nice house. Eliminating the tax will provide another incentive for people of means to move north. They will continue to drive up the price of housing and influence what developers build.
By all means, cities and towns should continue to loosen zoning restrictions, permit accessory dwelling units and take other measures to promote in-fill development. That will help. More federal Section 8 housing vouchers, or even cash payments to tenants to subsidize housing costs, won’t. Until the supply of housing increases, they’ll work to drive rents higher. It’s time to invest in tax credits and subsidies that permit developers to profit by building truly affordable homes and apartments, homes that come with protections to guard against speculation or rapid gentrification.
Climate change and its attendant wildfires, droughts and storms, will continue to give people an incentive to migrate. Safe, low-tax New Hampshire will remain an attractive destination for migrants of means. But where will the people who provide childcare so parents can work, the caregivers of the Granite State’s geezers, and the countless other workers who keep the economy running live? With no action, the answer could be — not in New Hampshire.
(Ralph Jimenez of Concord is a member of the Monitor’s editorial board.)