Editorial: Behind the housing shortage

Published: 6/11/2017 12:05:19 AM

Earlier this week, Rachel Eames, president of the New Hampshire Association of Realtors, warned that the state’s housing shortage jeopardized the state’s economy. The situation is even worse than Eames portrayed it.

The rental vacancy rate in Merrimack County and many other New Hampshire communities is below 2 percent. That drives up rents and makes it difficult to impossible for companies to hire entry-level employees or even those making a solid middle-class income. The inventory of homes for sale is at the lowest level since the association started keeping tabs on it.

This spring, the Monadnock Ledger-Transcript published a story about the difficulty that region’s largest employer, New Hampshire Ball Bearing, was encountering. For want of affordable housing, 20 to 30 jobs are going unfilled every year. Multiply that by the unfilled jobs offered by other employers and it points to one reason why growth in New Hampshire is so anemic.

Eames pointed to the usual culprit to explain the shortage, a mismatch between the homes available, many of them large, old expensive homes put on the market by boomers seeking to downsize, and “unnecessary town regulations.” But what’s behind the regulations? Not a fear of the rampant growth the state experienced several decades ago. The Office of State Energy and Planning estimates that the state’s population will increase by a paltry 100,000 over the next quarter century. That comes out to about one quarter of 1 percent per year. Virtual stagnation. Meanwhile, for want of affordable housing, young workers pass New Hampshire by or leave in search of better opportunities, and the state’s average age increases even faster.

The housing shortage is a key factor in the poor growth rate. Though most legislators are loathe to talk about it, the state’s heavy reliance on property taxes underlies the shortage. It’s also to blame for the antipathy to growth that could increase school costs and behind the regulations brokers complain about.

Children are expensive to educate. At the $14,000 per child state average, few homes with even one school-age child pay their way. That fosters hostility toward residential growth. It forces construction away from central cities and creates sprawl.

Homes outside the center city tend to be larger. Since the number of school children added to a system depends largely on the number of bedrooms in a home, that means higher costs for school districts. It also means higher municipal costs for snowplowing, police and fire protection, and sewer and water service.

In-town construction offering one or two bedrooms, a study for the New Hampshire Housing Finance Authority once demonstrated, adds very few children to a school district, yet it provides housing for young workers not yet ready to start a family, the kind of workers New Hampshire sorely needs.

Few if any starter homes are being built. When a house lot in Concord costs $75,000 to $100,000 or more, there’s no money in putting a starter home on it. Eames pointed to Middlesex County in Massachusetts and Cumberland County in Maine as two areas adjacent to New Hampshire where jobs and housing options were increasing. The former is an upscale area where the median housing value last year was $420,800. The annual property tax bill on that median home was $4,356. Had the home been in Concord, the tax bill would have been $11,600 or almost $1,000 per month.

New Hampshire’s reliance on property taxes to fund government is a drag on growth. It’s keeping young workers away and penalizing most those with the least ability to pay. One day, perhaps once the state’s growth rate slips into the negative column, lawmakers will face that reality.

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