Though rental housing is in tremendous demand statewide, its share of new building permits issued is shrinking. In 2020, single-family homes represented 59% of new building permits issued in the state, up from 50% the year before. It’s become harder to build multi-family housing in New Hampshire as opponents have become very effective at organizing to block new projects.
With too few apartments being built, the state’s rental vacancy rate has fallen to 0.6%, and average rents, already at record highs last summer, have continued to rise. Rental data tracking site Rent Cafe pegs Manchester’s average rent at $1,646 and Nashua’s at $1,829. The Union Leader reported this past weekend that “stiff rent increases are hitting New Hampshire residents.”
For both single-family homes and rentals, the record price increases are caused by critical supply shortages. But rentals tend to face stronger local opposition when developers propose projects that would reduce the shortage.
Most of the opposition is caused by persistent myths about multi-family housing’s impact on local communities. With communities finally taking a greater interest in approving new housing projects, it will be important to counteract those myths.
Fortunately, we have the data to do that.
The Apartments Lower Home Values Myth
The myth that probably generates the most passionate opposition to new multi-family developments is that they will drive down nearby home values. As a rule, it’s not true.
“Single-family homes located within 1/2 mile of a newly constructed apartment building experienced higher overall price appreciation than those homes farther away,” concluded a University of Utah study last year.
Harvard University’s Joint Center for Housing Studies looked at previous research on this topic a few years ago and summarized the results this way:
- “Houses with apartments nearby actually enjoy a slightly higher appreciation rate than houses that don’t have apartments nearby.”
- “…working communities with multifamily dwellings actually have higher property values than other types of working communities.”
- “…proposed multifamily housing rental developments do not generally lower property values in surrounding areas.”
The Apartments Worsen Traffic Myth
“By any measure, it is clear that single-family houses generate more automobile traffic than apartments – or any other type of housing,” Harvard’s Joint Center for Housing Studies concluded in a summary of research on the topic.
There are several reasons for this. Single-family homes have more residents per unit and more cars per unit than apartments do, and “single-family owners use their cars more often than apartment residents use theirs. On average, cars in single-family houses make 18 percent more trips during the week, 31 percent more trips on Saturday, and 41 percent more trips on Sunday than cars owned by apartment residents.”
The Apartments Raise Property Taxes Myth
This myth is based on the assumption that apartments will flood public schools with students, which will require tax increases. But apartments bring fewer children than single-family developments do.
Data from Harvard’s Joint Center for Housing Studies shows that out of 100 single-family homes, 51 will have school-age children, but out of 100 apartments, only 31 will have school-age children. “The disparity is even greater when considering only new construction: 64 children per 100 new single-family houses vs. 29 children per 100 new apartment units. Wealthier apartment dwellers have even fewer children (12 children per 100 households for residents earning more than 120 percent of the area median income, AMI), while less wealthy residents earning less than 80 percent of AMI still have fewer children (37 per household) than single-family homes.”
And because apartments often are taxed as commercial property, they usually generate higher property taxes than single-family homes do.
“Thus, apartments actually pay more in taxes and have fewer school children on average than single-family houses. In other words, it may be more accurate to say that apartment residents are subsidizing the public education of the children of homeowners than the reverse,” the Harvard researchers conclude.
New Hampshire needs tens of thousands of new housing units, and multi-family housing will have to be a large part of that mix. As housing tastes change and home prices surge, rentals are increasingly in demand. Though more people want this type of housing option, local opposition based on myths often succeeds in blocking new construction. Debunking the myths has to be part of any plan to get more housing approved in New Hampshire.
When opponents claim that apartments will increase traffic, raise property taxes, and lower home values, Granite Staters who would like to see more housing options should be prepared to counter those myths with data.
