August 2023 saw a new all-time low in housing affordability in the Granite State, according to the New Hampshire Association of Realtors (NHAR).
The affordability index in August fell to 59, the lowest on record. “That means the state’s median household income is just 59 percent of what is necessary to qualify for the median-priced home under prevailing interest rates,” NHAR reported.
“We continue to see a lack of affordable housing in the state, and the affordability problem is directly tied to the inventory problem,” Ben Cushing, NHAR president, told NHJournal.
“There do seem to be signs that the price escalation is beginning to slow, and we know that the housing market is cyclical, but the transition away from this long-standing seller’s market is being slowed by the alarming lack of inventory,” Cushing said. “It’s a real problem because it impacts the state’s ability to expand the economy, it exacerbates homelessness, it drives up property taxes, and it forces young people out of the state to find more affordable options elsewhere.”
For the 11th straight month, closings fell by double digits. August saw 1,283 single-family home sales — a 23.2 percent decrease compared to a year ago. The last time the New Hampshire housing market saw an increase in year-over-year monthly sales was over two years ago.
Single-family homes sold for a median price of $490,000 in August — the record high for that month and the second-highest monthly median ever recorded in the state. That brings the list of year-over-year median price jumps to 42 straight months.
It’s no surprise that the issue is top-of-mind for New Hampshire voters. A UNH poll in August found that a clear plurality (27 percent) of Granite Staters believe housing is the state’s most important problem. The next closest issue is the cost of living at 13 percent.
Similarly, the Center for Ethics in Society at Saint Anselm College found in its recent survey of voter attitudes on affordable housing that there is high demand for more affordable homes among New Hampshire residents. More than three-fourths (78 percent) of voters agreed their communities need more affordable homes to be built, and 58 percent even wanted more affordable housing in their own neighborhoods (an eight-percent jump from 2022). The latter figure signaled a decline in NIMBYISM (Not-In-My-Backyard-ism), historically prevalent throughout New Hampshire.
Moreover, more New Hampshire voters identify regulations as the root cause of the state’s affordability problem. Sixty percent thought their towns and cities should reform local land-use and zoning regulations to facilitate greater housing development. That was an eight-percent increase from 2022, a 21-percent increase from 2021, and a 31.3-percent increase from 2020.
While the recently approved 2024–25 state budget appropriates a record $25 million for the affordable housing fund, Jason Sorens, senior research faculty at the American Institute for Economic Research and principal investigator on the New Hampshire Zoning Atlas, told NHJournal voters are right to view housing as a regulatory issue.
“For the last few years, we’ve seen exceptionally low inventory coming onto the real estate market despite escalating prices. Homeowners don’t want to sell because they have to buy into that same hot market,” Sorens said. “The only way to cut the Gordian knot is new home-building. This is no longer mainly a supply-chain problem or a work-from-home-induced demand problem: It’s a regulatory problem that predates the pandemic. That’s why the state legislature has been seriously looking at easing regulatory barriers to construction.”
Demand for housing remains high, but the supply can’t meet it under the current regulatory landscape, hence the housing shortage. As a result, housing prices soar.
Sorens’s Zoning Atlas revealed that although single-family housing is allowed by right on 90 percent of New Hampshire’s 3.6 million acres of buildable land, most towns and cities don’t permit single-family homes on small lots. Homes on lots of less than one acre are allowed on only 16 percent of the state’s buildable land.
According to the New Hampshire Housing Finance Authority’s Statewide Housing Needs Assessment, the state needs over 23,500 units to stabilize the housing supply.
Meanwhile, borrowing remains expensive. Federal interest rates are holding steady in the 5.25–5.5 percent range, while 30-year fixed mortgage rates are over seven percent.
“If we’re going to work toward narrowing the housing gap, steps need to be taken at the state and local levels to ease restrictions and incentivize development,” Cushing said. “The governor and legislature have taken a step in that direction by creating financial incentives in the last budget cycle, but putting money toward the problem is only a stopgap.”
Cushing added that more should be done to bolster property rights. “We need to follow the lead of towns like Lebanon, Dover, Salem, and Exeter, which are implementing programs to grant property owners greater control over their own land. Unfortunately, too many communities have gone in the other direction, stripping property owner rights to such a degree that housing creation is virtually impossible.”
