Two events on opposite ends of the state last week highlighted the central problem with New Hampshire’s housing market.
In Newmarket over the weekend, a group of renters held a demonstration to denounce landlords and protest high rents.
After experiencing a substantial rent increase, one couple said they had to move out of town to find a place where the rent and the quality of the apartment were better matched.
That place, they said, is New Jersey.
Another protester said she had moved to Maine to find a more reasonable rent.
It’s true that, on average, moving from Rockingham County to Maine will lower one’s rent, as average rents are lower in Maine than in New Hampshire.
Apartmentlist.com puts the average rent for a one-bedroom apartment at $952 in Maine and $1,329 in New Hampshire.
Home prices are lower in Maine too.
The median home price in New Hampshire is about $430,000.
In Maine, it’s about $350,000.
Maine and New Hampshire have almost identical populations. Maine has 1.34 million people, and New Hampshire has 1.35 million people.
That’s not enough of a difference to create such huge price variations for housing.
Why would prices be so much lower in Maine?
In a word: Supply.
Maine has 101,000 more housing units than New Hampshire does, according to Census Bureau data.
That’s almost exactly as many housing units as exist in Merrimack and Cheshire Counties combined.
If New Hampshire had 101,000 more housing units, what do you think the effect would be on home prices and rents?
A few days before the Newmarket protest, residents of Keene demonstrated exactly why New Hampshire is suffering from a severe housing shortage that has driven home prices and rents to record levels.
On Wednesday, Keene’s Planning, Licenses and Development Committee recommended unanimously that the city council send back to committee a proposed zoning ordinance that would allow more housing in the city’s rural district, the Keene Sentinel reported.
The city had proposed reducing the minimum lot size in the rural zone from 5 acres to 2.
That’s right. The City of Keene has a rural zone with a mandatory minimum lot size of five acres. Within that zone, no house may legally be built on any lot smaller than five acres.
This is exactly the kind of government regulation that reduces the housing supply and raises prices.
Keene officials wanted to do their part to make it less expensive to build single-family homes in large sections of the city. But about 15 people showed up to oppose the ordinance, with many saying it would change the rural character of the City of Keene.
Spooked city officials promptly moved to withdraw and rework the proposed ordinance.
Meanwhile, prices continue to rise and pressure continues to build for legislative action. Activists are pushing hard for state laws to pre-empt local zoning ordinances or regulate prices.
If local governments don’t take more decisive action to trim regulations that limit housing supply, state-imposed solutions will come. It’s only a matter of time.