New Hampshire can’t address homelessness without addressing housing regulations

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The NH Coalition to End Homelessness (NHCEH) recently released The State of Homelessness in New Hampshire Annual Report 2022, and the results are understandably concerning. 

According to annual Point-in-Time (PIT) counts, statewide homelessness grew from 1,382 people in 2019 to 1,605 in 2022, a 16% increase. 

While sheltered homelessness (people living in shelters) increased by about 3% over those four years, both chronic and unsheltered homelessness increased by a whopping 71% and 125%, respectively. 

According to data collected throughout the year using the state’s Homeless Management Information System (HMIS), the numbers are equally startling. The state’s homeless population grew by about 32% from 4,554 people in 2020 to 6,031 in 2022. 

“The rate of homelessness in New Hampshire increased from 330.6 per 100,000 residents in 2020 to 432.3 in 2022, reflecting a rate increase of 30.8%,” the report states. Over those three years, chronic homelessness rose by 30% and unsheltered homelessness rose by 41% using HMIS.

Homelessness is undoubtedly a multivariate problem—an issue involving a handful of variables where not one single “solution” will eliminate the problem entirely. But a severe shortage of rental housing is a major factor in New Hampshire. 

“There is simply not enough available housing to meet the need,” the NHCEH states in its report. 

A state’s rental vacancy rate is the percentage of residential rental units in a given area that are currently available. A statewide vacancy rate of 5% is emblematic of a balanced market (supply meeting demand). 

New Hampshire’s vacancy rate is 0.8% for all units (0.6% for two-bedroom units), according to the New Hampshire Housing Finance Authority

The state vacancy rate has been under 1% for four out of the last five years. The last time it was at least 5% was 2009–2010. Six of New Hampshire’s 10 counties (Belknap, Carroll, Hillsborough, Merrimack, Rockingham, and Sullivan) have vacancy rates below the statewide figure of 0.8% this year.

Our research has established that local land-use regulations are the main culprit holding back the supply of housing in the state. Parking requirements, minimum lot sizes, exclusionary zoning, and other constraints are examples of land-use regulations that choke the supply of housing by making it more costly, difficult, or impossible to build. Municipal restrictions on rental housing can be severe in some locations.

Multifamily housing is greatly restricted in many of the state’s 13 cities. Here are the percentages of buildable land on which multifamily housing is allowed in each New Hampshire city in 2023, according to the New Hampshire Zoning Atlas:

2-Family 3-Family 4-Family 5+-Family
Berlin 82% 40% 40% 40%
Claremont 87% 5% 5% 5%
Concord 22% 36% 36% 36%
Dover 82% 65% 65% 65%
Franklin 7% 7% 7% 7%
Keene 8% 9% 7% 7%
Laconia 28% 28% 28% 28%
Lebanon 14% 6% 6% 6%
Manchester 23% 21% 21% 21%
Nashua 57% 58% 58% 58%
Portsmouth 28% 30% 30% 30%
Rochester 72% 10% 10% 10%
Somersworth 14% 8% 8% 8%

Eight cities allow duplexes on 30% or less of their buildable land. Another nine allow multifamily housing of three units or more on 30% or less of their land. And these are after some zoning improvements were made over the last year. 

With a current shortage of more than 23,500 housing units, building more multifamily housing is critical to addressing homelessness. But prohibitive zoning laws in many municipalities get in the way. 

Reducing homelessness means increasing rental housing. Increasing rental housing means relaxing the local land-use regulations that severely restrict the development of rental housing. 

It’s no coincidence that as the state vacancy rate has consistently remained below 1%, rents—and homelessness—have increased. 

Median monthly rent for a two-bedroom apartment in the state has increased by 59% since 2014 to $1,764 in 2023. Rents have increased by 31% since 2019 alone.

Again, housing supply isn’t the only factor driving the increase in New Hampshire homelessness. Municipal officials also point to increases in substance use, addiction, and mental illness. But a larger supply of lower-priced homes and apartments would put housing within reach for many who struggle to stay off the streets. 

Illustrating the connection, research by the Pew Charitable Trusts found a strong connection between high rents and high levels of homelessness between 2017 and 2022. That study was consistent with findings from previous studies.  

One policy often proposed as a remedy for both homelessness and high rents is the government imposition of rent caps. For the second year in a row, state lawmakers have filed a bill to authorize municipalities to implement rent control measures.

House Bill 1362 would enable municipalities to enact ordinances limiting how much rents can be raised over a 12-month period. It’s pitched as a way to “stabilize rent increases.”

Price controls like this may be politically seductive, but they are economically harmful. Instituting rent control would have the same deterring effect on developers that burdensome zoning regulations already have. By reducing profitability, rent control would further reduce the supply of rental housing. So, instead of solving the state’s shortage of rental housing, it would only worsen the shortage. This would lead to increases in New Hampshire’s homeless population. 

It’s well established, as we’ve pointed out, that rent control laws reduce the supply of rental housing and tend to push market rents even higher. Rent control is not a solution. 

“[T]he people who are asking for rent control are very angry when they discover there is a shortage of apartments and a shortage of housing,” wrote economist Ludwig von Mises in Economic Policy: Thoughts for Today and Tomorrow.

The problem with housing in New Hampshire isn’t “greedy” landlords or developers. It’s government policies that prevent or discourage landlords and developers from increasing supply. Get those regulations out of the way and the market will step in to meet the need.