New Hampshire voters rank affordable housing as the state’s No. 1 problem, according to a UNH Survey Center poll released on August 28. State business and political leaders agree, saying housing affordability is the top problem holding back the state’s economy.
“Oh, it’s number one,” Gov. Chris Sununu told Drew Cline, president of The Josiah Bartlett Center for Public Policy, on the WFEA Morning Update. “The lack of housing for middle and lower-income families is absolutely number one because…. Without the housing, you don’t have the employees. Without the employees, the businesses can’t grow. If the businesses can’t grow, then economically everything becomes stagnation.”
In June 2023, housing affordability in the state reached a new record low for the second consecutive month, according to the New Hampshire Association of Realtors. With an affordability index of 61, the state’s median household income was only 61% of what’s necessary to qualify for the median-priced single-family home at current interest rates.
At the same time, median prices for single-family homes in New Hampshire hit their highest point ever at $495,000—an increase of $30,000 from the previous month’s record high. Condos notched a record median price of $400,000 in June too.
Rents are also hitting new heights. The median cost of a two-bedroom apartment soared 11.4% over the past year alone to $1,764 a month.
Despite New Hampshire’s growing economy—ranked fourth overall, third in economic growth, first in economic opportunity, and last in poverty rate by U.S. News & World Report—the state is 36th in housing affordability.
“I would rate housing affordability number one currently among issues or challenges impacting New Hampshire’s economy,” Michael Skelton, president and CEO of the Business & Industry Association (BIA), told The Josiah Bartlett Center.
“It’s unquestionably the single most important problem facing New Hampshire’s economy,” said Jason Sorens, senior research faculty at the American Institute for Economic Research and author of The Josiah Bartlett Center’s landmark 2021 study linking local land-use regulations to the state’s housing shortage.
Several leaders also agree that land-use regulations are a leading cause of the issue.
“Most of the affordability problem is due to local land-use regulations,” Bob Quinn, CEO of the New Hampshire Association of Realtors, concluded. “They increase development costs or eliminate the opportunity to build entirely.”
“Local land-use regulations are certainly part of the issue, on par with NIMBYISM [Not-In-My-Backyard-ism],” Keene Mayor George Hansel said.
It comes down to a problem of supply and demand: Limited supply of housing with steady or increasing demand leads to an increase in prices. By restricting what can be built and where, zoning laws are suppressing the supply of housing, resulting in New Hampshire’s current housing shortage, state housing experts and business leaders say.
“There is simply not enough housing for people to rent in New Hampshire,” Ben Frost, deputy executive director of New Hampshire Housing, said on WMUR.
According to the CATO Institute’s Freedom in the 50 States—an index of personal and economic freedom—New Hampshire ranks 40th in land-use freedom, a product of local land-use regulations obstructing supply.
These zoning regulations include minimum lot size, setback, frontage, minimum square footage, and design requirements, among others—all of which make it difficult to build and/or increase the costs of building.
“We know developers are interested in building more housing and there are generally financing options and capital available to do so, [but] the challenge they most often face is finding a place to build,” BIA’s Skelton observed. “Local land-use regulations and zoning (minimum lot size being the most prominent) and infrastructure (water/sewer, etc.) availability and requirements, to me, are the most significant local regulatory issues impacting what can be built and where.”
As the New Hampshire Zoning Atlas demonstrates, single-family housing is allowed by right on 90% of the state’s 3.6 million acres of buildable land, yet most municipalities don’t allow single-family homes on small lots (less than one acre).
In fact, homes on lots of less than one acre are permitted on only 16% of the state’s buildable land.
The median lot in New Hampshire is 49,223 square feet, according to the Angi U.S. Lot Size Index. This is the second-highest in the country.
In New Hampshire, minimum lot size requirements can exceed dozens of acres. Districts in Groton, New Boston, Peterborough, and New London require lots to be a minimum of 25 acres (1.089 million square feet).
Zooming in on the Greater Manchester Area, 89% of the buildable land in the city and surrounding towns (Auburn, Bedford, Goffstown, Hooksett, Litchfield, Londonderry, and Merrimack) allows single-family housing, but only 33% of that buildable area is open to new single-family homes (after accounting for existing development, vacancies, and growth potential).
Just 21% of Greater Manchester’s buildable land allows single-family homes on small lots. This drops to merely 7.8% when considering only vacant or underdeveloped space.
“It’s not the only factor, but it’s the predominant factor, and it’s easily the most important factor we can actually do something about,” Jason Sorens, the principal investigator on the New Hampshire Zoning Atlas, noted about local zoning laws.
“We can’t do much about steep slopes and poor soils, and expanding sewer and water service takes time and expense. Growing the construction workforce is another lever, but that will take a long time. Local land-use regulations drive at least 50% of the affordability problem, and we can change them,” Sorens added.
Multifamily development is heavily restricted as well. While housing for five or more families is permitted on 44.2% of New Hampshire’s buildable area, only 21% of this land allows these large-family developments on smaller lots.
Reforming a city’s zoning regime can be quite an undertaking. “Keene has dramatically streamlined and rewritten our land-use codes in the last three years,” Mayor Hansel said. “This was an expensive effort, costing more than $500,000 on top of internal staff time devoted to the rewrite effort. Smaller communities, without full-time planning staff, would have a hard time tackling something like that.”
Though some communities might want to avoid a full rewrite, smaller changes such as reducing minimum lot sizes, eliminating overlay districts (zoning districts that overlap original zoning districts), and increasing density limits (how many housing units can be built in a given area) would have significant impact.
Mayor Paul Callaghan offers Rochester as a model for other municipalities looking to make quick progress on this front.
“In 2018 we increased the density allowance in and around our three urban centers (East Rochester, Downton Rochester, and Gonic) to allow for more density (and therefore less cost to developers),” Mayor Callaghan said. “And then in 2019 we did away with density requirements altogether in Downtown Rochester and allowed for some residential units on the ground floor level.”
“The system really works when it’s clicking, and the number one thing holding it all back…is housing,” Gov. Sununu told Cline. “And it isn’t, ‘Well, the government needs to build more housing.’ We’re investing more in housing than we ever have.”
In fact, the 2024–25 state budget spends a record $25 million for the affordable housing fund.
“But the locals need to permit it,” the governor continued. “Local, even small towns, need to talk to their businesses who are struggling to find employees and say, ‘Maybe if we just put five units up here or we let a small multifamily complex with seven, ten units go over here,’ that in itself can just be a game changer for a lot of small businesses in town to make them more economically viable.”
Capturing the full economic extent of the challenge, the governor added, “Everything moves positively when you have the housing and you can bring in the employees.”