In 1970, Manchester had more than enough rentals for all who needed one. Over the course of the next half century, the city created its own housing shortage. 

It’s a story repeated in many communities throughout New Hampshire. Manchester offers a case study based on Census figures.

Manchester had 36,024 total housing units in 1970, according to U.S. Census Bureau data. In 2020, the city had 49,445 housing units. That’s an increase of 37% in 50 years. 

By comparison:

  • Salem’s housing units grew from 6.795 in 1970 to 12,005 in 2020, an increase of 76%. 
  • Nashua’s housing units grew from 20,984 in 1970 to 37,933 in 2020, an increase of 80%.
  • Derry’s housing units grew from 4,279 in 1970 to 13,539 in 2020, an increase of 216%.
  • Total statewide housing units increased from 280,962 in 1970 to 638354 in 2020, an increase of more than 127%.

Those are total units, not just rentals. But you can see the rental shortage in the vacancy rate. Manchester’s rental vacancy rate fell from 5.4% in 1970 to below 1% today. 

(New Hampshire suffers from a similarly low vacancy rate, also caused by a shortage of rentals. Local planners in many communities have preferred to approve single-family homes rather than rentals.)

Because Manchester did not allow the construction of enough housing, the city’s population growth rate lagged the rates in some other municipalities. 

From 1970-2020, Manchester’s population grew by 32%. During the same period, Nashua’s population grew by 64%, Derry’s by 95%, and Salem’s by 342%. New Hampshire’s population grew by 87%. 

Because city officials chose to limit growth, Manchester’s population and economy have grown at a slower rate than the rest of the state as a whole. Artificially limiting the city’s housing supply created a drag on the city’s economic growth and cultural life.

If city leaders want to stimulate Manchester’s economy, revitalize its public schools, increase its tax base, and enhance its cultural life, goal No. 1 should be to approve a lot more housing, with an immediate emphasis on rentals. 

Granite Staters support building affordable housing in their communities, and even in their neighborhoods, a new poll from the Center for Ethics in Society at St. Anselm College has found.

The results upend the traditional view that residents don’t want new housing built close to them. That view has been used for decades to justify local regulations that limit the construction of homes and apartments. The new poll suggests that Granite Staters are much more open to change than previously assumed. 

Granite Staters expressed in the poll strong support for building affordable housing in people’s own communities, changing local regulations to allow more housing, and limiting local planning and zoning regulations.   

Among the findings:

BUILDING AFFORDABLE HOUSING 

  • By a 69%-29% margin, New Hampshire voters said “my community needs more affordable housing to be built.” This represents a 9% increase from last year’s survey. 
  • For the first time, the center asked a subset of voters about building affordable housing in their “neighborhood” instead of their “community.” While “community” might refer to a whole town or city, “neighborhood” sounds like a much smaller context to most people. Respondents still endorse building more affordable housing in their own neighborhood by a 7-point margin (50-43%). 

CHANGING LAWS AND REGULATIONS 

  • By a 52-40% margin, New Hampshire voters support changing town and city zoning regulations to allow more housing to be built.
  • By a 70-21% margin, respondents endorse setting a “hard limit” on how long local planning and zoning boards can take to review permits to build housing.
  • By a 38-35% margin, Granite State voters endorse the concept of a bill that failed this session, which would have allowed property owners to build up to four housing units on any residentially zoned lot served by municipal water and sewer.

REEXAMINING WHERE HOUSING IS BUILT

  • By a 61-37% margin, N.H. voters oppose the idea that multifamily housing should only be built in cities, not in suburbs and rural areas.
  • By a 53-42% margin, voters oppose the state “doing more to prevent housing development and keep the state the way it is.” The poll’s data shows young people under 35 and retirees are generally the most supportive of building more homes and changing state and local laws to allow that to happen. As expected, non-homeowners are more likely than homeowners to endorse building affordable and multifamily housing. It also shows that while conservatives are less likely to endorse the concept of affordable housing, they are more likely than liberals to endorse having the state set a hard limit on municipal permit review timelines. 

“Legislators have yet to address the acute housing shortage caused by local overregulation in this session, but these poll results show that Granite State voters don’t want to wait,” Jason Sorens, director of the Center for Ethics in Society, told the Josiah Bartlett Center. “They want their own towns to change the rules to allow more homes to be built, and they want state government to get involved by setting a hard limit on permit review times and maybe even directly preempting local zoning rules. Going full ostrich on the housing issue could hurt the legislative majority if the problem continues to go unaddressed.”

Though Gov. Chris Sununu championed housing reform at the start of the year, the Legislature killed most reform efforts. The biggest housing bill of the year (Senate Bill 400) passed the Senate, but stalled in the House over concerns about the political costs of limiting local governments’ ability to restrict new development.

The bill would have slightly curtailed the power of local boards to limit where residential housing is built, and it would have allocated more state funding to municipalities that allowed more housing. 

The House removed those provisions and amended others, severely weakening the bill. 

Last week, both chambers incorporated a watered down version of SB 400 into another bill, HB 1661. It requires local boards to include written, specific findings of fact when rejecting a housing application. It requires zoning boards to begin formal consideration of received applications within 90 days of receiving them, and planning boards within 65 days.

A requirement for municipalities to grant workforce housing the same regulatory allowances made for senior housing was changed from a “shall” to a “may.” And a provision forbidding local boards from putting age restrictions on workforce housing was removed. 

Legislators also killed a bill to allow duplexes, triplexes and quadplexes on any single-family lot, one to forbid minimum lot sizes of more than half an acre unless it’s to accommodate a septic system, another to forbid minimum lot sizes of more than 10,000 square feet (excluding those with septic systems), and one forbidding proscriptions on workforce housing. 

Legislators did pass a bill to create a commission to study barriers to housing construction.  

A report published by the Josiah Bartlett Center last October, and written by the Center for Ethics in Society’s Sorens, detailed how local land use regulations have reduced the state’s housing supply and driven up prices.

The study found that residential land use regulations are associated with growing socioeconomic segregation and slowing population growth.

As housing becomes more expensive, fewer people are moving to New Hampshire, especially to those towns that are most expensive. Those who stay are disproportionately wealthy and college-educated, while middle- and lower-income families leave because they cannot find affordable housing. Costly housing in towns with better schools also limits families’ access to educational opportunity. Finally, the sprawl caused by anti-density policies such as minimum lot sizes increases drive times and road maintenance costs and worsens air and water quality.

 

 

New Hampshire’s critical housing shortage has emerged as the No. 1 impediment to state economic growth, and the legislative session could end with no substantial progress on the issue. 

In Concord, there is broad agreement that housing is a serious problem. There is little agreement on solutions.

Paralyzed by a widespread reluctance to place legal constraints on local governments, legislators have killed or watered down bills drafted to address the primary cause of the shortage: local planning and zoning ordinances. 

Senate Bill 400, intended to be the major housing reform bill of the year, never offered the sort of sweeping changes that would fix the local regulatory problem. But the most significant changes it did offer were removed last week by the House Municipal and County Government Committee. 

The committee even added language designed to exempt suburban and rural communities from the state’s current mandate to allow housing for lower-income families. 

This follows the Legislature’s rejection of previous bills to prohibit excessive minimum lot sizes and allow small multi-family housing (up to four units) in places served by municipal water and sewer. 

Deference to local governments has not been the only obstacle. The House Municipal and County Government Committee removed from SB 400 a state program to reward communities that allow more housing. 

In the bill’s proposed New Hampshire Housing Champion Certification program, municipalities that adopt ordinances to promote new housing development would be eligible for increased state infrastructure funding. 

An absence of a substantial legislative fix would leave Gov. Chris Sununu’s proposed InvestNH Housing Fund as the only statewide plan. The governor has been a strong and passionate leader on the housing issue. Working within his authority to manage COVID relief money, he’s proposed spending $100 million in federal American Rescue Plan Act (ARPA) funds to create incentives for new housing development. 

That effort was stalled in the Executive Council after objections from affordable housing advocates that the money wasn’t reserved for below-market developments. 

This obsession with steering the housing market toward lower-priced units via government intervention is yet another factor that has contributed to the state’s critical shortage. 

Developers need to make a return on their investment. When government insists that a portion of a development be sold or rented at below-market rates, that discourages new construction. In New Hampshire, town boards even use “workforce housing” quotas to kill projects they don’t want, as they know that these quotas can make projects unprofitable. 

The governor’s plan would allocate $60 million to developers to encourage multi-family housing projects, $30 million to municipalities to encourage the issuance of new housing permits, $5 million to municipalities to study improvements to local planning and zoning ordinances, and $5 million for the demolition of vacant or dilapidated buildings. 

The money to municipalities is directed at overcoming real obstacles by changing the incentives local boards have. Right now there is very little incentive to approve new projects, largely because of vocal opposition fueled by misinformation about the impacts of new housing on local communities. These municipal-directed dollars would offer incentives to move town boards in the right direction.

The seed money for new development would not work the same way. Developers already have every incentive in the world to build, especially in the current market. Developer financing is not a major obstacle to new housing development. Municipal ordinances are. 

The $60 million could cover some lost profits of developments with below-market-rate units. But once that subsidy goes away, those rents will rise to market rate. In any case, subsidizing new development is not necessary, as financing for housing is readily available in the private sector. 

Local ordinances are the problem, and so far, legislators have proven reluctant to approve statewide solutions that limit local authority. Creating better incentives for local governments to approve more housing would be a good option. Unless legislators change course in the next three weeks, the governor’s proposal will be the last statewide solution available this year.

Granite Staters could gain a little more freedom this year to make extra money from home.

The COVID-19 pandemic has reshaped the American workforce, probably permanently. A Pew poll in February found that 59% of people who say their jobs can be done mostly from home are working from home all or most of the time, with another 18% working from home some of the time. 

What’s more, 61% of them say they are working from home by choice. 

A study published by Stanford University in March concluded that “about half of the US workforce currently works remotely at least one day each week.”

Millions of Americans are choosing to convert their living rooms, dens, bedrooms, play rooms, basements, etc. into home offices. 

But for those who don’t type on laptop computers all day, working from home is trickier. Regulations often prevent homes from being monetized in more traditional ways. 

Two bills in the Legislature would relax some restrictions that make it harder for people to generate extra income from their homes. 

RSA 143-A:12 allows Granite Staters to operate a “homestead food operation” from their kitchens. (It excludes foods the require refrigeration.)

To prevent these kitchen businesses from scaling up to full commercial operations, allowable sales are capped at $20,000. 

House Bill 314 would increase that cap to $35,000, letting people make a living, or at least a really strong side-income, from homestead food preparation. The bill would increase a homestead food operator’s maximum allowed weekly sales from $384.60 to $673.

For those who wish to monetize the rest of their home, Senate Bill 249 would prohibit municipalities from banning short-term rentals. 

According to a new analysis by the state Office of Planning & Development, 27 New Hampshire jurisdictions regulate short-term rentals in some way. These range from Franconia’s registration requirement to Bedford’s ban. 

SB 249 would allow short-term rentals statewide while authorizing municipalities to “generally regulate parking, noise, safety, health, sanitation” and apply “other related municipal ordinances” to short-term rentals. 

Municipalities could require registration, and they could revoke that registration if a property is associated with more than one ordinance violation. 

There is some concern that short-term rentals could raise rents and home prices. Studies have found that these rentals are associated with a short-term bump in prices.

But over the long run, short-term rentals have been found to stimulate housing construction.

A study released last fall looked at the effect of Airbnb rentals on housing construction over a decade. It found that a 1% increase in Airbnb listings led to a 0.769% increase in permit applications. 

The authors found that short-term rentals stimulate the construction of new housing units, leading to increased property tax revenue, and that “restricting STRs can have a significant, negative impact on local economic activity.”

It’s not surprising that people will try to build more housing if they can use it to generate extra income. 

These practical considerations aside, regulations on the use of property (particularly for generating income) have grown so strict that they’ve caused a significant erosion of private property rights. 

Historian Edmund S. Morgan wrote that “widespread ownership of property is perhaps the most important single fact about Americans of the Revolutionary period. . . . Standing on his own land with spade in hand and flintlock not far off, the American could look at his richest neighbor and laugh.”

Today, a Granite Stater standing on his own land looks at his neighbor and worries, as the neighbor can call the town planning department and report him for a dozen potential ordinance violations.

Instead of balancing competing private property interests, state and local regulations have long trended against property owners. Regaining that balance will take decades. It can start with small changes that grant a little more discretion to property owners while maintaining rules that allow neighbors to assert their own property rights. 

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:

  1. “Houses with apartments nearby actually enjoy a slightly higher appreciation rate than houses that don’t have apartments nearby.”
  2. “…working communities with multifamily dwellings actually have higher property values than other types of working communities.”
  3. “…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 would like to see more housing options should be prepared to counter those myths with data.

Join us on Tuesday, Feb. 8, at 6 p.m., for a lively, candid discussion about the Seacoast region’s housing market and the opportunities for regulatory solutions to our housing supply and affordability crisis, organized by the Center for Ethics in Society at Saint Anselm College and the Josiah Bartlett Center for Public Policy.

Jason Sorens, Director of the Center for Ethics, will summarize the findings of his statewide residential land use regulation study before drilling down on specific Seacoast communities to show how housing costs have changed, and what the consequences have been for workers and families in the region. What can the region’s municipalities do to free up home-building from regulatory red tape?

Following Sorens’ presentation, Andrew Cline (President of the Bartlett Center) will moderate a panel discussion with local experts. Panelists include Portsmouth Mayor Deaglan McEachern, Sarah Wrightsman (Coordinator of Community Engagement at New Hampshire Housing and former Executive Director of the Workforce Housing Coalition of the Greater Seacoast), and Darren Winham (Town of Exeter’s Economic Development Director).

 

Details:

Sheraton Portsmouth Harborside Hotel

250 Market St.

6 p.m.

Tuesday, Feb. 8, 2022

 

This event is supported by New Hampshire Housing, New Hampshire Association of Realtors, and the Josiah Bartlett Center for Public Policy.

 

Register here to attend in person (Sheraton Portsmouth Harborside Hotel)

Register here to attend virtually

 

Panelists:

Jason Sorens is Director of the Center for Ethics in Business and Governance at Saint Anselm College. He received his Ph.D. in political science from Yale University in 2003 and a B.A. in economics and philosophy (with honors) from Washington and Lee University in 1998. He has researched and written more than 20 peer-reviewed journal articles, a book for McGill-Queens University Press titled Secessionism, and a biennially revised book for the Cato Institute, Freedom in the 50 States (with William Ruger). His research has focused on fiscal federalism, U.S. state politics, and movements for regional autonomy and independence around the world. He has taught at Yale, Dartmouth, and the University at Buffalo and twice won awards for best teaching in his department. He lives in Amherst, New Hampshire.

Andrew Cline is President of the Josiah Bartlett Center for Public Policy. Before joining the Bartlett Center, he was a communications consultant and a newspaper editor. He spent 14 years as editor of the editorial page of the New Hampshire Union Leader, where his work won him two New Hampshire Press Association Editorial Writer of the Year awards. A USA Today contributor, he has been published in more than 100 newspapers and magazines, including The Atlantic, The Washington Post, The Wall Street Journal, National Review, and The Weekly Standard. He was appointed chair of the State Board of Education in 2017.

Deaglan McEachern was elected Mayor of Portsmouth, NH in November 2021. He was elected to the City Council in 2019 and was the co-creator in 2020 of the Citizen Response Task Force to help local businesses cope with the economic impact of the pandemic. Previously he had co-founded Seacoast Business Owners with his wife Lori to help small businesses in the area thrive. He serves on the Advisory Board of SOS Recovery, a community recovery program that is on the front lines of substance misuse treatment. McEachern works in the technology sector, managing New England for Yext Inc, a publicly traded software company. Before working in the technology sector, McEachern spent 10 years on the United States rowing team.

Sarah Wrightsman is the Community Engagement Coordinator at New Hampshire Housing. Prior to joining the team at New Hampshire Housing, Wrightsman was Executive Director of the Workforce Housing Coalition of the Greater Seacoast and the Housing Coordinator for the Regional Economic Development Center, which serves southern NH. Wrightsman is a graduate of Leadership Seacoast’s class of 2019 and Leadership New Hampshire’s Class of 2021. She holds a master’s degree in public policy from the Carsey School of Public Policy at the University of New Hampshire. Wrightsman was selected for the Union Leader’s 40 Under Forty list in 2020, and featured in New Hampshire Magazine’s 2019 “It List,” named a “10 to Watch” winner by Seacoast Media Group and Catapult Seacoast, and named “Civic Leader of the Year” by Stay Work Play and NH Public Radio in 2018. A resident of Newmarket, Wrightsman is the co-host and co-founder of the New Hampshire-based podcast, Creative Guts.

Darren Winham is the Economic Development Director for the Town of Exeter, NH. Winham has worked in economic development around the country for 21 years, previously serving as the Business Development Specialist for the Maine Department of Economic and Community Development, Chief of Economic Development and Housing for Lassen County, CA, Energy and Construction Lead for the Employment and Training Administration at US DOL in Washington DC, and Economic Development Director in Barre, VT. Winham is also the owner of DarWin Dynamic Solutions, EconDev Consulting, and a Partner at Argos Data and Development.

 

On Oct 12, 2021, the Josiah Bartlett Center for Public Policy and the Center for Ethics in Society at St. Anselm College released a first-of-its-kind study on how local land use regulations affect the supply and price of housing in New Hampshire. The event included a panel discussion on housing regulation with Sarah Marchant of the City of Nashua and Ben Frost of the New Hampshire Housing Finance Authority.

For those who couldn’t make the event, we’re offering the full video on our YouTube channel here.

The study and its findings are available here.

This study finds that residential land use regulations are associated with growing socioeconomic segregation and slowing population growth.

As housing becomes more expensive, fewer people are moving to New Hampshire, especially to those towns that are most expensive. Those who stay are disproportionately wealthy and college-educated, while middle- and lower-income families leave because they cannot find affordable housing.

Costly housing in towns with better schools also limits families’ access to educational opportunity. Finally, the sprawl caused by anti-density policies such as minimum lot sizes increases drive times and road maintenance costs and worsens air and water quality.

 

 

The Josiah Bartlett Center’s new study of local residential land use regulations provides a first-ever ranking of N.H. municipalities’ local housing restrictions.

The study ranks N.H. municipalities by the inelasticity of their housing supply, that is, by how much local conditions, especially land-use regulations, restrict the ability of the private sector to provide new housing in response to rising demand. 

Excessive residential land use restrictions have sharply restricted New Hampshire’s housing supply, our study finds. That supply shortage has led to dramatically higher housing prices, increased income segregation, larger gaps in educational performance, slower economic growth, and slower population growth.

The ten municipalities where housing is most restricted are:

 

1.     New Castle

2.     Rye

3.     Portsmouth

4.     Newington

5.     New London

6.     Hanover

7.     North Hampton

8.     Moultonboro

9.     Hampton Falls

10.  Waterville Valley

 

The ten municipalities where housing is least restricted are:

  1. Ellsworth
  2. Hart’s Location
  3. Hale’s Location
  4. Stratford
  5. Northumberland
  6. Berlin
  7. Colebrook
  8. Stewartstown
  9. Warren
  10. Clarksville

Why have house prices and rents increased so much in New Hampshire? A new Josiah Bartlett Center for Public Policy study finds that residential land use regulations, mostly at the local level, are a major cause.

Examples of local regulations that prevent people from building homes include: minimum lot sizes, frontages and setbacks, single-family-only requirements, bureaucratic requirements for accessory dwelling units, maximum heights and densities, minimum parking requirements, historic and village district requirements, municipal land ownership, subdivision regulations, impact fees, and simply the unwillingness of zoning boards to issue variances.

Widely available measures show that New Hampshire is one of the most restrictive states in the country for residential development. By suppressing building, land-use regulations drive up the price of housing as demand rises. Removing or relaxing these regulations would allow prices to rise more gradually.

Consequences

The consequences of housing scarcity for our state are significant. This study finds that residential land use regulations are associated with growing socioeconomic segregation and slowing population growth.

As housing becomes more expensive, fewer people are moving to New Hampshire, especially to those towns that are most expensive. Those who stay are disproportionately wealthy and college-educated, while middle- and lower-income families leave because they cannot find affordable housing.

Costly housing in towns with better schools also limits families’ access to educational opportunity. Finally, the sprawl caused by anti-density policies such as minimum lot sizes increases drive times and road maintenance costs and worsens air and water quality.

Causes

New Hampshire municipalities have enacted these restrictions on growth for several reasons. First, there is a widespread perception that allowing home-building would increase the number of children in local schools. However, the other side of the home-building equation is that new home construction leads to substantial growth in the tax base, relieving the tax burden on the rest of the town. Moreover, school populations are falling across most of the state, and so adding more children would not necessarily require more spending. So the “fiscal” motivation for restricting home-building does not make much sense today.

Rent-seeking

The main reason for growing development restrictions seems to be “rent-seeking.” In other words, some homeowners in the towns with the biggest housing demand see zoning as a way of boosting their wealth by artificially limiting the supply of housing.

This process may have gotten out of hand now, though, as pandemic-driven housing demand has well outstripped supply. Many Granite Staters have seen their homes rise in value, but this rise may be merely notional, because it is now so difficult to find a new house after selling the old one. The rapid aging of the New Hampshire population makes reform to relax local planning and zoning regulations all the more crucial.

As the rent-seeking explanation would predict, the places with the most stringent rules on building new homes tend to be the ones that historically saw big growth in housing demand. Portsmouth, Hanover, and some of their surrounding towns are among the most regulated towns in the state, along with a few Lakes Region and White Mountains locations. Some of the wealthier suburbs of Manchester and Nashua – Hollis, Windham, and Bedford – are also near the top of the list.

By contrast, the inland Appalachian belt of New Hampshire, running from western Cheshire County to the North Country, is the least regulated part of the state. There’s a definite trend in the historical data, whereby towns that saw large growth in the 1960s and 1970s enacted restrictions that then choked off growth in the later 1980s and 1990s. By contrast, population density does not seem to correlate with increases in regulatory stringency, even though it may have been a motivation for towns to adopt zoning to begin with. Some of the towns with the strictest rules have low densities and very little industrial activity, like Hanover and Lyme.

Another correlation observed in the data finds that towns that lie nearby other towns that increased their restrictions on housing were themselves more likely to enact new restrictions on housing. In other words, municipal land-use regulation in New Hampshire looks like a kind of “arms race.” When one town tightens, others are also provoked to tighten so that they don’t get a disproportionate share of new housing construction. As a result, all towns end up with less construction and stricter regulations than they really want.

Policy solutions

To get out of the arms race and make decent homes affordable to Granite Staters of all ages and walks of life, policymakers and citizens have to understand how local land use regulations affect the supply and price of housing. Better policies will come from a better understanding of the downstream effects of these regulations.

In addition to showing how land use regulations affect housing supply and prices, this study suggests several state- and local-level policy changes that could provide relief.

At the local level, zoning ordinances could be revised to allow homes to be built on smaller lot sizes, with smaller frontages, and with smaller setbacks. Building permit caps could be removed. Multi-family housing options, such as duplexes and triplexes, could be allowed in additional locations. In urban areas, minimum parking and maximum height restrictions could be eased.

At the state level, the state could enact a regulatory takings compensation law, so that municipal governments would have to compensate landowners for new regulations that substantially take away the value of their property. The state could directly preempt the most egregious forms of exclusionary zoning, such as minimum lot sizes above a certain level and building permit caps. The state could also authorize towns to decentralize planning authority to neighborhood or even block levels. At such a small level, residents are unlikely to adopt rent-seeking forms of zoning, because builders and home-buyers could easily go elsewhere. State government could authorize municipal land-use compacts that would allow neighboring municipalities to offer multi-community planning, where the impacts of regulation on the whole commuting area could be considered. Finally, an open-enrollment law for public school choice would at least ameliorate one of the negative consequences of exclusionary zoning for middle- and low-income families: being locked out of good schools.

Top Ten Municipalities Where Housing Is Most Restricted

The study ranks N.H. municipalities by the inelasticity of their housing supply, that is, by how much local conditions, especially building and land-use regulations, restrict the ability to build new housing in response to rising demand. The ten most inelastic, regulated municipalities are:

  1. New Castle
  2. Rye
  3. Portsmouth
  4. Newington
  5. New London
  6. Hanover
  7. North Hampton
  8. Moultonboro
  9. Hampton Falls
  10. Waterville Valley

Download a copy of the full study here: Residential Land Use Regulations in New Hampshire Report

If you missed the event, the full video is posted on our YouTube channel here.

NOTE:

The Center for Ethics in Society and the Josiah Bartlett Center for Public Policy have been gratified by the overwhelmingly positive response to the study, “Residential Land Use Regulations in New Hampshire: Causes and Consequences,” authored by Center for Ethics Director Jason Sorens and published by the Josiah Bartlett Center for Public Policy. However, in referring to this study in some contexts, we created some confusion by using the term “building regulations” instead of “land-use regulations.” In using the terminology of “building regulations” we did not intend to designate “building codes,” but rather regulations governing where and how housing is to be built on land in a given community. We do apologize for any confusion we may have caused.
 
To clarify, the overwhelming majority of the costs of developing new housing are due to land-use regulations found in zoning ordinances and the decisions of planning and zoning boards to approve or not approve projects. All the research suggests that life safety codes add only a small amount, in percentage terms, to the overall cost of housing. Accordingly, we have revised the title of the study to refer to “land use” rather than “building” regulations. Land use regulations are restricting what can be built where, and driving up the cost of housing.

In a few weeks, the Business and Industry Association will present its Lifetime Achievement Award to the imminently deserving Claira Monier, director of the New Hampshire Housing Finance Authority from 1988-2007. With New Hampshire housing prices setting new records every month, the timing couldn’t be better.

Had local elected officials listened to Monier over the years, New Hampshire would not have a housing crisis today. For decades, she’s advocated for the freedom to build. Local boards have instead restricted that freedom.

Today, thanks to a massive shortage of apartments and single-family homes, the median two-bedroom rent in the state is nearly $1,500, and the median home price is $410,000. 

In a New Hampshire Business Review profile of Monier, she calls the housing shortage “the major issue in the state” and identifies its root cause.

This was her analysis from 2007:

“In my mind, it is restrictions at the local level. It came about in the ’80s when we saw this massive migration of population here in New Hampshire because of our economic growth. The towns, in response, said, ‘We don’t want any more growth. We don’t want it to happen that fast. Let’s put land use restriction in place.’ And I think that’s been a major factor in inhibiting the growth of the housing market.”

Regarding local land-use boards, she pegged the problem with precision:

“They know the need for housing; they just want it to happen somewhere else. NIMBY is very alive and well.”

We’re pleased to see her receive such an honor, and her ideas receive renewed attention. The housing shortage in New Hampshire is old and getting worse, and she’s offered wise solutions for decades. Perhaps the current crisis will at last cause people to heed her counsel. 

For anyone interested in learning more about the state’s housing crisis and discussing ways to solve it, our land use regulation conference on October 12 is a great opportunity. 

We’re releasing a new report, Land Use Regulation In N.H.: Causes and Consequences, and hosting a discussion in partnership with the Center for Ethics in Society at St. Anselm College. 

To attend either in person or via Zoom, and to learn more about the study and the panel, follow this link.