The Josiah Bartlett Center has warned for the last few years that local government inaction on housing might prompt legislators to restrict local zoning authority. But legislators might have an even stronger incentive to act than the growing public frustration with local land use regulations: Falling revenue.

A combination of high interest rates and an extreme shortage of homes on the market has pushed housing affordability to a two-decade low in the state. Though interest rates clearly play a role, the New Hampshire Association of Realtors points out that supply remains the primary culprit. “It’s a lack of inventory that continues to push pricing to record heights,” the association wrote last month.

Home prices have fallen a bit in New Hampshire since hitting a record in October. But that’s not because the market has improved. Rather, interest rates are keeping some potential buyers on the sidelines, causing a decline in the number of aggressive bidding wars. When interest rates ease, buyers will return to a market still plagued by a severe inventory shortage.

No one knows how long interest rates will remain high. If the squeeze of high rates and low inventory continues to push buyers out of the market, New Hampshire could see a prolonged home sales slump. And that will be felt in Concord. In fact, it already has been.

For the first five months of the 2024 fiscal year, real estate transfer tax revenues are down 20%, or $23 million. That’s the largest decline of any state tax this year. 

We know what some are probably thinking right now. “But what about Interest & Dividends tax revenue?” Eliminating that tax, as state law does by the end of next year, will have a larger impact on the state budget. 

But the I&D tax phaseout is part of a strategy to make New Hampshire more economically competitive. The anticipated tradeoff is that making the state more attractive to investors, retirees and entrepreneurs will generate greater economic activity, and thus greater economic growth, in the long term. 

There is no such tradeoff with falling home sales. A $50 million annual decline in real estate transfer tax revenue caused by falling home sales is simply lost revenue. 

Worse, it reflects shrinking economic activity in an important industry, which will have ripple effects in the broader economy. Lawmakers have made clear that they want state policy to stimulate economic growth. Local policies that hurt economic growth, such as overly restrictive land use regulations, are increasingly being scrutinized by legislators. 

Though state lawmakers and local boards are unable to affect interest rates, they can do something about the housing supply. They can lift regulatory burdens that block or restrict new home construction. 

So far, legislators have been reluctant to preempt local regulations. Yet with  polls showing that most Granite Staters want government to address the state’s housing shortage, pressure is increasing on legislators to act. Falling state revenue by itself probably wouldn’t trigger state action. Combined with rising political pressure to act, though, it becomes another incentive for legislators to do something. 

So local boards (and voters at town meeting) have another warning sign. The longer local governments wait to clear the way for more home construction, the more likely it becomes that legislators will do it themselves. 

It seems like it’s every week that there’s some new concerning statistic about the New Hampshire housing market.

This time it comes from CoreLogic’s U.S. Home Price Insights. At 9.4%, New Hampshire saw the highest home price growth in the country from August 2022 to August 2023. 

The top 10 states with the highest year-over-year increases in their home prices include four other New England states. The rest of the top 10 are Maine (8.9%), Vermont (8.9%), Rhode Island (8.4%), New Jersey (8.1%), Connecticut (8.1%), Wisconsin (7.0%), Missouri (6.7%), Indiana (6.6%), and Ohio (6.0%).

Nationally, from August 2022 to August 2023, home prices rose by 3.7%, which means that New Hampshire home prices increased by more than double the national average so far this year.

Not every state saw a jump in home prices over the last year. States like Arizona, Idaho, Montana, Nevada, New York, Texas, Utah, and Washington saw some of the largest year-over-year drops in their home prices. 

Many states in the Western U.S.—the three states along the Pacific Coast, as well as all Mountain states but New Mexico—saw annual declines in home prices.

Is this a coincidence? Hardly.

Several of those states happen to be building the most homes. According to an analysis of U.S. Census data by RubyHome Luxury Real Estate, Texas (22.5%), Utah (20.65%), Idaho (20%), Nevada (16.74%), and Colorado (16.30%) all rank among the top 10 states with the highest rate of new homes built (as a percent of their total housing stock) from 2010 to 2022.

Another analysis of U.S. Census data by Construction Coverage found similar results. By new housing units authorized per 1,000 existing homes, Mountain West states like Utah (26.7), Idaho (24.2), Arizona (19.4), Colorado (19.2), Nevada (15.3), and Washington (15.1), as well as Southern states like Texas (22.2) and Florida (21.1), were among the top builders of new housing in 2022. 

This spring, Montana’s legislature passed a slate of zoning reform bills to speed up home construction

Towards the bottom of the list are many of those states that experienced the highest year-over-year increases in their home prices, including New Hampshire. At 7.4 new housing units authorized per 1,000 existing homes, the Granite State ranked 38th in housing development in 2022. 

Similarly, Rhode Island (2.8), Connecticut (3.7), Ohio (5.9), Vermont (6.8), Missouri (7.5), and Wisconsin (7.7) all ranked in the bottom half, while Maine (9.5), Indiana (9.6), and New Jersey (9.8) were middle of the road. 

The U.S. Census Bureau’s Building Permits Survey (BPS) tracks the number of new privately owned housing units authorized by state each year. Before 2022, Arizona and Utah each saw 11 consecutive year-over-year increases in the number of housing units authorized, and Idaho saw 10. In total, Colorado, Texas, and Washington each had 10 year-over-year increases in the number of units authorized.

New Hampshire, meanwhile, saw seven total year-over-year increases in units authorized, the longest consecutive stretch being the four increases from 2012 to 2016.

New home construction is one of many different factors that play a role in determining home prices. But at a minimum, there’s a strong correlation between states that have higher rates of home building and states that have seen recent drops in their home prices (or relatively minor increases compared to many states in the Northeast). 

As we’ve shown, New Hampshire municipalities have made housing development very difficult with onerous land-use regulations that restrict supply and inflate home prices.

If Granite Staters want lower home prices, we can follow the lead of many Western states and build, baby, build!



Manchester is often seen as the center of multifamily housing in the state, while smaller cities and surrounding towns are viewed as less hospitable. But Manchester’s land-use regulations are unusually hostile to one relatively popular form of multifamily housing: duplexes. 

Two-family housing is permitted on only 18% of Manchester’s buildable area, according to the New Hampshire Zoning Atlas, created by the Center for Ethics in Society at Saint Anselm College. 

That puts the Queen City smack in the middle of New Hampshire’s cities when it comes to permitting duplexes. 

Here are New Hampshire cities ranked by the percentage of buildable land on which duplexes are allowed:

Claremont: 86%

Dover: 57%

Rochester: 56%

Berlin: 45%

Nashua: 42%

Laconia: 19%

Manchester: 18%

Portsmouth: 17%

Concord: 15%

Lebanon: 14%

Somersworth: 10%

Keene: 6%

Franklin: 5%

Besides Bedford, the municipalities surrounding Manchester are much friendlier to duplexes:

Goffstown: 74%

Londonderry: 63%

Litchfield: 59%

Merrimack: 55%

Auburn: 31%

Hooksett: 21%

Manchester: 18%

Bedford: 1%

“I was a little bit surprised about how restrictive Manchester is toward duplexes, but it makes sense when you think about it,” Jason Sorens, senior research faculty at the American Institute for Economic Research and the principal investigator of the New Hampshire Zoning Atlas, said. 

“The very fact that Manchester has had a lot of blue-collar housing near the center in the past has made single-family neighborhoods, particularly in the North End, very protective of their status. And at the same time, business and commercial districts in the city sometimes (not always) allow multifamily development but restrict one- and two-unit buildings. 

“It seems to me the latter problem is easy to fix: There’s no constituency for keeping small-scale housing out of commercial districts. Mixed-use and planned unit developments should be lawful across everything that is now zoned commercial or business.”

On small lots (less than one acre), only 1.9% of Manchester’s buildable area is open for duplex development. 

“Even in the single-family districts, legalizing duplexes is a small step, because ADUs are already legal under state law,” Sorens said. “All you have to do is remove the maximum size requirement (currently 750 square feet), and duplexes are then effectively lawful.”

Manchester is slightly more hostile to triplexes than duplexes. On only 17% of Manchester’s buildable land is three-family housing allowed. 

Opposition to multifamily housing typically arises from fears that large apartment buildings will be erected next to single-family homes, changing the character of residential neighborhoods. But the Zoning Atlas shows that municipalities, including the state’s largest city, can add to the state’s housing stock just by reducing restrictions on duplexes. 

Making it easier to build duplexes and multifamilies in Manchester would make homes and apartments more affordable. The median home price in New Hampshire is up to $490,000, according to the New Hampshire Association of Realtors (NHAR).

These monthly median prices have been increasing for 43 consecutive months (since February 2020). And for the second straight month, the affordability index sat at 59—both an all-time low and a 15% drop from one year ago.

Monthly median gross rent for two-bedroom units in the state is $1,764

Duplexes and triplexes offer options for both homeowners and renters. They can be great starter homes that double as investment properties for young couples and individuals. 

To get more of them, municipalities will have to change their land-use regulations, not just to allow more duplexes and triplexes, but to reduce secondary regulations that prevent them from being built. 

“Beyond duplexes, you really have to look at how the zoned density compares to the existing density,” Sorens added. “On much of the West Side, multifamily development is allowed, but tight floor area ratios, low maximum heights, and inappropriate parking minimums have made it impossible to increase density there at all. The strict regulations haven’t gentrified these neighborhoods despite rising rents; instead, they’ve helped create a homelessness problem downtown.”

Though Manchester has allowed the construction of more large apartment buildings, its burdensome restrictions on small multifamily options keep the city’s housing supply artificially low, raise prices, and limit options for city residents. 

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 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 the Manchester area’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 of 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.”

 

Large majorities of Granite Staters support changing local land use regulations to allow the construction of more housing, the latest annual affordable housing survey from the Center for Ethics in Society at St. Anselm College reveals.

Support for more housing options has surged in the last year as home prices and rents have hit new records in New Hampshire. But despite huge and unprecedented levels of support for relaxing local regulations, news stories show that local boards continue to block new housing proposals when small groups of local residents turn out to oppose them.

In our hyper-partisan era, it’s unusual to get anywhere near 80% public support on an issue. Yet in New Hampshire, 78% of registered voters now agree that “my community needs more affordable housing to be built.” Only 18% disagreed. That 60-point gap was a 40-point gap last year. 

Opposition to housing construction often comes from older voters who don’t want to see their communities change—and who already have homes. Younger people who face the prospects of huge rents and few available starter homes tend to take a more permissive view of new housing construction. The effect of high rents and home prices on younger voters was shown in the results of this new poll. In the survey, “not a single voter under 35 disagreed with the ‘more affordable housing in my community’ position,” according to the Center for Ethics in Society. 

Voters have grown more receptive even to the idea that affordable housing should be built in their own neighborhood. The survey found that 58% of voters agreed that “My neighborhood needs more affordable housing to be built.” Support grew threefold in one year, from +7 in 2022 to +21 in 2023.

Significantly, voters have come to link the state’s severe housing shortage to local planning and zoning regulations. The survey found that 60% of voters agreed that “New Hampshire towns and cities should change their planning and zoning regulations in order to allow more housing to be built.” That 26-point gap was just a 12-point gap last year.

 

When the Josiah Bartlett Center asked voters in our 2021 poll whether they “support relaxing some local regulations to make it easier to build homes for people who need them,” 45% said yes and 34% said no. The growth over just two years in support for relaxing local land use regulations is remarkable. 

Highly restrictive local land use regulations became pervasive throughout New Hampshire because they once had broad support. The damage they’ve done to the state’s housing market has become so obvious that support for anti-housing positions is collapsing.

The Center for Ethics in Society asked voters if “New Hampshire should do more to prevent housing development and keep the state the way it is.” Only 45% of New Hampshire voters disagreed with that statement in the 2020 survey. (Support was at 31%, with the rest undecided.) In this year’s survey, 59% of voters disagreed, representing a 14-point swing since 2020. 

At the Josiah Bartlett Center, we’ve warned for years that if local governments continue to choke the housing supply by maintaining overly restrictive land use regulations, support for blanket state laws to override those regulations will grow. Sure enough, that is happening. 

In 2021, 37% of voters supported and 38% opposed “a bill to allow property owners to build duplexes, triplexes, and fourplexes on any property served by municipal water and sewer, and where the zoning allows residential development.” Opposition to such a law has fallen nine points to 27%, and support has risen to 43%. 

In the Legislature, opposition to such legislation is driven by a perception that voters back home disapprove. But that disapproval is eroding. If local governments don’t swiftly change course and begin allowing more housing, legislators will be pushed by voters to offer a state solution.

Manchester has made strong gains, approving approximately 2,000 new units’ worth of new construction in recent years, according to city officials. But projects still run into road blocks there, and in many other municipalities local boards routinely thwart new construction as a matter of course. 

A few recent examples:

  • Portsmouth’s Zoning Board of Adjustment voted against a plan to convert an abandoned animal hospital into 16 housing units. 
  • Swanzey’s Zoning Board of Adjustment voted against a proposal for an 18-unit residential development. 
  • Seabrook’s Zoning Board voted against a 332-unit luxury apartment development at the former greyhound track. 
  • Brady-Sullivan continues a two-year fight to convert old office building to apartments. 

A sentiment often heard at local planning and zoning board meetings is that multi-family housing belongs in cities like Manchester, not in smaller communities. But most voters disagree with that, and the disagreement is growing stronger.

This year’s survey found that 64% of voters disagreed with the statement, “Our suburbs and rural towns should have mostly just single-family homes. Apartments, duplexes, and townhouses should be built only in cities.” That’s up from 61% two years ago. 

After years of surging housing costs—and a concerted effort by reformers (including the Josiah Bartlett Center) to highlight the role local regulations play in driving those costs higher—overwhelming majorities of Granite Staters now support relaxing local land use regulations.

It’s now up to voters and boards to take up this cause at the local level. If they don’t, it’s only a matter of time before legislators pass state laws to free developers and property owners from the local regulations that prevent the market from supplying people with the homes they want and need.   

Jason Sorens at the American Institute for Economic Research has posted a provocative essay connecting young people’s affinity for heavy-handed government economic intervention to overly restrictive land use regulations.

Restrictive land use regulations play a significant role in driving housing costs higher. That’s very well documented.

Government zoning regulations that limit homebuilding are a big factor in housing costs over the long run. A lot of research has shown this, but so does common sense. Look at the populations of Boston, Houston, Miami, and San Francisco over time. Between 2010 and 2020, Boston’s county (Suffolk) grew 2 percent, Houston’s county (Harris) grew 16 percent, Miami-Dade grew 7 percent, and San Francisco County grew 8 percent. Clearly, San Francisco’s huge expense is not solely a result of hot demand; otherwise, its population growth rates would be much higher than those of the others. Boston also looks pretty bad when you compare rents to population growth, while Houston looks amazing. It has accommodated rapid growth at moderate rents.

What’s less well known is that persistently high housing costs, caused by a long-term supply shortage, price younger adults out of the housing market, and in their frustration they demand government remedies. The longer the shortage persists, the more extreme their proposed remedies become.

Right now, left-of-center states and localities are experimenting with rent control and public housing, would-be solutions to the problem of rising rents that economists know are incredibly costly. Simply reforming zoning would be a better solution.

Not only do artificial restrictions on the housing supply turn people toward radical economic interventions, but they also tend to make communities more left-leaning over time.

A standard-deviation increase in housing regulation makes a place shift toward the Democrats about three percentage points over the next eight years, because noncollege voters, who are becoming the Republican base, move out.

“But won’t building apartment high-rises bring in more Democrats than Republicans?” I often hear. Yes, usually, but by increasing housing supply these high rises will make single-family homes cheaper in the suburbs, keeping blue-collar families from moving to Texas or Florida. And building tract subdivisions in the suburbs directly helps blue-collar families stay put.

Many Democrats and progressives are at least somewhat free-market on housing, because they want to keep rents down. That’s admirable. On the other hand, democratic socialist types insist on harmful “solutions” like rent control and public housing. Republicans and conservatives have largely sat on the sidelines of zoning reform so far. But the data strongly suggest that to fight the radical left, we need to build more homes.

A lot of Republicans and conservatives believe that strict zoning is a way to protect their communities politically right-of-center. The opposite tends to be true. It makes them more left-of-center over time and causes people, particularly the young, to seek more government economic interventions.

 

 

The Portsmouth Planning Board did something remarkable last week. It ever so slightly loosened its iron grip on a small portion of the city’s iconic downtown. And in the loosening, a lesson fell out. 

Local investors want to create at 238 Deer St. a mixed-use building with 21 micro apartments. These units would be no more than 500 square feet and would have no on-site parking. 

Though the location is a short walk from the city’s $26 million Foundry Place parking garage—built specifically to facilitate additional commercial activity downtown—the developers needed permission from the Planning Board, in the form of a Conditional Use Permit (CUP), to build those tiny apartments without on-site parking spaces.

A dispute over the need for private parking dragged on for two years, and last week the board voted, despite some member misgivings, to grant the CUP. 

That’s a huge decision, for many reasons. Among them, it separates housing from parking not just for this project but possibly for others in the future. Planning boards typically insist on maintaining minimum parking requirements that raise housing costs and occupy real estate that could be turned to more productive uses. 

It also allows tiny apartments to fill a huge market need in Portsmouth, where astronomical housing prices are driving away lower-and middle-income people.

During the board meeting, members kept asking about the rental price of the apartments. The developer’s attorney at one point answered, “…it’s going to be market rate, it’s not going to be affordable, that’s really all we can tell you at this point.”

This comment might not sound off to a lot of people, but it would be a strange thing to say about most products.

Why should there be a difference between “market rate” and “affordable?”

We don’t think of most other consumer goods in these terms. 

No one says, “the bananas are going to be market rate, not affordable,” or “are you pricing those chainsaws at market rate, or are they ‘affordable?’”

Sure, we browse clearance racks, wait for sales, clip coupons, buy generics or store brands, ransack the corner drugstore in protest of systemic oppression. (OK, maybe you do only some of these things.) But for most consumer goods, we don’t conceive of there being a market price and a separate “affordable” price. 

That’s because the market, if allowed to, will provide a gazillion options of most products at a wide range of prices.

If you need toilet paper, the market offers everything from wafer-thin sandpaper to quilted, pillow-soft rolls that smell like a flowering Alpine meadow in spring. 

If you need a car, you can pick up a no-frills Nissan Versa (MSRP: $15,700) or save up a little longer and spring for the slightly flashier Bugatti Chiron Super Sport (MRSP: $3.4 million).

If you need a cell phone, you can get a Nokia flip phone for $19 (less than the price of a 12 piece KFC bucket) or a Samsung Galaxy Z Fold 4 for around $1,800.

Sure, housing prices have a range, too. But in housing, government regulations have literally outlawed the construction of many options at the lower end of the range. So builders can’t offer the lower-price fare that manufacturers are able to offer in most other industries. 

And so we talk of “market rate” housing and “affordable” housing. That’s not because the market doesn’t want to provide less-expensive options. It’s because governments don’t want the market to provide those options. 

As Mark Perry has demonstrated, markets tend to lower prices and improve quality unless government gets in the way. Industries in which government regulations have prevented robust competition (health care, education, housing, child care) have experienced steady price increases, while less regulated industries have experienced price declines. 

Remove the regulatory barriers, and the market will be happy to provide micro apartments, tiny homes, duplexes, in-law apartments, single-family homes on half-acre lots and any number of other less-expensive options for people who want them. 

Once the supply catches up with demand, “market rate” will become “affordable” in housing just as in most other markets.

In 2021, we published a landmark study that showed how local land use regulations drove New Hampshire’s housing shortage. That study changed the conversation on affordable housing in New Hampshire, from one focused on government subsidies to one focused on regulations. This week, the Center for Ethics in Society at Saint Anselm College set the next housing policy landmark when it released the New Hampshire Housing Atlas.

The New Hampshire Zoning Atlas is the most powerful tool Granite Staters have ever had for understanding local zoning ordinances. It catalogues—and maps—23,000 pages of zoning regulations in 2,139 districts in 269 jurisdictions. Never has this information been available in one place, much less open for public examination. 

In the atlas, users can quickly find the building and land use restrictions in one community, or search the state to see what restrictions are in effect across multiple communities. The search tool and maps reveal just how severely New Hampshire municipalities have restricted people’s housing options, and how much freer some towns are than others. 

The atlas shows that single-family homes are allowed by right on 90% of New Hampshire’s buildable land, and by public hearing on another 6%. Sounds good, right? 

A closer look, though reveals that single family homes on lots of less than one acre are illegal—yes, literally illegal—on most of that property. It is legal to build a home on less than one acre in only 16% of the state’s buildable land.

You might think of zoning as “allowing” certain types of property uses. In reality, zoning is a prohibition. It carves communities into areas in which most uses of private property are outlawed. Large minimum lot size requirements are the perfect example of a regulation that outlaws a once common housing preference. The result is a nearly statewide prohibition on the construction of affordable starter homes.  

People generally have no problem with municipalities using zoning to, say, keep industrial operations out of residential neighborhoods. The New Hampshire Zoning Atlas shows, however, that municipalities commonly use this power to outlaw small yards, duplexes, apartments and any mixing of commercial and residential activities. The maps show that it isn’t unusual for municipalities to take zoning restrictions to absurd extremes.

Lebanon’s rural lands 3 zone has a huge 10-acre minimum lot size for single-family homes, which we knew from previous research. But the atlas shows that Hanover isn’t alone. Meredith’s forest and conservation district also has a 10-acre minimum lot size. Marlowe’s rural lands district has a minimum lot size of 20 acres!

Neighboring towns can have huge discrepancies in the types of homes they allow. 

No portion of Bedford, Merrimack or New Boston has a minimum lot size of five acres or more. But significant portions of Mont Vernon and Amherst do. Two-family housing is allowed in most of Londonderry, but in only a small sliver of Derry. 

Though the New Hampshire Zoning Atlas is itself policy neutral (it’s just a presentation of data), it’s likely to lead to policy changes. It’s hard to justify zoning that allows rental housing of five units or more, but bans duplexes and triplexes, for example. This particular rule shows up in a surprising number of communities.

The atlas offers an invaluable tool for citizens who want to better understand how government regulations prevent the market from providing housing options that people want, even in times of sky-high demand.

When the Josiah Bartlett Center released our landmark study of the nexus between New Hampshire’s housing shortage and local land use regulations, in October of 2021, the connection between the two was not widely reported in the popular press. Academics, developers and planners knew that local regulations were responsible for reducing the supply of housing, but it was rarely mentioned in the media.

Not even two years later, and even media organizations that generally embrace government activism and progressive regulation of the economy are acknowledging that local land use regulations are at the root of the housing shortage here in New England.

The Boston Globe is out with a long editorial titled “A hundred years of choking housing growth catches up with Massachusetts.”

The conclusion: “Since the early 20th century, the Legislature has let individual municipalities thwart housing. Now the consequences threaten the Commonwealth’s future.”

The Globe pointed out that in 1920 Massachusetts legislators, acting on authority granted to them by a 1918 state constitutional amendment, authorized municipalities to regulate land use.

Municipalities “promptly started using their new authority to pass rules that suppressed housing growth and kept out poor people and renters.”

It didn’t take long for warning signs to start flashing about the impact of local obstructionism spawned by the zoning amendment. Just after World War II, the Globe reported that “zoning restrictions in many Greater Boston communities are hampering large rental projects” for returning veterans. In 1961, the Globe reported on complaints from builders that zoning rules made “more moderately priced housing ‘an impossibility to build.’ ” In 1971, a developer said, “until ways are found to force towns to change zoning codes … ‘we are not going to be able to lick the housing shortage in Massachusetts.’ ” A 1979 feature about housing in Braintree reported, “Because of zoning regulations and environmental restrictions … it is no longer financially feasible to build housing for the middle class in town.”

By and large, those warnings were ignored. Meanwhile, the gap between the cost of housing in Massachusetts and the cost of housing elsewhere kept widening. In 1940, according to the census, the median home value in Massachusetts was 1.3 times the national median. In 2000, it was 1.55 times. In 2021, it was 1.7 times.

Now, the bill may be coming due. The median single-family home in Greater Boston cost $707,250 in January, compared to $378,700 nationally in the fourth quarter of last year. In Boston, 46 percent of renters are “rent-burdened.” For years, housing advocates warned that crippling housing prices and the lure of cheaper housing elsewhere would eventually affect the state’s ability to sustain and attract businesses. Now a tipping point seems to have been reached; 110,000 people have left the state since the beginning of the pandemic, nearly enough to fill Fenway Park three times over.

The same story can be told of New Hampshire, although the timeline is somewhat different. Progressive zoning ordinances swept the state, separating workplaces from living spaces, segregating multi-family units from single-family units, and putting government in charge of everyone’s property. The results were predictable. Government regulations prevented developers from supplying the amount of housing necessary to meet demand, and the resulting shortage drove prices to record highs.

It’s not that this story was never told. It showed up in stories about specific housing proposals over the years. But now mainstream news organizations are connecting the dots to tell the bigger story. The Globe’s recognition that local regulations are central to the region’s housing shortage is important because the problem can’t be fixed until we’ve identified its cause. With the largest newspaper in New England lending its voice to the land use regulation reform movement, the push for increased private property rights gains an unexpected but welcome ally.

In 2019, the state created a Housing Appeals Board to offer a speedier resolution to land use disputes between property owners and local boards. Though the cases that have gone to the board have been resolved quickly, a large backlog of cases remains in Superior Court.

Richard Head, government relations coordinator for the state judicial branch, told the House Judiciary Committee last month that the volume of land use cases in state courts has not noticeably changed since the Housing Appeals Board began operations in 2020. It turns out that there are so many legal challenges to local land use decisions that the state Superior Court has a constant load of between 60-100 cases at any given time, according to the judicial branch.

It can take more than a year for a landowner or developer just to get a court hearing if a local board improperly denies a building permit. It can take up to three years before the courts reach a decision, developers say. That long wait gives local regulatory bodies an upper hand in these disputes. 

The legal playing field should not be tilted in favor of government. Private citizens, whether homeowners challenging the rejection of a garage or developers challenging the denial of a commercial project, should have quick and ready access to the court system when they suspect a local board of illegally denying them the use of their property. (Local governments deserve the same if they suspect a developer of violating local ordinances.)

Within the court system, there are two obstacles. One, there aren’t enough Superior Court judges. The judicial branch is 3.5 judges short of being able to keep up with its existing caseload, according to its own presentations to legislators. Two, land use cases tend to be large and highly complex, which slows them down. 

New Hampshire has more than 200 unique zoning codes, many of them exceeding 100 pages, according to testimony by state Rep. Ben Ming, D-Hollis, an attorney who practices real estate law. 

The judges who hear these cases say the parties would be better served if a single judge could be assigned to hear all land use cases. 

“When asked, the judges in our Superior Court described these types of cases as complex,” Head told the House Judiciary Committee in January. The judges “require a great deal of time to get up to speed” when they receive one of these cases. 

“And one of the things the judges commented on was if we only see these as part of our regular docket and mixed in and occasionally, it is just a greater lift to get up to speed again and to get refamiliarize yourself not only with the case itself but with the technical aspects of it and the law, which is also, as you’ve heard, very complicated, long, and detailed,” Head said. “So to be able to consolidate these types of cases, the complexity of these cases, into a single docket would just have inherent benefits associated with doing so.”

Head’s explanation came in his testimony in January for House Bill 347, which would create a land use docket in the state Superior Court and fund the hiring of an additional justice to hear those cases. Importantly, the bill covers all local land use regulations, not just housing, so commercial and industrial property would be included. The state has a shortage of industrial buildings too, though it’s not as well known or as severe as the housing shortage. 

Creating a land use docket would accomplish five goals:

  1. Create within the judicial branch a level of expertise on these complex cases that would benefit all parties — the local boards, the property owners, and the justice who handles the cases;
  1. Reduce the long backlog of land use appeals that delay projects and discourage wronged parties from going to court;
  1. Create a level of consistency and continuity on complex land use cases that local boards and property owners could use to guide their future decision-making;
  1. Reduce backlogs of other civil cases, as the complex land use cases go to a newly hired judge;
  1. Generate economic benefits by reducing the amount of time and money local boards, property owners and developers spend in court, freeing them to spend more time concentrating on their core activities. 

Adding a land use docket to the Superior Court, and hiring a justice to handle the cases, will not solve the state’s housing and industrial real estate shortages. Better local land use regulations are the answer. But a separate court docket would greatly improve the dispute resolution process, level the playing field, and have the additional benefit of speeding up court cases in general and reducing the costs for property owners, developers and local governments.