Local land use regulations drive N.H. housing shortage, Bartlett study shows

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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.
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Claira Monier’s housing wisdom

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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. 

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Josiah Bartlett Center to hold housing conference, release land use study with the Center for Ethics in Society

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Join the Josiah Bartlett Center for Public Policy and the Center for Ethics in Society at Saint Anselm College on October 12 as they present the findings of a first-of-its kind study showing how residential land use regulations have affected the supply and price of housing in New Hampshire.

“Residential Land Use Regulation In New Hampshire: Causes and Consequences,” a study conducted by Jason Sorens, Director of the Center for Ethics in Society, and published by the Josiah Bartlett Center for Public Policy, examines how land use regulation in New Hampshire has suppressed the supply of new housing and driven up home prices and rents.

At this event, Sorens will explain his study’s findings, which show how and where local regulations have changed the supply and price of housing in New Hampshire. After the presentation, Sarah Marchant, Director of Community Development for the City of Nashua, and Ben Frost, Managing Director of Policy and Public Affairs at the New Hampshire Housing Finance Authority, will join Sorens in a panel discussion about housing scarcity and the larger effects it has had on New Hampshire’s society, economy, and politics, moderated by Andrew Cline, President of the Josiah Bartlett Center for Public Policy.

HYBRID EVENT: This event will take place in the Frost/Hawthorne room at the DoubleTree by Hilton Manchester Downtown (700 Elm Street, Manchester, New Hampshire, 03101). Please arrive at 9:45 am to sign in. If you choose to attend virtually, the Zoom webinar will begin at 10:15 am.

Event details:

10 a.m., Tues., Oct. 12

Frost/Hawthorne Room, Doubletree by Hilton, 700 Elm St., Manchester

The event will also be streamed live on Zoom. 

Join us:

To attend in person, get on our guest list here.

To attend via Zoom, register here.

About the speakers:

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.

Sarah Marchant, AICP joined the City of Nashua in June 2014 as the Director of Community Development. In this position, she is responsible for the budget and leadership of the Community Development Division which consists of six departments, including Building Safety, Code Enforcement, Planning and Zoning, Waterways, Transportation, Urban Programs, and various commissions, boards and programs. Sarah was elected President of the Northern New England Chapter of the American Planning Association (NNECAPA) representing NH, VT and ME, in the fall of 2015 and serves on the National APA Policy and Advocacy Committee. She also serves on the Executive Committee of the New Hampshire Planners Association (NHPA), after serving as President from 2010-2014, and in 2019 was appointed to the New Hampshire Housing Finance Authority Board of Directors. She holds a BA from the University of New Hampshire and an MA from the University of Connecticut.

Benjamin Frost, Esq., AICP is the Managing Director of Policy and Public Affairs at New Hampshire Housing Finance Authority, where he manages legislative initiatives, communications, research, and strategic planning, and also serves as internal legal counsel. He frequently lectures on issues of affordable and workforce housing, land use law, and ethics. Ben has 35 years of experience as a land use planner and over 25 years as an attorney. He is a founding member of the Governing Council of Housing Action NH, a low-income housing advocacy organization. Ben is the Treasurer of both the NH Planners Association and the Northern New England Chapter of the American Planning Association and serves on the Amicus Curiae Committee of the American Planning Association. He holds B.A. and M.A. degrees in Geography (with a focus on USSR environmental policy) from Colgate University and Syracuse University, respectively and a J.D. from Cornell Law School with a concentration in business law and regulation.

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On evictions, the answer is more property rights, not fewer

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The Center for Disease Control’s plainly unconstitutional eviction moratorium, begun in the Trump administration and continued by President Biden, is much more than a presidential abandonment of the rule of law. It’s a rejection — and reversal — of the very foundation on which James Madison based all government power — private property rights. 

And the problem it’s trying to solve would be much less of a problem were it not for other government restrictions on private property. 

Government in the United States exists to protect individual rights, including the right to property. In fact, Madison believed that government itself was justified primarily for the purpose of protecting property rights. 

As Thomas Jefferson put it in the Declaration of Independence, the purpose of government is to “secure these rights” — the unalienable ones endowed by man’s creator. 

Madison, explaining his thinking in 1792, wrote that protecting property rights was the very foundation of government. 

“Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own.”

Madison believed that people had property rights not just in physical objects they owned, but in their ideas, their beliefs, and their labor. The Constitution secures rights to free speech and religious worship because each of us has a property right in our own conscience and our own faith. Our ideas and our thoughts are a form of property on which government can have no claim, he believed. 

Protecting these individual rights from violation by other individuals or groups was the very purpose of government, Madison wrote. And violating property rights was inherently unjust.  

“That is not a just government, nor is property secure under it, where the property which a man has in his personal safety and personal liberty, is violated by arbitrary seizures of one class of citizens for the service of the rest.” 

The eviction moratorium is just such an arbitrary seizure. It appropriates private property for public purpose, and does so both illegally and unnecessarily. 

The federal and state governments have had other, less intrusive means of achieving the eviction moratorium’s goals. The obviously correct method is to pay landlords, not to appropriate their property. 

To this end, the federal government has made $46.55 billion in rental assistance available. Being the federal government, it has ineptly managed this aid, most of which remains undistributed. But the government can’t argue that its own bureaucratic incompetence is a justification for illegally appropriating private property. 

Today, many arguments for extending the moratorium rest primarily on leftist political theory, not public health. The idea is not that evictions will spread COVID, but that they are an evil in and of themselves because they allow people with power and money to exploit people who have less power and money. 

This, however, is Madison’s very definition of unjust government, that being one in which property “is violated by arbitrary seizures of one class of citizens for the service of the rest.”

Whether it exists for public health or “social justice” reasons, the eviction moratorium is an unconstitutional Madisonian nightmare. 

And, as with so many government “solutions,” it is a property rights violation issued to correct a problem caused by previous property rights violations. 

America’s primary housing problem is not that the country has too many “greedy” landlords, but that the country has too few of them. 

The vast majority of landlords in the United States are not corporations, but individuals, Census Bureau data show. As the Pew Research Center put it last week:

“Landlords aren’t a homogenous group of faceless corporations. In fact, fewer than one-fifth of rental properties are owned by for-profit businesses of any kind. Most rental properties – about seven-in-ten – are owned by individuals, who typically own just one or two properties, according to 2018 census data. And landlords have complained about being unable to meet their obligations, such as mortgage payments, property taxes and repair bills, because of a falloff in rent payments.”

It’s not big companies that provide so much American rental housing, but individuals who buy or build properties for investment purposes, often to provide a retirement income. And this entrepreneurship is suppressed by government.  

For decades, local governments have systematically constrained rental housing through a variety of private property restrictions. Knowing that people left free to use their property as they see fit would voluntarily build duplexes, apartments, and small rental homes, governments nationwide have banned or severely curtailed such construction. 

From rent control laws to bans on boarding houses and accessory dwelling units, localities have intentionally discouraged people from becoming landlords. Without such property restrictions, rental housing would be much more plentiful, rents would be much lower, and landlords would much have less power over tenants. 

Competition for tenants drives prices down and services up. Limiting the supply of landlords reduces that competition, which pushes rents up and services down. 

As is often the case, a seemingly intractable problem some say can be solved only by unprecedented government intervention was in fact caused in the first place by unwise government intervention and would be largely remedied simply by removing government restrictions that created the problem in the first place. 

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The time has come for housing reform

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When the COVID-19 pandemic hit New Hampshire last year, it’s unlikely that even the cleverest among us thought, “You know, this is going to turn people against local housing ordinances.”

Yet here we are in the summer of 2021, and housing is tied with COVID as the No. 2 concern of Granite Staters, according to a July University of New Hampshire poll. 

Granite Staters are most concerned about “jobs and the economy,” with 26% naming it their top concern, according to the July 26th poll. Ten percent of respondents cited “housing” as their top concern, tying it with COVID-19 for second place. 

That’s a five-fold increase from last July, when 2% of respondents named housing as their No. 1 concern. 

Surely this is related to the huge spike in home and rental prices that has made finding a place to live in New Hampshire feel like a Mad Max-style battle for a vanishingly scarce resource. 

Granite Staters aren’t quite donning leather outfits and fighting each other with home-made weapons over apartments and houses. Yet. But the stories from the real estate front lines aren’t pretty. Bidding wars have priced all but the best-financed families almost entirely out of the home and rental markets. 

Old timers tell stories of bygone days when high school graduates could get an apartment soon after landing their first job, and homes could be bought by people who didn’t own yachts and condos in Barbados. 

Children shake their heads, refusing to believe that such a Shangri-La ever existed. 

“Tell me, grandfather, of the time you rented an apartment without having to sell an organ on the black market.”

But the numbers don’t lie. As we noted last month, the median rent for a two-bedroom apartment has gone up 24% in the past five years. The median home price in New Hampshire just surpassed $400,000.

The record rise in home prices and rents has left people feeling helpless, frustrated and angry. They’re watching their housing dreams evaporate before their eyes, and they know something is wrong. They might not know what, but they sense that this wouldn’t happen in a normal market.

And they’re right. The COVID-fueled surge in demand has collided with a NIMBY-fueled housing shortage. The result has been record price increases that the market can’t correct because the numerous local ordinances that caused the shortage remain in place.

For a recently reported example, see the excellent New Hampshire Sunday News story on some of the cases taken up by the new Housing Appeals Board. 

A Francestown couple wanted to subdivide some of their own property so their children could build homes on it and all of them could live together on the family land. People have been doing this in New Hampshire since colonial times. But the town refused to approve the changes. 

The family took the case to the Housing Appeals Board, which ruled in their favor in three months. A similar case took about 20 months to go through the court system. 

Stories like this are common, and they raise serious questions about the way we regulate housing in the “Live free or die” state. When you can’t even build a home for your own children on your own land, is it really your land anymore? 

Towns increasingly act like all land belongs to the community, not to the property owners. In the Francestown case, officials wouldn’t approve the family’s proposal in part because the officials thought the land would look better with more trees. They demanded the family replace trees that had been previously — and legally — cut. 

This kind of regulatory overreach is how the state wound up with a housing shortage.

Things are so bad that housingmight be at the point where Stein’s Law kicks in. 

“If something cannot go on forever, it won’t,” economist Herb Stein mused. Housing prices cannot rise forever. At some point, people will demand solutions. We seem close to that point.

Our poll in May found that people are willing to relax local housing regulations in exchange for lower prices. A majority (51%-29%) support relaxing local regulations so developers can build more rental housing, and a plurality (45%-34%) support relaxing local regulations so developers can build more homes. 

The pandemic has exposed numerous unnecessary and harmful regulations, from prohibitions on telemedicine to bans on sidewalk dining. Local anti-housing ordinances can be added to the list. 

People want more housing, and rolling back bad ordinances is the way to get it. The only question is, who will have the political will to push for changes?  

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While the market drives up wages, government prevents it from providing more housing

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There are two sides of the affordable housing equation: incomes and housing prices. While the market pushes New Hampshire incomes higher, the government prevents it from lowering home prices. 

Casual news readers can get only one side of this picture because reports on wages and housing costs often focus on the wage side and ignore or downplay the home supply side.

For example, a recent report by the New Hampshire Low Income Housing Coalition cites the state’s minimum wage and shows various wage rates that would be needed to afford various types of apartments in the state. 

But as we pointed out in May, it’s almost certain that no one in New Hampshire earns the $7.25 minimum wage. Market competition has driven wages much higher.

With labor scarce (the state tabulated more than 34,500 job openings in the state in May and June), the market has been pushing up compensation for years. The average weekly wage of workers covered by unemployment insurance in New Hampshire rose by 18.5% from the fourth quarter of 2019 to the fourth quarter of 2020, state data show. 

The average weekly wage in the Manchester-Nashua metropolitan area was $1,565 in the fourth quarter of 2020, up $255 from the same quarter the year before. 

Employment website indeed.com pegs the average laborer pay in New Hampshire at $16.29 an hour. 

In short, a highly competitive labor market is taking care of the income side of the housing equation. But the opposite is happening on the home price side. 

As we noted last week, a severe shortage of housing is sending rents and home prices to record highs. 

Rents for a two-bedroom apartment have risen 24% in the last five years, reaching a median of $1,498 this year. The median home price statewide passed $400,000 this spring. In Rockingham County, it passed $500,000. 

In a free market, developers would quickly build more supply to meet the huge demand. After all, there are huge profits to be made right now selling homes. But local governments have prevented the housing market from functioning properly. 

Record price increases are not a post-pandemic phenomenon. Prices have been surging for years because local government regulations have prevented developers from meeting the housing market’s sky-high demand. 

Developers aren’t refusing to build. Towns and cities are refusing to let them. 

Local planning and zoning restrictions have made the construction of new units both difficult and expensive. That’s true of both single-family homes and multi-family housing. 

Estimates vary, but the state’s housing shortage generally is pegged at approximately 20,000 housing units. The newly formed New Hampshire Council on Housing Affordability identified a critical need for 13,500 housing units by 2024.

Eliminating this shortage will be extremely difficult, if not impossible, until local governments remove some of the unnecessary obstacles that are causing it. 

Local elected officials would be more likely to remove housing obstacles if they understood that vocal anti-housing activists are not representative of most residents. 

Our poll in June found that a majority of New Hampshire voters (51%-29%) supported relaxing some local government regulations to allow more rental housing, and a plurality (45%-34%) supported relaxing some local regulations to allow for more single-family housing. 

Allowing the construction of much-needed housing is not unpopular. In fact, opponents of new construction are in the minority in New Hampshire. Unfortunately, they make up majorities of many local boards and of the crowds who turn up to their meetings. 

That’s a major reason why the market solution we’ve seen on the income side of the housing equation has not happened on the supply side. 

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State’s housing shortage has driven rents up 24% in five years

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New Hampshire’s severe housing shortage continues to drive prices to record highs and put rentals and single-family homes out of reach for many families. 

  • The median price of a two-bedroom rental in New Hampshire has risen 24% in the last five years and 43% since 2011, reaching a record high of $1,498 a month (including utilities) this year, the New Hampshire Housing Finance Authority’s annual rental survey has found. 
  • The median price of a two-bedroom rental rose 6% last year, and the price for all rentals rose 7%. 
  • In Hillsborough and Rockingham Counties, the median rent is more than $1,600 a month (including utilities). 
  • The vacancy rate for two-bedroom apartments is down to 0.6% and the rate for all units is 0.9%. (A healthy vacancy rate is around 5%.) In every county, the vacancy rate is below 1% for two-bedroom units and below 2% for all units. No New Hampshire county has had a vacancy rate above 4% for all units since 2017. 
  • The percentage of New Hampshire two-bedroom rental units considered affordable to the median-income renter household (meaning the household would spend no more than 30% of its income on rent) is just 13%.
  • Single-family home prices are also hitting records. The median home price in Rockingham County hit $509,850 in June. Statewide, it hit $409,000.
  • In 2012, homes spent an average of more than 125 days on the market. In June, homes spent an average of 18 days on the market. 
  • In 2012, there was a more than 10-month supply of inventory for single-family homes. In June, it was down to 1.2 months. 

 The state’s housing shortage is not new. It’s been a well-known problem for decades. It has persisted despite numerous state-level efforts to address it. But those efforts, often focused on housing subsidies or task forces, have made little impact. The Housing Appeals Board, the most promising recent reform, just started its work this year. And its focus is on enforcing existing laws and rules to ensure that local governments don’t overstep their legal authority.

The shortage persists, and has become worse, because it is largely a product of local regulations that restrict housing development. Local ordinances often outlaw small homes on small lots, severely restrict mixed-use development, and make it nearly impossible to build multi-family buildings even in areas where they are allowed. 

The cumulative result over many decades is a massive shortage of housing. Estimates vary, but the shortage generally is pegged at approximately 20,000 housing units. The newly formed New Hampshire Council on Housing Affordability identified a critical need for 13,500 housing units by 2024. 

Whatever the actual number is, filling the need will be no less challenging than it has been in recent decades — as long as local governments continue to needlessly restrict new home construction and deny needed developments at the urging of a handful of anti-housing activists. 

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Report illustrates New Hampshire’s dire housing shortage

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The dire state of New Hampshire’s housing shortage is illustrated in the New Hampshire Housing Finance Authority’s just-released spring Housing Market Snapshot. 

The median home price in New Hampshire hit $362,000 in April, up 16% from last April’s median price of $313,000. 

Last April’s housing snapshot showed that in March of 2019, the median was just $275,000. In just two years, the state’s median home price has jumped by $87,000.

Migration caused by the COVID-19 pandemic is not the primary cause of this increase. The report shows a roughly 5% increase in home buyers from Massachusetts and a much smaller bump in buyers from other states in 2020. 

The real culprit is supply. 

The number of new building permits issued in New Hampshire collapsed in the five years from 2004 to 2009 and has not recovered. In 2004, more than 500 permits for single-family homes and more than 200 permits for multi-family housing were issued in the state. By 2009, barely more than 100 single-family home permits were issued, and multi-family permits were in the low double digits.

Since 2009, the number of issued permits has climbed slowly but has not come close to its early 2000s levels. A little more than half as many permits are being issued annually than in the early years of this century. 

One way to think about the numbers is that builders were constructing hundreds more homes each year in New Hampshire when the hit TV show “Friends” ended its run than when “The Big Bang Theory” ended its run. 

Fewer homes being built means fewer homes on the market. There were more than 8,000 homes for sale in the state in May of 2018. This May, there were 4,613. 

Last spring, there was a 1.6 month supply of homes on the market, including a 1.1 month supply of homes priced less than $300,000. 

This spring, the overall supply has fallen to 0.6 months and the supply of homes priced less than $300,000 is down to 0.4 months. 

The only way out of this housing shortage is to build more homes. 

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