How New Hampshire plans to alleviate the housing crisis

New Hampshire’s hot housing market has put the Granite State in crisis mode.

The state’s business-friendly regulations and tax policies have led to rapid population growth in recent years, including an estimated population growth Influx of 16,000 people from 2020 to 2022 alone. But as the state’s population has grown, housing supply — which began shrinking more than a decade ago — has not kept pace.

In 2023, through his Statewide Housing Needs Assessment, Housing in New Hampshire found that the state currently has a shortage of 23,500 units.

Based on the state’s estimated population growth, nearly 60,000 additional housing units are needed between 2020 and 2030, while nearly 90,000 additional housing units are needed between 2020 and 2040. This is based on an estimate that approximately 52,500 households will be added between 2020 and 2030, or approximately 74,400 between 2020 and 2040.

There’s a lack of available housing — and especially affordable housing — as the state’s median list price has skyrocketed to $600,000, according to data from Alto’s research. This is starting to impact New Hampshire’s growing economy because employers can’t hire people if there’s nowhere suitable to live.

“It’s a big problem. If you are a recruiter for an employer and interview 10 applicants for a job, you may lose one or two in salary or benefits, but you will lose half the applicants because they cannot find suitable housing,” says Andy. Smith, the broker-owner of Badger Peabody & Smith Real Estate.

According to Smith, larger employers in some of the state’s more rural communities are purchasing bed-and-breakfasts or multifamily properties to house employees. “I think there would be even stronger growth and more stability in the market if we had more homes for sale,” he added.

As the pressure has become more apparent, businesses across the state have begun pushing for more diverse housing options. They want to attract younger workers, including recent graduates.

“It is encouraging to see some increase in apartment construction in some of our larger communities. “If you can attract someone right out of college or early in their career to stay in New Hampshire or come to New Hampshire, apartment living is a great option for people at that stage of their lives,” said Rob Dapice, executive director and CEO of New Hampshire. Housing.

Underlying problems

Despite this progress, Dapice and others are frustrated by the lack of new construction — especially starter homes — in the state. Housing industry experts attribute this to the state’s restrictive zoning laws. In 1925, the state legislature passed the law New Hampshire Zoning Lawwhich gave municipalities the right to zone their own land.

This has resulted in a patchwork of zoning plans statewide. Some communities, primarily in Grafton and Coos counties, do not have traditional zoning ordinances, while others have a minimum lot size of 25 acres.

Historically, these zoning regulations were due to health and safety concerns associated with septic tanks and leech fields, but many believe some communities have lost sight of that over the years.

“Now we only have minimums of two or even ten hectares for reasons no one can remember, so why are we still doing it? That’s a lot of land, and it contributes significantly to the cost of building new homes,” said Bob Quinn, CEO of the New Hampshire Association of Realtors (NHAR).

State Rep. Joe Alexander, a Republican who represents the 29th District of Hillsborough, is among the lawmakers championing the issue. Alexander is currently drafting two bills for the 2025 legislative session. The first is intended to help reduce land costs for construction by analyzing minimum zoning requirements.

“This bill would require municipalities to prove that their land infrastructure is not capable of having smaller lots to meet their large minimum lot requirements in some parts of the city,” Alexander said.

The second bill seeks to study the Zoning Enabling Act as 2025 marks its 100th anniversary.

“I want to look at what the original legislative intent of the law was in 1925 and how it works today,” he said. “As far as I’m concerned, a municipality should have the right to zone some things, but unless zoning in a certain direction would violate the health, safety or welfare of someone else, why do they have those restrictions? ”

More ADUs?

Another specific part of the zoning reform that could create more housing options is accessory dwelling units (ADUs). In 2017, the state passed a new law allowing ADUs almost anywhere single-family homes are permitted.

By passing this law, the state was hoping to see the creation of tens of thousands of additional homes, but that was not successful. In some cases, local zoning regulations adopted in response to the ADU law that resulted in restrictive parking or occupancy requirements were responsible for the lack of ADU proliferation.

Groups like AARP, Keep working, play New Hampshire and NHAR, as well as lawmakers like Alexander, hope to change that by 2025.

With an average age of 43, New Hampshire’s population is the second oldest in the country facts of the U.S. Census Bureau. As the state’s population continues to age, some residents will seek to downsize, but in a state with limited supplies and rising prices, this desire comes with some challenges.

“There are people who have large family homes that they no longer want or can take care of, but who cannot downsize because they cannot afford it with house prices or interest rates,” says Stephanye Schuyler. a volunteer with AARP New Hampshire.

“The lack of affordable housing also makes it more challenging for people who are the caregivers, whether paid or family, to be close enough to their loved ones or those they care for.”

To help with the housing crisis, AARP is a strong supporter of the state’s ADU law. According to Schuyler, an ADU is a great way to accommodate caregivers and can allow retirees to economise while earning rental income from their primary home.

Stay Work Play New Hampshire is on a mission to attract and retain young professionals in the state. It also aims to raise awareness of the ongoing problem of an aging population and the consequences of not supporting a young workforce. Its executive director, Corinne Benfield, also believes ADUs can result in significant growth in housing supply aimed at recent graduates and other young professionals.

“New Hampshire is the second-oldest state in the country, and we are already seeing workforce challenges such as shortages at some of our growing companies,” Benfield said. “And if our employers can’t scale here at the pace they want, they may look elsewhere. There is a real risk that we will see reduced growth in economic development in the state, which will have many consequences.”

Supply-side initiatives

In addition to exploring zoning reforms, the state has launched several initiatives to encourage cities to increase their housing supply. The initiatives are being continued InvestNH Housing and are aimed at accelerating the approval and construction of affordable workforce housing.

“What really piqued the interest of the governor and other lawmakers was that experts and studies showed that the economy was actually being held back by the unavailability of housing,” said Andrew Dorsett, director of housing finance for InvestNH. “Vacancy rates are so low and there are really just frozen tenants and buyers, with little to no inventory for them to move into. And it creates this retention pattern, which prevents new people from entering the housing ecosystem.”

Some of these initiatives include a program that pays municipalities $10,000 per unit to quickly issue permits for multifamily projects. There is also a demolition program, which allows communities and developers to pay for the costs of renovating or demolishing dilapidated buildings and replacing them with housing.

Additionally, the state’s Housing Opportunity Program encourages communities to proactively review their zoning and public service plans before development questions even come to the table.

“I think the Housing Opportunity Program will have such a lasting impact in helping the housing crisis because it has made communities evaluate their readiness for development,” Dorsett said. “Do they have the infrastructure, sewer system and things like that to handle more capacity, or do they need to upgrade things?”

But as much as those advocating for the housing issue want to push municipalities to reform their zoning ordinances, they are also trying to retain some local control over zoning laws.

“Finding a solution to the housing crisis is all about balance,” said Alexander, the state representative. “We must recognize that we need to strike a balance between the right of a property owner to build whatever they want on their own land and the right of municipalities to govern themselves. And there is no easy answer.”