12. Affordable Housing

12. Affordable Housing
The issue of affordable housing within New Hampshire has become one of the more contentious problems facing the state and local communities. The booming economic growth experienced throughout the state during the late 1990s and into 2000, fostered employment growth that resulted in an influx of workers into New Hampshire to fill newly created positions. However, although the expansion of the state economy produced positive economic indicators (very low unemployment and increases in the gross state product), these benefits have also contributed to skyrocketing home sale prices and rental rates and plummeting vacancy rates.
In a recent report, entitled Feeling the Pinch: Wages and Housing in New Hampshire, completed by the New Hampshire Housing Forum, housing, economic and wage findings show how affordable housing across the state has reached crisis proportions. The findings include:
  • New home costs have risen sharply during the late 1990s to a median sale price of $180,000 in 1999; while the median sale price of existing homes has risen to $120,000;
  • Between 1995 and 2000, the rent for the average two bedroom apartment unit in New Hampshire increased 25% from $618 to $774, while wages have remained relatively stagnant;
  • Increased population growth coupled with low multi-family housing production has pushed vacancy rates below 1% in most cities and towns and 1.6% statewide;
  • Despite the economic expansion, only the top fifth of New Hampshire families gained in real income over the last decade;
  • Although single-family construction has recovered to pre-boom levels, new construction of multifamily units has not. Currently there is a cumulative shortfall of approximately 25,000 rental units throughout the state.
The lack of affordable housing throughout the state is only exacerbated by the decline in real income for most New Hampshire families. Between 1988 and 1998, the average real income (income dollar amounts adjusted to compensate for inflation) for the bottom four-fifths of New Hampshire families declined anywhere from 3.5% to 15%. Only the top fifth of New Hampshire families experienced growth in real income, increasing by about 9% over the last decade.
The findings of this report indicates that the lack of affordable housing are further compounded by the fact that significant portions of New Hampshire’s employment base are structured around low-wage service industry jobs. For example, 38% of the jobs in New Hampshire paid less than $10 an hour in 1997.
Occupations within earning incomes at this level include child care workers, safety and security officials and social service workers. A way to define the affordability gap is to analyze what a family would need in order to afford housing in the state – commonly referred to as a “housing wage”. Using a formula incorporating the statewide median gross rent level for a two bedroom apartment, the widely accepted 30% of gross income standard for housing costs and a typical working week, a family in New Hampshire needs a wage of at least $14.88 per hour in order to afford housing. In order to meet this wage level and provide basic shelter needs, many families must incorporate two wage earners which typically introduces the need for child care that then places additional strains on the family budget. The report continues to paint a bleak picture for access to affordable housing throughout the state by indicating that 45% of renters throughout the state (50% in Carroll County) cannot
afford the fair market rent for a two bedroom dwelling unit.
Typically affordable housing issues affect larger urban areas such as the major cities across the country. However, the lack of affordable housing also impacts suburban and smaller communities as well. In a survey of least affordable housing released in January 2002 by the National Association of Homebuilders (NAHB), the Portsmouth-Rochester region ranked as the tenth least affordable community in the country.
The other nine communities, such as large urban and suburban areas are all located in California. The list is compiled annually by the NAHB which compares family incomes and home prices for metropolitan areas around the country. The latest survey is based on third-quarter income and home price estimates for 2001.
As many households are priced out of the expensive home purchase market, many are turning to an increasingly popular and viable affordable housing alternative – manufactured housing. Manufactured housing includes both trailer-style mobile homes and prefabricated homes set on permanent foundations. A typical double-wide manufactured home in New Hampshire sold for approximately $60,000 in 1997. The attractiveness of this type of housing alternative has grown in popularity across the state increasing 11% to a total of 46,375 units in 1999 – representing 8% of the total housing units in New Hampshire[7].
In order to address the affordable housing crisis in New Hampshire, the New Hampshire Housing Forum report offers several recommendations or principles to guide decision makers in responding to the housing shortage issues. These principles include:
  • Face the Problem Squarely: Due to the inevitability of population growth, communities opposing growth export housing problems to neighboring communities thus creating problems not only for their neighbors, but for the state as a whole;
  • Recognize that Low Wages are as Much a Part of the Problem as Low Housing Supply: The wages of workers in the services sector have not kept pace with the cost of housing. Although solutions to the wage problem are not given, wages must be part of the overall discussion on affordable housing;
  • Take Advantage of Discounts: The state should take advantage of all federal housing funds and appropriate matching state funds where applicable;
  • Discourage “No Vacancy” Community Land Use Planning: Although zoning authority is delegated to local municipalities, the state should encourage mechanisms to ensure that local planning efforts do not limit the construction of housing in certain communities;
  • Reward Creativity: The state should provide incentives such as tax credits, conservation grants and school aid, to communities who are actively engaged in dealing with the affordable housing problem.