Experts say middle-income NH workers locked out of housing market
By NORMA LOVE
The Associated Press
November 14, 2005
(appeared in the November 14, 2005, edition of the Union Leader)
Concord — Statistics on New Hampshire housing are startling. The median price of a home sold during the first six months of the year was $245,700. The income needed to buy it: $77,100.
That’s $9,000 more than the state’s median family income of $68,000 — enough to afford a house selling for $217,000, if housing costs are to be no more than the 30 percent to 40 percent of gross income recommended by experts.
Yet, a recent study showed only 2,725 houses listed at or below that price — 22 percent of the houses on the market.
Instead, the market is awash with big, expensive homes and housing restricted to adults aged 55 and older.
Middle-income workers — the nurses, firefighters, teachers, police officers and others long considered the backbone of small towns — need what legislators and others call "work force housing." That’s housing within the reach financially of families who make at or below the median household income where they live. In many parts of New Hampshire, few houses fit that category.
"There are a lot of agencies that look after poor people. These people aren’t poor. They’re locked out of the market," says Exeter builder Eric Chinburg.
Keene City Manager John MacLean has lost several police candidates who couldn’t find housing they could afford on a starting annual salary in the low $30,000 range. The median sales price for a house in Keene last year was $180,000 — too expensive for that income level, according to labor and housing experts.
"If you’re starting out at the lower end of the salary scale, it’s going to be tough," MacLean said. "It’s a big loss to us. It takes a big effort to recruit good candidates."
Housing prices are high for reasons besides demand. In a study released in March, economist Lisa Shapiro cited limits on the number of building permits, large required lot sizes and infrastructure requirements such as roads and sewers.
Chinburg said the cost of environmental and other regulations has risen from $2,000 to $15,000 per house in recent years on the Seacoast. He said he had to install a special $25,000 culvert to encourage frogs to cross under a road in one recent project.
"They got across the road before," he said.
Land suitable for building also is being gobbled up — particularly in southern New Hampshire.
Local zoning regulations contribute to the disappearance of open space by requiring lots with an acre or more per house rather than encouraging higher density projects. And, as easily developed land disappears, builders are spending money to make less suitable land developable, adding another cost.
"Ten years ago, you could buy a house in Bow for $150,000, and now that’s the lot," said Bow planning director Bill Klubben.
Demographer Peter Francese of Exeter fears New Hampshire’s economy will begin to degrade within five to six years if the trend away from affordable housing continues.
"We are driving young people from the state and welcoming in people 55 and older," he said.
In the past four years, the population aged 25-44 has declined 4 percent while the group aged 55-64 has jumped 28 percent, Francese said. That means workers and families are being replaced with people who soon will retire, said Francese, director of demographic forecasts for the nonprofit New England Economic Partnership.
He said the small, town-centered government structure prevalent in New England contributes to the problem because decisions are made based on each town’s interest. In other states, county governments typically make decisions, spreading costs over a wider area.
"The crux of the issue is all the costs of building affordable housing fall on small municipalities while all the benefits accrue to the entire region," Francese said.
Klubben said the result is predictable.
"As long as we run everything off the property tax, towns are going to make decisions based on what makes sense from a financial point of view," he said.
New Hampshire’s unique tax structure — which relies almost exclusively on the property tax to pay local costs, especially schools — sets it apart from neighboring states experiencing similar housing shortages, Francese said.
Hostility to work force housing is intensified by a false belief that each new house or apartment adds an average of two children to schools, Francese said. He said a recent study by economist Russ Thibeault found the average was only 0.45 students per unit.
As the construction of age-restricted and expensive homes drives up the average age of New Hampshire’s population, health care costs will rise, including costs borne by employers, Francese said.
If employers can’t find workers and can’t afford health care for them, they will leave if they can, he said.
"When that happens, your economy is in the tank," he said.
Shapiro estimates the shortage of work force housing will cost New Hampshire 1,300 to 2,800 jobs a year.
But while the problem is apparent, a solution is not.
Francese believes the market would take care of the problem if towns stopped encouraging age-restricted housing and instead focused on so-called "smart-growth" initiatives. Smart growth policies include clustering homes in a small part of a large parcel, leaving the rest open.
In neighboring Vermont, Gov. James Douglas is proposing a package of tax credits and other incentives to encourage construction of more work force housing.
And in Maine, York Hospital is offering $10,000 house loans, which can be forgiven over time, to recruit and retain workers unable to afford the area’s expensive homes. Seventeen workers have taken advantage of the program in two years, hospital administrator Jud Knox said.
Jameson French’s company, Northland Forest Products of Kingston, N.H., borrowed from the past to help its workers save for homes. The company bought an apartment building and rents to employees shut out of the market. French doesn’t see that as the best answer, however.
"It’s not easy to be the employer and landlord at the same time," he said.
He believes government must act on a statewide or regional level rather than letting each town set standards.
"That’s very much against New Hampshire tradition," he acknowledged.