Reality Check: The Graying of New Hampshire

New Hampshire Market Trend Report published by the New Hampshire Association of REALTORS and reprinted with permission. Peter Francese as always, does an outstanding job with his report.

-by Peter Francese

It’s hard to pick up any paper in the state and not see another story about our aging population and our graying workforce – right near a story about another age-restricted or senior housing project. The Sept. 10 issue of the Portsmouth Herald had a story with this lead: “The Executive Council approved $12,000 to be used to see if Rye is a good place to build affordable housing for seniors.”

Considering that the median priced home in Rye is around $500,000, they can probably use a few affordable housing units. But notice how they qualified it: No workers wanted, only seniors. The story goes on to describe how the committee got a zoning change to allow a retirement community of 22 units on just 10 acres. You can bet that no housing for younger workers would ever be considered at that density.

At the same time, a hospital a short drive from Rye has over 150 jobs they cannot fill in large part because applicants so often turn down their average offer of a $50,000 salary plus benefits. The reason most gave: “There’s no housing within a reasonable commuting distance that I can afford.”

Let’s assume that, if they could have afforded it, an average of two-thirds of those job-seekers would have bought a home here. That’s as many as 100 sales that a New Hampshire REALTOR® did not make. If the average sale could have been at, let’s say $250,000, then that was $25 million in sales lost to a state where housing costs are more affordable for working-age residents.

The workforce in New Hampshire is now growing at slightly less than 1 percent per year, and that meager growth is forecasted to approach zero within five years. Working people have been the strongest leg of the three legs of housing demand in New Hampshire — the other two, of course, being second home owners and retirees.

New Hampshire REALTORS® will see a significant decline in their business when workforce growth in our state drops further and that previously strong leg of demand withers. Our state cannot sustain a vibrant economy or build sustainable communities on tourists, part-time residents and retirees.

But there is no reason to pick on the fine town of Rye. There are a great many other municipalities in the state that either prefer high density age-restricted housing, or extremely large minimum lot sizes, so that no affordable workforce housing is possible. The reason given is that if they permit any such housing, their school population will “explode” and their property taxes will rise.

The chart below shows what has happened, over the past six years, when thousands of units of age-restricted housing have been built, but hardly any workforce housing. Public school enrollment has dropped 2 percent but school costs have risen 39 percent.

The frustration many New Hampshire property owners feel about rapidly escalating property taxes is very real. But as that chart shows, it’s not the kids’ fault. Most public education costs are either fixed or contractually obligated. Preferring only child-proof housing hasn’t solved the problem of rising property taxes, and it’s not likely to in the future. But it will hurt home sales. It already has.

Turning now to the data on August sales, we see that during the first eight months of this year about 8 percent fewer homes were sold. That added up to a bit over 700 units not sold compared to last year, a drop in volume of $244 million. Ouch.

But you know, there are at least a dozen hospitals in the state with job openings like the one mentioned above. That volume drop might never have occurred, despite the poor national market conditions, if the appropriate inventory had been there.

Average prices of New Hampshire sold homes has held pretty steady at an average of $306,900, down only 0.9 percent compared to the first eight months of last year. The average sale price for a condominium in the state for the first eight months was $211,200, which is 1.8 percent higher than last year.