Assessing NH’s housing options
We’ve have been talking about affordable housing and workforce housing for years, but we have a long way to go
We at Norton Asset Management and Harrington & Reeves are commercial real estate brokers and advisors. We do not do residential single-family homes. In commercial real estate there are five asset classes: office, retail, multi-family, commercial and industrial-high bay (distribution).
However, to be current and able to offer the best advice to our clients, we need to be knowledgeable and well-versed on many topics and themes. Thus I found myself attending an NH Forum on the Future Forum on housing.
There were several speakers, including Chris Masiello from Better Homes and Gardens/The Masiello Group, Russ Thibeault of Applied Economic Research and Bill Ray from the NH Housing Finance Authority. The general theme was that 2016 will be very similar to 2015, slow but steady sales volumes with slightly rising home prices.
Much of the presentation was on changing demographics – the aging of the workforce, the challenge of keeping young college grads in the state, the stress from under-employment (several part-time jobs with no benefits) and, until very recently, outmigration, which appears to have turned in the last quarter of 2015.
A key issue is that younger homebuyers are delaying marriage, some prefer mobility and flexibility to home ownership and appear to favor simple, smaller homes, including apartments and condos vs. suburban homes.
There is a shortage of such options on the Seacoast and in the Manchester and Nashua areas. The costs of new construction are prohibitive. Thus, apartment rents have doubled since 1990 ($600 vs. $1,200).
My 26-year-old son rents an apartment in downtown Manchester. He pays $850 a month, which includes heat. It is in an old five-unit Victorian. The landlord lives there as well, which is a plus. It is not a pristine neighborhood, but not undesirable. My son can walk to work, the gym, restaurants, etc. A new apartment building would be 50 percent to 100 percent more in rent.
One bill in the NH House would enable local towns to amend their zoning to allow for putting non-related parties’ housing units in existing single-family homes (“non in-law apartments”). The goals are to help seniors stay in their bigger, older homes and to help young people find affordable housing.
Such zoning has long been a “local control” issue, so this bill may not go anywhere fast.
Traditionally, up to 92 percent of New Hampshire home sales have been single-family, which is the highest in New England. Many towns are zoned for only, or virtually only, single-family homes. This needs to change to meet today's demographics, especially in the southern part of the state.
Another factor is that younger workers often have high levels of student debt, which weakens their credit and ability to buy. The standard is 30 percent of income for principal, interest, taxes and insurance. Very few can meet the standard. Often they have to go further out, but that increases their commuting costs.
One half of all renters make $35,000 or less annually. So while we have been talking about affordable housing and workforce housing for years, it is clear we have a long way to go. With constraints on supply, apartment rents are rising quickly, thereby aggravating the situation. Today, it mostly takes a two-income household to qualify to purchase a home.
After two hours of presentations and discussions, it made me think – this makes selling a warehouse or leasing an office look easy! Clearly, housing options are an important component of economic development, specifically maintaining and growing a skilled and educated workforce, which impacts/drives decisions about firms staying and growing in New Hampshire or deciding to locate or relocate to New Hampshire.
Bill Norton, president of Norton Asset Management and principal of Harrington & Reeves, is a Counselor of Real Estate (CRE) and a Facilities Management Administrator (FMA). He can be reached at email@example.com.