Cook on Concord: NH’s housing conundrum

The zip code for Sunapee, New Hampshire, is 03782.  In late July it also was the zip code for the hottest real estate market in the country, according to a national report sent to me by Bill Purcell, former mayor of Nashville, and an observer of housing issues.

The same month, the Manchester/Nashua region was the top market for real estate among urban areas, with the median home price being around $600,000. One reason for the active market here was that median prices were about a quarter of a million dollars less than comparable homes 40 miles south, around Boston.

Much attention has been focused on the cost of housing everywhere, but especially in New Hampshire. Young people, even those in professional jobs with two earner households, search for houses and often lose out in bidding situations. Some are giving up, facing budgets that also need to address student loans and other expenses.

Meanwhile, hundreds of premium apartments are being constructed in Manchester and Nashua, often in converted commercial space downtown, with amenities and high-end features, and prices to match.

Paying $2,500 to $3,500 a month for a two-bedroom apartment in these new complexes provides a luxury lifestyle without many of the burdens of home ownership, but also presents a housing trap. Paying that much for housing without building up equity deprives the renter of the savings needed to ultimately purchase a home.

Hearing stories from young couples looking for houses in southern New Hampshire is a sobering experience.  A nonscientific review of anecdotal evidence reveals the following examples:

One couple who owned a condominium in Manchester recently sold it and moved in with parents when confronted by a possible increase of the condo monthly fee to over $600, which they feared would lower the value of the condo, while looking in vain for a home to buy.

Another couple found a house in Manchester on less than a quarter of an acre, built in the early 1900s, in average condition but needing many features replaced, at a price of over half a million dollars, which had sold several years before for half that amount.

Several young professionals in law and medicine have reported that they are resigned to renting for the rest of their lives, and are seeking alternate ways of building up savings.

One other couple is starting to look for houses 50 miles away from the cities in towns they never heard of, in hopes of finding something affordable.

All of the examples listed are of professionals with good incomes. If this is the case for the relatively affluent, what is the situation for average working-class people?

In many communities, large employers such as colleges or hospitals struggle to find workers who can afford to live nearby.  New London, for example, has a proposed affordable housing plan, proposed by Twin Pines Housing Trust, a major provider of affordable housing in the Upper Valley, enthusiastically endorsed by the town and local employers like Colby-Sawyer College and New London Hospital.

However, lack of available public infrastructure, in this case water capacity which the local water district claims cannot support the project, has the plan stymied.

Many other communities resist such housing for fear of adding students to the schools, or changing the mix of residents, clearly a short-sighted view.

On the other side of the real estate market situation, is the dramatic increase in property values. The Sunapee story is not due to workforce housing of young professionals looking for a first home. Anyone reading the local “shopper” in the Sunapee area sees lavish ads for magnificent lake homes with prices in the multimillions.

This is a statewide phenomenon, with waterfront homes doubling or tripling in value every five or so years.

People familiar with the real estate market in Newcastle and other Seacoast communities know the story well.  Residential properties in the cities and towns, while not so dramatic, also are similar.

The result of these increases in value need reflection, too. In the vacation areas, prices have Realtors saying the market “is not for millionaires anymore, but billionaires,” in the words of one prominent Realtor.

Also, people often are forced to sell, real estate taxes having become so high that their getaway places have become major financial investments. Many worry about whether the next generation will be able to afford what the parents could.

Putting all this in economic perspective, especially in the “live free or die” state, the real estate market is a fairly good example of free market economics at work.  Supply and demand, ability to pay, building value on good investments, all come into play.

The question still is what to do about providing housing in such a complex situation?

Brad Cook is a Manchester attorney. The views expressed in this column are his own. He can be reached at bradfordcook01@gmail.com.