Housing crisis looms if ‘smart growth’ is ignored

The housing sector’s strong contribution to economic recovery and growth in New Hampshire over the last several years is merely a fulfillment of strong market demand.

The market forces driving housing demand are the basis for the state’s continued economic prosperity. The economic growth engine, pulled by job creation, leads to more disposable income, higher housing demand, more durable goods and retail spending, and increased need for service support which then perpetuates the cycle.

The perception that growth strains resources is partially true. The pace of development is accelerating, making land increasingly scarce and causing a supply/demand imbalance, further driving values to escalate significantly. Conversely, more new housing has been shown to lower housing prices. Coupled with this perception is the concern that local communities are swamped by developers and contractors for even more projects to satisfy the market demand. The visionary approach requires leadership to insure that growth managed properly can both sustain long-term economic growth while controlling the perceived negative impact of using increasingly scarcer resources.

Two good examples of preserving resources would be recycling of waste vs. disposal (aluminum cans) or replenishing renewable resources (reforestation). Reaction to growing demand by some communities, though, is more severe. Growth controls, permit moratoria, higher impact fees, additional code requirements and other regulatory constraints are amplifying the problem. Large lot zoning is not the answer.

The result of defying market demand will lead to even higher housing values and a lack of affordable housing, thereby stifling employers’ ability to attract employees at reasonable wages. The growth engine that leads to a vibrant and healthy economy can be derailed by these actions.

When will it end?

Compare what is happening in southern New Hampshire and Massachusetts. Wage structure in those areas is substantially higher than central and northern portions of the state, but creeping north rapidly. Strong housing demand caused partially by better housing values in New Hampshire is transitory, as the population bubble is driven even further north.

Where will it end?

Only when values north and south are at parity will strong growth subside and will we realize some equilibrium of supply versus demand. Strong housing demand is causing communities to review and update master plans to reflect recent trends. Weighing the impact of increased demand on municipal services, school population, land use, conservation and the environment are serious matters affecting fiscal viability and the quality of life for each individual community.

All of these elements are placing an increasing burden on planning boards and town planners to insure a delicate balance is maintained. Our tax structure and local rule dictate the role that the property tax plays in the economy of each town, and subsequently the state. Public and private investment, including housing, support the local economies and provide the springboard to economic vitality.

All of our communities need to revisit and embrace one of the fundamental tenets of economic growth, which includes plans for job growth, zoning for all types of development and sharing their impact with bordering communities. An isolationist approach will not work. The best use of resources is not necessarily coveting the next piece of available open space but considering the reuse (recycling) of previously developed urban areas, where infrastructure is in place and development costs are more reasonable.

Providing proximate housing to support this economic job growth is not optional but mandatory. Pushing housing growth outside the community to preserve commercial/retail development borders on protectionism.

To minimize sprawl, “smart growth” principles must be applied. Balanced housing employing such principles will allow mixed-use and higher-density developments that optimize land use, preserve and conserve open space, minimize environmental impact and positively impact the finances for each community. Embracing a comprehensive plan for growth demands a thorough understanding and an individual inventory of available local resources.

Growth appears inevitable. Planning for it requires thorough communication of housing growth needs so residents understand the need and support their planning boards.

Restricting housing growth can lead to negative economic impact. We may not have a severe housing crisis today, but we may be closer than we want to be.

Donald J. Bealko of the Public Policy Alliance for Housing will be among those taking part in a Nov. 16 conference on “smart growth” co-sponsored by the alliance, Plan NH and the Environmental Business Council, at the Puritan Back Room in Manchester. For more information, call Plan NH at 749-337.