Middle class feeling the New Hampshire housing squeeze

Shortage of homes, rental units leaves Lakes Region ‘in a big hole’

For Dave and Tammy Flanders, finding a right-size, mid-price home in the Lakes Region was as much a dream-come-true as it was a stroke of luck. It wasn’t what they originally envisioned.

The couple, with grown children and eager to downsize, sold their 1,400-square-foot ranch-style house in Concord within a day of listing it in October. Then they searched for almost three months for a condo or mobile home. Finally, something popped up online that grabbed their attention: a 3,800-square-foot house in Northfield, with an in-law apartment for Tammy’s aging mom, surrounded by woods and country quiet.

“It’s a place for everybody to come back to,” including adult children and future grandchildren, Dave said. “And it’s a great house to entertain in.”

It also cost $100,000 more than their Concord home.

Flanders’ advice for other house hunters fishing in a small pond of options: “Have patience. If you can, sell your property and stay somewhere temporarily then make your buy. Especially in this market it’s difficult with the inventory being so low.”

Across New Hampshire and the Lakes Region, available housing available for buyers and renters remains in short supply – outstripped by the number of people looking for homes they can afford or splurge on. During the past 10 years, residential real estate in the Granite State has switched from a buyer’s market, where buyers have their pick of a bounty of possibilities, to a seller’s market, where demand exceeds supply, which drives prices higher. It’s also a condition that can leave lower-end and middle-income buyers and renters without a lot of realistic options.

Brenda Rowan, a Realtor at Coldwell-Banker in Laconia, said: “For the working people, and people who don’t qualify for assistance, it’s really hard. There’s all kind of housing for people who have money.”

Elderly people who can’t afford to pay their taxes and insurance “ask me to sell their house, but there’s nothing for then to move into,” Rowan said. “There’s no inventory in the affordable range.” The bulk of Lakes Region rentals are at the higher end, $2,000 a month or higher, she said.

Labor ramifications

It’s a conundrum gripping most of New Hampshire – and one that reaches beyond the housing market. Not having available, realistically priced housing for young people entering the workforce, young couple with families and employees who relocate here is affecting the state’s economic growth, and making it difficult for businesses to stay staffed and expand, even on the more economically vibrant Seacoast and in southern New Hampshire.

Most of the Lakes Region’s economy is tourism-based. Jobs in that sector are largely seasonal, driven by high summer demand which slacks off in winter. Wages don’t come close to matching the cost of available housing.

It doesn’t help that home building has slowed from a peak in 2006, according to data compiled by New Hampshire Housing Finance Authority. The result is too few homes that most of the state’s population can afford to buy, and a pared-down supply to choose from even for those with modest to above average incomes. At the same time, the percentage of the state’s population above age 65 continues to expand.

Seniors are opting to age in place for a variety of reasons – including not having affordable alternatives that include single-floor homes in move-in condition. Stalled housing turnover stymies the amount of houses for sale and apartments to rent.

Liz Swenson, a Realtor with Berkshire Hathaway-Verani Realty in Belmont who helped the Flanders family, said low inventory has boosted prices, which has further depleted options for first-time buyers and average-income retirees.

“Back in years, people looked at a lot before they made their choice. Now there’s less to look at.” That has resulted in bidding wars between buyers competing for the same lineup, and hastened the transaction pace. Buyers need to be prepared for multiple offers, Swenson said. “They almost have to expect it if the property’s in good shape.”

Rising prices

Ten years ago in Franklin – a city that historically has had an ample selection, including for first-time buyers and seniors – there were roughly 85 to 95 homes for sale at any given time, compared to 25 to 35 today, Swenson said.

“That is a very wide gap of difference. It has driven up prices everywhere. You’ll have some fixer-uppers for $80,000, but they need quite a lot of work.”

It also means buyers and renters are frequently settling for less than their ideal, especially if they’re shopping on deadline.

Corina Cisneros, owner of Cisneros Realty in Gilford, said the average New Hampshire home price during the Great Recession hovered around $175,000 in December 2007. In September 2019, the median price – meaning as many homes were priced above as were priced below – stood at $287,500, according to Northern New England Real Estate Network data. In much of the Lakes Region, the number has climbed since 2014 to over $300,000. In 2006 to 2007 it took approximately five to six months to sell a house; today houses are selling in less than 2½ months, Cisneros said, and sellers are getting 99% of their asking price, compared to 94% in the recession. “We are at a peak market and we don’t know how long it’s going to last,” she said.

Ten years ago, the average selling price of a home in Laconia was $202,000; today it’s roughly $278,500, according to market data. Today the average sale prices of Gilford home is roughly $310,600, compared to $573,000 in Wolfeboro and $663,000 in Moultonborough – communities with a greater proportion of luxury waterfront homes.

Renters are squeezed because property owners can reap higher profits with fewer headaches by selling instead of renting. Smaller new homes aren’t being created at a pace brisk enough to match demand, largely because of the rise in construction costs, including materials and labor, which is in short supply. Investors are buying fixer-uppers that scare off first-timers, older buyers and others who need to relocate quickly, turning them into housing that eclipses many lower-end consumers.

“What you’re seeing are median sales prices going up and inventory dropping,” said Carmen Lorentz, executive director of Lakes Region Community Developers, a local creator of housing. There was a huge drop in building permits for single family homes from 2007 to 2009, according to a November housing report, and that number hasn’t recovered much, she said.

In the last five years, the tally of houses in New Hampshire for sale under $300,000 dropped by 60%, compared to the number over $300,000, which fell by 8%, according to sales statistics. The state’s rental inventory remains precariously low. A 5% vacancy rate is considered a healthy minimum; every county in New Hampshire has a rental vacancy rate of 2% or less, which pushes rents higher, Lorentz said.

“We’re in a big hole right now,” Lorentz said. “The growth in wages hasn’t kept pace” with the cost of housing, including in the Lakes Region. “Economists have estimated that we need 15,000 to 20,000 more housing units (statewide) just to get back to a healthy market.”

She added: “People cannot find apartments. People cannot find homes they can buy. It’s true in the Lakes Region, and it’s affecting people at all income levels.”

‘Not in great shape’

The shortage is especially noticeable from Concord through Franconia, Cisneros said.

“There’s a lot of refurbishing of existing homes, and gentrification of lake homes,” Cisneros said, but no major new development in the Lakes Region, except Memory Lane in Laconia and Weirs Beach Village, where prices range from $240,000 to $260,000 for two to three bedrooms. The disconnect is that most buyers fall into the $180,000 to $260,000 range, and homes in that range disappear quickly. And most were built between 1910 and 1940, adding a substantial rehab expense to upgrade outmoded kitchens and bathrooms.

“They’re not in great shape,” Cisneros said. “Inventory is not growing fast enough for the needs of that local population.”

In turn, the housing shortage has boosted prices for land, as more people who can’t find something suitable turn to buying lots and building.

The shortfall is also translating to longer commutes, with lower-paid workers coming from as far as Andover, Plymouth, Rumney and Warren to work in retail and tourism in the Lakes Region. “A clerk working at Hannaford in Meredith is living in Danbury,” Cisneros said.

Cisneros said the Lakes Region is slowly becoming “a privileged place to live,” drawing retirees from Connecticut, Massachusetts and Rhode Island, as well as snowbirds from southern states. “As prices continue to escalate, a lot of people who want to live here can’t live here.” The mid-price market of $350,00-$450,000 is doing well, she said, and the luxury market is booming. Homes in the $900,000 to $1.4 million range are very popular, she said.

“A lot of premium builders are building waterfront homes,” and replacing cottages with larger custom-built second homes. That doesn’t seem to be slowing down at all,” said Brenda Richards, executive office of the Lakes Region Builders and Remodelers Association, which has roughly 100 members, most of whom have a waiting list for building and remodeling projects, she said.

The biggest building challenge locally is finding skilled labor to replace experienced tradespeople who are aging out and retiring.

One bright star on the immediate horizon, Richards said, is the Huot Center at Laconia High School, which serves six Lakes Region high schools including Inter-Lakes, Winnisquam, Gilford and Belmont.

Compared to three years ago, classes in building construction and plumbing and heating are full or nearly full, funneling trained entry-level workers for summer jobs and employment with local contractors. For the first time, in 2020, the group will be building an affordable starter home in the Lakes Region, instead of tiny homes that are moved on trailers, or class projects such as bobhouses or garden sheds.

State government is also stepping up to address the problem, and has created a $5 million yearly Affordable Housing Fund, and a housing appeals board that can speed appeals of arbitrary local zoning decisions.

Gov. Chris Sununu’s housing task force identified two critical barriers to housing development: local regulatory restrictions, and a lack of investment incentives. Municipalities are encouraged to adopt more housing-friendly ordinances and increase incentives for private investment in workforce housing, according to the N.H. Housing Finance Authority’s November report.

According to NHHFA’s 2019 Residential Rental Cost Survey, the statewide median monthly rent for a two bedroom apartment, including utilities, is $1,347 and the rental vacancy rate is 0.75 percent, which means apartments are changing hands as soon as they’re vacated, and there’s continued upward pressure on prices because of burgeoning demand.

This article was originally published in The Laconia Daily Sun as part of The Sunshine Project, which is underwritten by grants from the Endowment for Health and the New Hampshire Charitable Foundation.