Study: Local land use regulations drive New Hampshire’s housing shortage

Bartlett Center report points to localities’ ‘anti-density policies’

A newly released report explicitly ties rising housing prices and rents in New Hampshire to local regulations that prevent people from building homes.

“Residential Land Use Regulations in New Hampshire: Causes and Consequences,” written by Jason Sorens of Saint Anselm College for the Concord-based Josiah Bartlett Center for Public Policy, points to a variety of local regulatory culprits, including minimum lot sizes, frontages and setbacks, single-family-only requirements, bureaucratic requirements for accessory dwelling units, maximum heights and densities, minimum parking requirements, historic and village district requirements, municipal land ownership, subdivision regulations, impact fees, and simply the unwillingness of zoning boards to issue variances.

Those regulations place the state among the most restrictive in the country when it comes to allowing new housing, he writes.

And, by suppressing building, Sorens points out, the price of housing rises as demand rises. Removing or relaxing these regulations, he says, would allow prices to rise more gradually.

Another consequence of restrictions on the construction of new housing is that housing scarcity increases socioeconomic segregation and slows population growth.

For example, according to Sorens, as housing becomes more expensive, fewer people move to New Hampshire, especially to those towns that are most expensive. Those who stay are disproportionately wealthy and college-educated, while middle- and lower-income families leave because they cannot find affordable housing.

Costly housing in towns with better schools also limits families’ access to educational opportunity, the study points out. And the sprawl that results from what the study calls “anti-density policies,” such as minimum lot sizes, “increase drive times and road maintenance costs and worsens air and water quality.”

‘Rent-seeking’

Among the reasons municipalities have enacted the land use restrictions is the widespread perception that allowing more home-building will increase the number of children in local schools and “rent-seeking,” when homeowners in towns with the biggest housing demand see zoning as a way of boosting their wealth by artificially limiting the supply of housing.

But when it comes to possible increased school populations, according to the study, new-home construction actually “leads to substantial growth in the tax base, relieving the tax burden on the rest of the town.” It also points out that school populations “are falling across most of the state, and so adding more children would not necessarily require more spending. So the ‘fiscal’ motivation for restricting home-building does not make much sense today.”

But the main reason for the restrictions, he writes, appears to be “rent-seeking,” a practice that “may have gotten out of hand as pandemic-driven housing demand has well outstripped supply.”

The study found that communities with the most stringent land use restrictions “tend to be the ones that historically saw big growth in housing demand.”

According to the study, the 10 New Hampshire communities with the most “inelastic” housing supply caused by land-use regulations are the Seacoast towns of New Castle, Rye, Newington, North Hampton and Hampton Falls, the Dartmouth-Lake Sunapee communities of Hanover and New London, the Moultonborough in the Lakes Region and Waterville Valley, the ski resort in the White Mountains.

In contrast, the 10 municipalities where housing is least restricted are all in the North Country: Ellsworth, Hart’s Location, Hale’s Location, Stratford, Northumberland, Berlin, Colebrook, Stewartstown, Warren and Clarksville.

In addition, the study says, communities located near towns that have increased their land use restrictions were more likely to enact new restrictions on housing. “In other words,” the study points out, “municipal land-use regulation in New Hampshire looks like a kind of “arms race.” When one town tightens, others are also provoked to tighten so that they don’t get a disproportionate share of new housing construction. As a result, all towns end up with less construction and stricter regulations than they really want.

As for solutions, Sorens suggests various policy changes that can be made at both the state and local levels.

At the local level:

• Zoning ordinances could be changed to allow homes on smaller lot sizes with smaller frontages and with smaller setbacks.
• Building permit caps could be removed
• Multi-family housing options, such as duplexes and triplexes, could be allowed
• Minimum parking and maximum height restrictions could be eased in urban areas

At the state level:

• A regulatory takings compensation law could be implemented so municipal governments would have to compensate landowners for new regulations that substantially take away the value of their property
• Preemption of “the most egregious forms of exclusionary zoning,” including minimum lot sizes above a certain level and caps on building permit
• Allow towns to decentralize planning authority to neighborhood or even block levels
• Authorization of municipal land-use compacts to allow neighboring municipalities to offer multi-community planning, allowing for consideration of the impacts of regulation on the whole commuting area

It also suggests that enactment of an “open-enrollment law for public school choice” could “at least ameliorate one of the negative consequences of exclusionary zoning for middle- and low-income families: being locked out of good schools.”

To see the full report, “Residential Land Use Regulations in New Hampshire: Causes and Consequences,” visit jbartlett.org.

Editor’s note: This article has been revised to reflect that the Josiah Bartlett Center for Public Policy study was referring to land use restrictions imposed in certain New Hampshire communities, not building restrictions. In a statement, the Bartlett Center said it changed the terminology because it “did not intend to designate ‘building codes,’ but rather regulations governing where and how housing is to be built on land in a given community. We do apologize for any confusion we may have caused.”