Trouble on the horizon?
By most accounts, this nation’s providers of new homes will have finished 2005 on a strong note. According to the U.S. Census Bureau, as of the end of October new home permits across the nation are running 5 percent ahead of the same pace of a year ago.
As predicted by most pundits and crystal ball-gazing experts, there has been a softening of the market for new homes, due to a whole host of factors, ranging from last year’s devastating hurricanes to the volatility of energy prices. However, in most markets there has been little evidence of a “bursting of the housing bubble” that gained some press coverage last year.
The demand for housing continues to be strong and the contributions to the nation’s economy (about 14 percent of the gross domestic product) by the builders are well documented.
How does New Hampshire fare in this positive picture of housing?
From reviewing some reports and articles, and listening to naysayers, one would think that housing is booming and development is running rampant in the Granite State. That’s not so — and the state’s builders of new homes and apartments are very concerned.
While housing permits nationwide are up by 14 percent, according to October Census Bureau statistics, the New Hampshire housing industry has been slowly going downhill in meeting the demands for new homes. The same October Census report shows that the state is running behind last year’s production level by 14 percent. At that rate we will be finishing the year at just under 7,500 units, assuming all permits turn into housing starts.
According to an article published earlier this year by The Public Policy Alliance for Housing, “New Hampshire will need to increase housing units by 34 percent by the time 2030 rolls around.”
That article was quoting from a Brookings Institution report, “Toward a New Metropolis: The Opportunity to Rebuild America,” authored by Arthur Nelson, which detailed housing growth projections.
If that report is accurate we will need to average approximately 8,700 new housing units per year to keep up with the demand.
Based on 2005 year-to-date data, New Hampshire is heading in the wrong direction.
Not only are we not building enough new homes in the state, the builders are unable to build homes that are affordable to an ever-increasing number of our citizens.
According to the Census Bureau, the median sales price of new houses sold in October (nationwide) was $231,300. With permits up across the nation it would seem that more families can afford new homes at the prevailing prices.
However, in southern New Hampshire, as well as other portions of the state, families are finding it more and more difficult to buy their first home due to those higher prices.
Employers take notice
According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, in the Rockingham County-Strafford County region just 41.6 percent of homes sold in the third quarter of this year were affordable to families earning the median income of $73,000, and the median price of homes sold was $275,000 ranking it 101st on the scale of affordability nationally and 19th for the region.
In the Manchester-Nashua region, just 38.2 percent of homes sold in the first quarter of this year were affordable to families earning the median income of $72,800, and the median price of homes sold was $255,000, ranking it 110th on the scale of affordability nationally and 20th for the region.
As a comparison, Mansfield, Ohio, was the most affordable region of the country — 91.4 percent of the families in the area that earn the median income of $52,300 could afford the median-priced home at $95,000.
All of this translates into problems for the state’s employers, as they begin to experience the serious consequences of having workers commute longer distances to work or not being able to recruit new workers in the first place from out of the state due to the high cost of housing.
Looking ahead, the Home Builders & Remodelers Association of New Hampshire is working with many organizations, individuals and elected officials to identify ways in which we can meet the demand for housing at all price levels while at the same time we protect the unique and precious natural resources that make New Hampshire one of the most desirable states to call home.
Kendall Buck is executive vice president of the Home Builders & Remodelers Association of New Hampshire.