CONCORD, NH – Efforts to alleviate New Hampshire's persistent housing shortage faced a setback in 2023 as new residential construction experienced a decline. This slowdown puts the state further behind its ambitious target of achieving a balanced housing market by 2040, where supply adequately meets demand.
Data from the New Hampshire Department of Business and Economic Affairs reveals the scale of the challenge. To stay on track for this long-term equilibrium, the state needs to add a substantial 32,704 new homes by the end of 2025. However, current progress falls short, with only approximately 75% of this crucial milestone reached. This lag in construction activity raises concerns about the affordability and accessibility of housing for current and future residents of the Granite State.
While the overall issuance of building permits for housing units statewide witnessed a downturn in 2023, some municipalities within Merrimack County demonstrated notable growth. Chichester, for instance, approved 12 more building permits compared to the previous year, indicating a localized surge in residential development. Similarly, Dunbarton recorded an increase of 8 permits granted in 2023.
Donna White, the office administrator at Dunbarton’s building department, attributed this recent development to the creation of approximately 50 new residential lots through subdivision projects in recent years. "As soon as those new lots became available, they got built out relatively quickly," White explained. However, she also noted a recent lull in new home construction, stating that Dunbarton has not received a single permit application for a new dwelling in the past four months, suggesting a potential exhaustion of readily available building lots.
In contrast to the growth observed in some Merrimack County towns, Concord, the state capital, experienced a significant contraction in approved building permits for housing. The number plummeted from 110 in 2022 to a mere 11 in 2023, representing a dramatic 90% decrease. This sharp decline raises questions about the factors contributing to the slowdown in the city's residential development.
However, recent developments in Concord suggest a potential rebound. The city has since approved permits for several large-scale housing projects aimed at bolstering the housing stock. Notably, last year saw the greenlighting of the Townhomes at Capital Pointe, a development slated to add 83 new units to the state's inventory. Furthermore, Concord has been actively exploring zoning amendments and regulatory changes to streamline the development process and encourage more residential construction within city limits. These efforts indicate a proactive approach to addressing the earlier slowdown.
Across the state, Hillsborough County stood out as the leading county for new housing unit approvals in 2023, issuing permits for 1,591 new homes. This figure surpassed all other counties in New Hampshire, highlighting the county's relative resilience in the face of statewide construction headwinds. Conversely, all other counties experienced a deceleration in permit issuance. Merrimack County, for example, saw a decrease from 432 permits in 2022 to 322 in 2023, reflecting the broader statewide trend.
The composition of new construction permits in 2023 remained predominantly focused on single-family homes, which accounted for 63% of all permits issued. While single-family dwellings play a crucial role in the housing market, the continued dominance of this type of construction may not fully address the diverse housing needs of the state's population, including the demand for multi-family units and more affordable housing options.
The persistent gap between housing supply and demand continues to exert upward pressure on home prices across New Hampshire. According to the New Hampshire Association of Realtors (NHAR), the $500,000 threshold has become "the new normal" for single-family homes in the state, a significant increase reflecting the intense competition for limited inventory. The ongoing scarcity of available homes is the primary driver behind this escalating cost of homeownership.
In March of this year, the median price for a single-family home in New Hampshire reached a staggering $525,000, underscoring the severity of the affordability crisis. Susan Cole, President of NHAR, cautions that a significant dip in prices below the $500,000 mark is unlikely in the foreseeable future. "This housing crisis has been decades in the making," Cole stated, emphasizing the long-term nature of the problem. "It will take a sustained focus on long-term solutions to dig us out of this situation."
Contributing Factors and Potential Solutions
Several factors contribute to New Hampshire's housing shortage and the recent slowdown in construction. These include:
Limited Land Availability and Zoning Restrictions: Stringent zoning regulations, minimum lot sizes, and limitations on multi-family housing in many communities can restrict the supply of developable land and the density of construction.
Workforce Shortages in the Construction Industry: A lack of skilled labor in the building trades can lead to delays and increased costs, hindering the pace of construction.
Supply Chain Issues and Rising Material Costs: Fluctuations in the cost and availability of building materials can impact project timelines and overall development expenses.
"Not In My Backyard" (NIMBY) Sentiment: Resistance from existing residents to new development can create obstacles for proposed housing projects, particularly higher-density or affordable housing.
Economic Factors: Interest rate fluctuations and broader economic conditions can influence developer confidence and the feasibility of new projects.
Addressing this complex issue requires a multi-pronged approach involving collaboration between state and local governments, developers, community organizations, and residents. Potential solutions include:
Zoning Reform: Revisiting and modernizing zoning regulations to allow for greater density, mixed-use developments, and a wider variety of housing types. Incentivizing "smart growth" principles that concentrate development in appropriate areas while preserving open space.
Workforce Development Initiatives: Investing in training and apprenticeship programs to expand the skilled labor pool in the construction industry.
Streamlining Permitting Processes: Reducing bureaucratic hurdles and inefficiencies in the permitting process to expedite project approvals.
Financial Incentives and Subsidies: Offering tax incentives, grants, and other financial support for the development of affordable housing and workforce housing.
Addressing NIMBYism: Engaging in community education and outreach to foster a better understanding of the need for diverse housing options and the benefits of responsible development.
Investing in Infrastructure: Ensuring adequate infrastructure, such as water, sewer, and transportation, is in place to support new housing development.
The recent dip in housing construction in New Hampshire serves as a stark reminder of the challenges ahead in tackling the state's housing crisis. While some local areas have shown resilience, a sustained and coordinated effort across the state will be necessary to meet the ambitious housing goals and ensure a more balanced and affordable housing market for all New Hampshire residents. The long-term economic health and the ability to attract and retain residents depend on addressing this critical issue effectively.
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