First published in NH Bulletin, September 25, 2023

New Hampshire’s housing shortage has contributed to record-high home and rental prices.

According to the 2023 New Hampshire Statewide Housing Needs Assessment, housing in the Granite State currently falls short of needs by an estimated 23,500 housing units. By 2040, New Hampshire will need nearly 90,000 units to meet the state’s housing demand.

Costs for a single-family home in the Granite State in June 2023 reached a median sales price of $499,000, an increase of 50.9 percent from June 2020. As higher home prices and interest rates keep many potential buyers in the rental market, the greater demand for rental units puts upward pressure on rents.

The New Hampshire 2023 Residential Rental Cost Survey Report shows that the median monthly cost of a two-bedroom apartment and utilities was $1,764 in the Granite State, an 11.4 percent increase from the prior year’s survey.

Households paying more than 30 percent of their incomes on housing, including rent or mortgage and utilities expenses, are considered cost-burdened by these expenses. The U.S. Census Bureau estimated that, during 2017-2021, three-quarters of Granite State renter households with less than $35,000 per year in income were considered cost-burdened, with 49 percent of renters with these incomes paying over half of their incomes on housing. These households may find it more difficult to cover other necessary expenses, such as food, health care, clothing, and transportation. They may also struggle to participate more fully in the economy compared to more financially secure households.

Disparities in housing stability can reinforce the structural and longstanding systemic barriers to success and opportunity that Granite Staters from underrepresented groups face.

Among New Hampshire residents from communities of color, both moderate and severe housing problems occurred more frequently for Black (42 percent and 20 percent), Hispanic (46 percent and 25 percent), and Asian or Pacific Islander households (40 percent and 22 percent) when compared to white households (32 percent and 15 percent), according to data published by the federal government in 2020. Moderate housing problems included incomplete plumbing, lack of complete kitchen facilities, or housing costs of more than 30 percent of resident income, while severe housing problems included any non-cost problem or housing costs totaling more than 50 percent of resident income.

The current state budget for state fiscal years 2024-2025 helps address affordable housing and homelessness through a combined $60.3 million contribution to several key programs, including the InvestNH program, the Affordable Housing Fund, the Housing Champion Designation and Grant Program Fund, and direct support for shelter programs serving unhoused individuals. This total is a significant increase from the 2022-2023 budget biennium, which allocated a combined $38 million toward the Affordable Housing Fund and shelter services.

Public policy investments to reduce housing costs for families can boost the economy. According to projections by Moody’s Analytics in 2021, each additional dollar invested in the Low Income Home Energy Assistance Program (LIHEAP) would have generated a $1.31 return in the economy by the end of the year.

As NHFPI reported in its August 2023 Issue Brief, New Hampshire’s lack of affordable housing is a substantial labor force and economic constraint. Workers who cannot find or afford suitable housing are limited in their ability to move into and around New Hampshire for employment. For those with housing but with more limited means, higher housing costs can reduce a family or individual’s ability to fully participate in the economy, while putting them at an increased risk for housing instability and homelessness. A 2020 U.S. Government Accountability Office report estimated a $100 increase in median rent for an area correlated with a 9 percent increase in the homelessness rate.

Accessible and affordable housing provides stability for communities and has been shown to positively impact children’s school performance, health, and development. Investing in effective solutions for the Granites State’s housing shortage will be critical to not only directly supporting a robust workforce and economy, but will play a key role in supporting the health and well-being of residents for generations to come.

The staff of the New Hampshire Fiscal Policy Institute contributed to this column.

Join NHFPI on Oct. 16 to be a part of the important policy dialogue on affordable housing in New Hampshire. Register for the conference and learn more at nhfpi.org/conference. Registration is $50 per person, but scholarships covering registration fees are also available for those whom cost is a barrier. Learn more at nhfpi.org.