Low inventory, less than 1% vacancy rates, and higher rents have created a very challenging market for New Hampshire renters. According to almost all public and private sources, the housing shortage in the rental market is as acute as the shortage in the single family home sale market. This shortage spans the entire range of product, whereas often there have been shortages in specific product types. In Portsmouth and Dover in particular, the shortage has not discriminated in any one sector, it is across the board even into the very expensive units. .
Portsmouth is seeing downtown rents that are approaching and going beyond the Boston market for dollars per square foot. Dover has seen double digit growth in rents year over year for at least 3-4 years now. According to the state published report from the NHHFA, the increases are as follows:
Renters are also experiencing a barrier to entry in becoming homeowners with such a limited supply of homes and increasing prices. This is most evident in the inventory (or more precisely lack thereof), in MLS. Across the state, the number of homes in MLS has been below 1500 statewide for more than a year now. With the norm across the state having previously been more than 6000 homes on average, this lack of inventory begins to impact the pricing and demand curve. Very few homes remain on the market greater than a week, and most have multiple offers for the seller to choose from – usually greater than the asking price. This then severely limits the ability of the want-to-be homeowner to enter the single family home market. What does this mean? Fewer households moving out of apartments, and thereby again decreasing inventory of apartments turning to new households.
Across the US, vacancy rates are at an average of 5.6% as of Q4 2021 (census.gov). However, across New Hampshire, that same average is less than 1%. Mid 2021, the rate in Strafford County was .09 % and the rate in Rockingham county was .08 %. Rental prices across the country have gone up substantially over the last year, with some cities experiencing price hikes of up to 40%. Here on the seacoast, this is precisely the case. We’re seeing an influx of investors buying real estate here and, because of higher prices, these costs are getting passed on to the tenants. Due to the huge demand and lack of supply, landlords are having no problems filling their space even at increased rates, and many have a list of applicants for each opening, when there is an opening.
Rockingham County has seen a 26.6% increase in median gross rent for a 2 bedroom apartment from 2016 to 2021. Although Rockingham County boasts the highest rental rates in the state, the increase as a percentage is similar to other parts of the state.
What could be the answer to the problem? We think there are a few.
- The cities and the smaller towns in particular need to loosen up the stranglehold on the permitting process. It is extraordinarily difficult to permit both single family and multifamily homes.
- The state environmental permitting process needs to be streamlined and the bottlenecks need to be eliminated to effectuate a short and efficient and predictable timeline for approvals, which would also include DOT.
- State assistance in the expansion of infrastructure for towns that need it to attain higher densities needs to be made available to incentivize the towns to higher densities.
- Education of local boards, give them the tools to fight the NIMBY concepts, give them the education on the rule of the law in RSA 674 relative to planning and zoning
- Education of the public that increases in population do not necessarily lead to increases in school costs, town costs, and traffic etc., they actually lead to a more vibrant and diverse community.
– Written by Dave Garvey & Laura Stoll