Housing Becoming A Problem

Though this particular housing problem is raising its ugly head here in New Hampshire, I have no doubt it is also an issue elsewhere in the US as well. What am I talking about?

Workforce housing. Or should I say the lack of it.

Sounds simple, doesn't it? But it is becoming a big problem in New Hampshire.

The economy in the state's southern tier is already starting to feel the effects of this particular type of housing shortage.

Most of the housing construction that has taken place here over the past few years has been for more upscale homes (2500+ sq ft, multiple car garages, an acre or more of land) because that's where the profit was. There was a large demand for this type of housing. To a point, there still is, though not nearly to the levels we saw only a year or so ago. The next highest demand was for what is called senior housing, age restricted developments for those 55 years of age or older. But that's not the only reason that type of housing was built. A lot of it came down to community preferences, with many towns making it difficult to build any other type of housing. As I wrote in the post linked to towards the top of this post, it is basically nothing more than “snob zoning”, something that has been illegal in New Hampshire for years.

Such zoning has a curious side effect – lower tax revenues. It also causes jobs that might otherwise be created here to move elsewhere because potential employees can't find affordable housing. According to the Union Leader article New Hampshire loses between 1300 and 2600 jobs and from $21 million and $33 million in state and local taxes annually. It's one thing if jobs were being lost because of an economic downturn, but to lose them because there's no housing available for low or moderate income families is stupid, if not criminal.

That's as true now as it was when I wrote that two years ago. In fact, it is more so today. Much of the incentives for home ownership in four of the five southern counties are aimed at the wealthier and more senior home buyers.

In the southern tier of New Hampshire, predominantly Rockingham and Hillsborough Counties, jobs are already going begging for people to fill them. The problem is only going to get worse.

Since 2000, Hillsborough County has lost 10,400 people between the ages of 25 to 39. The reason young people are leaving...is that financial incentives to live in the county are being offered to senior citizens, while its younger residents are facing higher tax burdens and very little affordable housing stock.

"We subsidize old people very heavily in this state," said [demographer Peter] Francese, "and we penalize families with young children. A basic rule is that you get more of what you subsidize and less of what you tax." While many young people have flown to cheaper pastures, 14,400 people aged 55 to 69 have flocked to Hillsborough County in the same period. In the past seven years, 410 units of age-restricted housing have been built in the Souhegan Valley.

The creation of elderly housing is a direct result of the commonly held belief that regular houses attract children and children drive up education costs and taxes. But Francese, and other experts in the state, say that belief is a myth.

And that is the crux of the matter. The younger and less well off residents of the state are left hanging, and many of them leave the state to look for work and affordable housing elsewhere. This is not a good thing. It is but one reason why more and more jobs in the southern part of the state are going unfilled. We're also starting to feel it here in central New Hampshire as well, though not to the same level. But it's only a matter of time.

Starter homes are not easy to find. One reason is that no one is building them any more. Another is that, as mentioned above, many of the towns don't want that kind of development taking place anywhere within their borders. Even condo communities are frowned down upon unless they are for senior housing.

Here's a true story that will illustrate how the workforce housing market has been overlooked for too long:

An engineer I used to work with ended up working with his father building houses after he was laid off from our company following the telecom bubble burst six years ago. I've kept in touch with him over the years. In fact, he and his father bought some land from me two years ago for one of the homes they wanted to build. During a conversation some time ago, I asked if his business had slowed down like many of the other construction firms. He told me that they're busier than ever. How was that even possible? It was simple, really.

All they were building at that point were starter homes/workforce housing, one house at a time. Even though their profit margin was much smaller, they had no lack of buyers for the houses they built because they were building homes specifically for that large untapped market.

Even though they couldn't do an entire development of that kind of housing, the did what they could with a house here, a house there, and so on. It took some imagination on their part to legally get around some of the restrictions some of the towns had that made that kind of construction less than easy to accomplish, but they managed. They also sell every house they build, in many cases before they've even finished construction. That tells me that they're filling a large unmet need.

Maybe it's time for others, including the towns, to make it easier to meet that need. In the long run, we'll all win. Otherwise we can look forward to an ever shrinking state economy and an ever older population.