Demographics and geography challenge renters in the Granite State.
Young and old New Hampshire residents (about 66,300 of them) are spending too much of their household income on rent. The median monthly rental cost for two-bedroom units has consistently increased, including a 12 percent spike in the last three years. Half of all households in rental units earn less than $40,800 per year, meaning they can’t afford almost 70 percent of market rate units in New Hampshire. This dynamic, coupled with the low statewide rental vacancy rate of 1.5 percent, creates an extreme demand for affordable units at the low end of the market that isn’t met by current rental housing stock. The impact is felt by low- to moderate-income renters who pay a greater percent of their income on housing costs.
There has been some renter household income growth in the last few years, but it has not been keeping pace with the rising tide of rental costs. A renter would have to earn 124 percent of the median income, or more than $46,000 a year, to be able to afford the statewide median cost of a typical two-bedroom apartment with utilities. As New Hampshire ages, shifting demographics can increase pent-up demand at the low end of the market, causing young professionals and down-sizing seniors to compete for already scarce units in their price range.
New Hampshire also has the highest levels of student debt in the United States, with an average of $36,100 per graduating student. Student debt, job quality, and high rental costs make it difficult for a young professional to save for a down payment and improve their situation through ownership. The disjointed rental supply can force young professionals to continue living with their parents, gravitate towards the Boston labor market, or leave the state entirely. One example is Tyler Carignan, a lifelong New Hampshire resident who left the state in 2016 for the Massachusetts labor market.
“It just seems like most of the good opportunities for young professionals are located in or near major cities,” the 26-year-old said.
Northwest vs. Southeast housing inventory
The counties closest to the Boston labor market (Hillsborough, Merrimack, Strafford, and Rockingham) demonstrate the highest rents in the state. Holding 77 percent of the state’s rental units, these four counties have significantly lower rental availability when compared to other parts of the state, and the concentrated demand drives rental costs up further.
Rental costs are misaligned with wages in concentric regions beyond the commute to the Boston labor market. Towns in Grafton County, like Bristol, don’t necessarily generate incomes that support the expensive rental market. Bristol’s largest percentage of rental households earn between $20,000 and $34,999 a year, with two out of three households in that threshold paying more than 30 percent of their incomes on rent alone. At the same time, most of the counties in the north and west saw no increase in rental cost in 2016, and have higher rental availability although even in those counties it’s a landlord’s market.
If you rent in northern or western New Hampshire, the apartments are where the jobs aren’t.
Affordable housing will be a keystone issue in economic resurgence. Given New Hampshire’s low unemployment rate, business development generates a demand for labor that can be met if workers have an affordable place to live. As the rental shortage comes to a head, recovery may be signaled by millennials buying homes and freeing up rental units at the low end of the market—if they have the ability to save for a down payment.