Housing Construction Low, Future Need Less than Previously Expected, Study Finds

Shifting demand shows need for additional rental housing construction and rehabilitation

By Riisipuuro, via Wikimedia Commons (http://creativecommons.org/licenses/by-sa/3.0)

By Riisipuuro, via Wikimedia Commons (http://creativecommons.org/licenses/by-sa/3.0)

New housing construction is still needed to meet market demands but on a different scale than past expectations, a new study called Housing Needs in New Hampshire finds. While housing construction will continue to contribute to New Hampshire’s economic growth, there is likely to be less demand for new housing and new construction of single family homes. Instead, the market’s focus will likely be more on the rehabilitation of the state’s older housing stock and increasing the number of rental housing units. Decreased market demand for new single family homes due to a variety of demographic and economic factors means that, although the need for new housing production remains, the type of housing required may change considerably in the future.

Housing Needs in New Hampshire is a three-part study commissioned by New Hampshire Housing and performed by the New Hampshire Center for Public Policy Studies and Applied Economic Research that examines factors influencing New Hampshire’s future housing needs. The third part of the study, titled “The Evolving Environment and Housing’s Future,” assesses the current housing markets in New Hampshire and provides a forecast for housing production over the next ten years.

This portion of the study finds that housing construction has declined significantly. Historically, New Hampshire added 5,000 to 7,000 units per year, but this number has dropped to 3,000 since the Great Recession. Housing Needs in New Hampshire projects that a return to historical annual construction levels will be necessary through the year 2025 to meet market needs.

Affecting these market conditions are economic and demographic factors. New Hampshire lost 35,000 jobs during the Great Recession and still has 1.5 percent fewer jobs than it did in December 2007. Two-thirds of the jobs created post-recession pay below average wages. Also, demand for homeownership remains low as younger generations are increasingly less likely to form households and purchase a home. These changes are curbing demand even though, statistically, homeownership is more affordable than it was seven years ago.

While home prices have fallen, the price of rental housing has increased. Rents for all units have increased by 9.7 percent since 2006, with the gross median rent for the state at $1,018 per month, including utilities. Incomes for renters have not risen as quickly as rental prices. Currently, almost half of renters in the state are paying more than 30 percent of their income on rent. Not surprisingly, low-income families in particular are overpaying for their housing.

“Housing Needs in New Hampshire gives a comprehensive picture of the factors that impact housing affordability and demand in New Hampshire,” said Dean Christon, Executive Director of New Hampshire Housing. “With this data and analysis, New Hampshire Housing and other public and private organizations can better understand the affordability challenges New Hampshire residents are facing and create ways to address them.”

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