Rental Market in New Hampshire Continues to Tighten

Rental cost survey shows a continuation of rising rents, low vacancy rates

IMG_4102 web versionNew Hampshire’s rental market is becoming tighter for renters, a recent survey finds. New Hampshire Housing’s annual residential rental cost survey, which surveys market-rate units across the state in order to gauge the condition of the rental market, found that vacancy rates dropped while rents rose – a continuation of a long-term trend. The state vacancy rate fell to 2.5%, while the median rent for a two-bedroom apartment, including utilities, is just over $1,100.

The southern tier of the state, specifically Rockingham, Strafford, Merrimack, and Hillsborough counties, have the lowest vacancy rates of about 2%, while Coos and Sullivan have the highest vacancy rates at nearly 8% and nearly 6% respectively. Low vacancy rates reflect a wider trend away from ownership and toward renting, which was examined in New Hampshire Housing’s three-part study Housing Needs in New Hampshire. The study, which was performed by the New Hampshire Center for Public Policy Studies and Applied Economic Research, found that young households are holding off on homeownership due to student debt, little wage growth and difficulties in obtaining financing. With the expectation that aging Boomers, who are currently opting to stay in their single family homes, will eventually downsize, low vacancy rates are expected to continue.

The state has seen a 6.4% increase in rents including utilities for two-bedroom apartments since 2009. However, over the past five years, Grafton County has seen a 14% increase and Carroll County an 11% increase. These changes may be indicators of residents having to “drive until you can afford it,” or living farther from job centers in the southern counties in order to find lower rents. However, as this increase in rent indicates, when people are forced to relocate to more affordable areas, those areas experience increased demand and rents increase.

The survey also shows that renter household incomes are not keeping pace with the steady increase in rents. A renter would have to earn 121% of the median income, or over $44,000 a year, to be able to afford the statewide median cost of a typical two-bedroom apartment with utilities. Housing Needs in New Hampshire found that almost half of renters in the state pay more than 30 percent of their income on rent, and low-income families are particularly likely to be overpaying for their housing.

“This trend toward low vacancy rates and elevated rents reflects both a demographic and economic shift in our state,” said Dean Christon, Executive Director of New Hampshire Housing. “Foreclosures, which pushed owners into the rental market, started the tightening of the market, and changing housing preferences added to that competition. While slower population growth and the aging of our population means the need for new housing isn’t as strong as it used to be, the results of this survey, combined with Housing Needs in New Hampshire, do indicate that there is a need for more rental housing construction in our state.”

For more detailed information, copies of the Residential Rental Cost Survey and Housing Needs in New Hampshire can be downloaded at www.nhhfa.org.

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