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Rental market hits 10-year high; renters feel crunch

August 01, 2018
REGION—Statewide, and in our backyard, a decade of economic recovery has produced one of the tightest housing markets in recent memory, with rents high and rising, and vacancy rates at record lows. In the North Country, the crunch has been hardest in Coös, and average (for the state) in Grafton.

Statewide, vacancy rates stand at two percent. Rents rose by three percent last year, ahead of inflation, part of a 20 percent rise over the past five years. These increases include utilities, and have accelerated over time.

Vacancy rates are about twice as high in the North Country: 3.9 percent on Grafton, and 3.7 percent in Coös county. That's still low compared to the national average of 7 percent, or the New England average of 5.1 percent. A vacancy rate of about 5 percent is considered healthy—enough slack to absorb new residents, but not too many tenantless properties.

During the 2007-8 housing crisis, rents leveled off for several years, then began to climb about 2012-13. Between 2009 and 2014, Coös County vacancy rates flew as high as 15 percent, indicating a severe lack of tenants. Today, that trend has reversed.

Low vacancy rates mean that housing stock isn't keeping pace with demand, which traditionally leads to higher prices, which puts the crunch on families. In New Hampshire as a whole, 43 percent of renters are paying more than 30 percent of their income in rent—30 percent being a typical estimate of a "normal" proportion to spend on housing.

Last year, the median rent for a two-bedroom home was $1,146 in Grafton county, $861 in Coös, and $1,296 statewide.

Coös County has the lowest median rents of any county in the state. Grafton county is more average, statewide, with Carroll somewhere in the middle. Nonetheless, Coös County has seen the largest increase of any county in the state, with a 31 percent jump over five years. The Grafton numbers are distorted somewhat by the high cost of units in the Hanover/Lebanon area.

One side effect of low vacancy rates may be a reduction in the quality of stock: NeighborWorks's Robert Tourigny suggests that when landlords have an easy time finding renters, they may invest less time and money in the quality of their properties.

"The lack of 'for sale' inventory creates great opportunities for sellers, but puts enormous pressure on first-time home buyers who can be at a severe disadvantage," he wrote.

New Hampshire is building fewer units than it needs to keep pace with job growth, the state reports. By way of explanation, Applied Economic Research's Russ Thireault cited high construction costs, recession-related reductions in the construction trade, and restrictive local zoning and planning decisions.

Local realtors are noticing the crunch too. At last year's Littleton Chamber of Commerce economic celebration, Andy Smith observed that Littleton was essentially "full," with no new units projected. Development at the old Hitchiner building is now expected to add perhaps 100-people worth of units, though rents are expected to continue to climb.

The scarcity, and expense, of rental housing has implications specifically for new families and young workers, who do not yet have the financial capacity to keep pace with rising property market. There is much talk of the need for workforce development, and the critical role housing plays in it. If the economy continues to improve, affordable, accessible housing is sure to remain a hot issue for non-home owners in our area.

Garnett Hill
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Garnett Hill
Martin Lord Osman
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