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PORTSMOUTH, N.H. — As policymakers warn about the economic downsides of New Hampshire’s way-too-tight housing market, renters are paying significantly more to live here this year than they did last year.
The statewide median cost to rent a market-rate two-bedroom apartment and pay for utilities has reached $1,764 per month, an increase of 11.4 percent year over year, according to survey results released this week by New Hampshire Housing.
While the increase is attributable partly to higher energy prices, it also reflects a long-term upward cost trend that’s rooted in the state’s “critically low vacancy rate,” according to New Hampshire Housing deputy executive director Ben Frost.
“The housing market remains exceedingly tight,” he said.
A vacancy rate of about 5 percent is considered a “balanced rental market” in which supply generally meets demand, but New Hampshire’s rental vacancy rate has been below 1 percent for each of the past three years, according to the survey report.
Some households get stuck renting because there aren’t enough affordable options for first-time homebuyers in New Hampshire, especially now that mortgage interest rates are hovering at 6 percent to 7 percent or higher, according to the report. That contributes to the low rental vacancy rate and rising rents.
The current housing shortage means New Hampshire needs more than 23,500 residential units, and that need is projected to reach 60,000 units by 2030 and 90,000 by 2040, according to a statewide assessment released earlier this year.
The solution? Build more housing. That means cities and towns need to change their regulations to accommodate more residential development, Frost said.
State lawmakers have taken helpful steps, Frost said, like appropriating money for the Affordable Housing Fund and creating a new “housing champions” program to recognize communities that are showing leadership on these issues. Now local officials need to take a careful look at their zoning ordinances and approval processes for residential developments.
“That’s the number one thing,” he said.
To help policymakers and the general public make sense of the complex rules that differ from one town to the next, researchers affiliated with Saint Anselm College published the New Hampshire Zoning Atlas earlier this year.
Data compiled by the National Low Income Housing Coalition shows that renting a two-bedroom apartment is less affordable in New Hampshire than it is in either Maine or Vermont. But the rental market in New Hampshire is still more affordable than Massachusetts.