How New Hampshire is looking to alleviate its housing crisis

New Hampshire’s hot housing market has spiraled the Granite State into crisis mode.

The state’s business-friendly regulations and tax policies have led to rapid population growth in recent years, including an estimated 16,000-person inflow from 2020 to 2022 alone. But as the state’s population has grown, its housing supply — which was already beginning to tighten more than a decade ago — has failed to keep pace.

In 2023, through its Statewide Housing Needs Assessment, New Hampshire Housing found that the state is currently short by 23,500 units.

Based on the state’s estimated population growth, nearly 60,000 more housing units are needed between 2020 and 2030, while nearly 90,000 units are needed between 2020 and 2040. This is based on an estimate that some 52,500 households will be added between 2020 and 2030, or roughly 74,400 between 2020 and 2040.

There’s a lack of available housing — and especially affordable housing — as the state’s median list price has skyrocketed to $600,000, according to data from Altos Research. This has begun to impact New Hampshire’s growing economy as employers can’t hire people if there is nowhere suitable to live.

“It’s a big deal. If you are a recruiter for an employer and you are interviewing 10 applicants for a job, you may lose one or two on pay or benefits, but you’ll lose half of the applicants because they can’t find suitable housing,” said Andy Smith, the broker-owner of Badger Peabody & Smith Realty.

According to Smith, in some of the state’s more rural communities, larger employers are buying bed-and-breakfasts or multifamily housing to host workers. “I think there would be even stronger growth and more stability in the market if we had more houses for sale,” he added.

As the strain has become more apparent, businesses across the state have begun pushing for more diverse housing options. They want to attract younger employees, including recent college graduates.

“It is encouraging to see some uptick in apartment construction in some of our larger communities. If you can attract someone right out of college or early in their career to stay or come to New Hampshire, apartment living is a great option for people at that stage in their life,” said Rob Dapice, the executive director and CEO of New Hampshire Housing.

Underlying issues

Despite this progress, Dapice and others are frustrated by the lack of new construction — especially starter homes — in the state. Housing industry experts attribute this to the state’s restrictive zoning laws. In 1925, the state Legislature passed the New Hampshire Zoning Enabling Act, which gave municipalities the right to zone their own land.

This has resulted in a patchwork of zoning regulations across the state. Some communities, mainly in Grafton and Coos counties, have no traditional zoning ordinances, while others have minimum lot sizes of 10 acres.

Historically, these zoning regulations were due to health and safety concerns related to septic tanks and leech fields, but many believe some communities have lost sight of that over the years.

“Now we just have these two- or even 10-acre lot minimums for reasons no one can remember, so why are we still doing it? That is a lot of land, and it is a significant contributor to the cost of building new housing,” said Bob Quinn, CEO of the New Hampshire Association of Realtors (NHAR). 

State Rep. Joe Alexander, a Republican representing the Hillsborough 29th District, is one lawmaker championing the issue. Alexander is currently drafting two bills for the 2025 legislative session. The first is designed to help decrease land costs when building by analyzing minimum zoning requirements.

“With this bill, municipalities would have to prove that their soil infrastructure is incapable of having smaller lots in order to keep their large minimum lot requirements in some parts of the town or city,” Alexander said.

The second bill seeks to study the Zoning Enabling Act as 2025 marks its 100th anniversary.

“I want to look and see what the original legislative intent of the act was in 1925 and how it works today,“ he said. “As far as I am concerned, a municipality should have the right to zone for some things, but unless zoning it one way would violate the health, safety or welfare of someone else, why do they have those restrictions in place?”

More ADUs?

Another specific section of zoning reform that could create more housing options is accessory dwelling units (ADUs). In 2017, the state passed a new law allowing for ADUs nearly everywhere single-family houses are permitted.

Through the passage of this law, the state was hoping to see the creation of tens of thousands of more housing units, but that has failed to transpire. In some cases, local zoning rules passed in response to the ADU law that resulted in restrictive parking or occupancy requirements were to blame for the lack of ADU proliferation.

Groups like AARP, Stay Work Play New Hampshire and NHAR, as well as lawmakers like Alexander, are hoping to change that in 2025.

With a median age of 43, New Hampshire’s population is the second oldest in the country, according to data from the U.S. Census Bureau. As the state’s population continues to age, some residents will look to downsize, but in a state with limited inventory and rising prices, this desire poses some challenges.

“There are folks who have these big family homes they no longer want or are able to care for, but they aren’t able to downsize because they can’t afford to with the home prices or the interest rates,” said Stephanye Schuyler, a volunteer with AARP New Hampshire.

“The lack of affordable housing also makes it more challenging for folks who are the caregivers, whether they are paid help or family, to be close enough to their loved ones or the ones they are caring for.”

To help with the housing crisis, AARP has been a strong backer of the state’s ADU legislation. According to Schuyler, an ADU is a great way to provide housing for caregivers, and it can allow retirees to downsize while earning rental income from their primary home.

Stay Work Play New Hampshire has a mission to attract and retain young professionals in the state. It also seeks to bring awareness to the ongoing issue of aging demographics and the ramifications of not supporting a young workforce. Its executive director, Corinne Benfield, also believes ADUs could result in significant housing supply growth to target recent college graduates and other young professionals.

“New Hampshire is the second oldest state in the country, and we are already seeing workforce challenges like shortage with some of our growing businesses,” Benfield said. ”And if our employers are not able to scale at the rate they want here, they may look elsewhere. There is a real risk we may see reduced growth in economic development in the state, which has many ramifications.”

Supply-side initiatives

In addition to exploring zoning reform, the state has launched various initiatives to encourage towns to increase their housing supply. The initiatives are run through InvestNH Housing and are focused on accelerating the approval and construction of affordable workforce housing.

“What really piqued the interest of the governor and other lawmakers was that experts and studies were showing the economy was actually being limited by the unavailability of housing,” said Andrew Dorsett, the housing finance director of InvestNH. “Vacancy rates are so low and it has kind of just frozen renters and move-up buyers, where there is little to no inventory for them to move into. And it creates this holding pattern, preventing new people from filtering into the housing ecosystem.”

Some of these initiatives include a program that pays municipalities $10,000 per unit to quickly issue permits for multifamily projects. There is also a demolition program, which helps communities and developers pay for the costs to renovate or tear down dilapidated structures and replace them with housing.

Additionally, the state’s Housing Opportunity Program encourages communities to proactively review their zoning ordinances and public service offerings before development questions are even on the table. 

“I think the Housing Opportunity Program is going to have such a lasting impact on helping the housing crisis because it has made communities evaluate if they are development ready,” Dorsett said. “Do they have the infrastructure, the sewer system and things to handle more capacity, or do they need to upgrade things?”

But as much as those championing the issue of housing would like to push municipalities to reform their zoning ordinances, they are also trying to preserve some of the local control over zoning.

“Finding a solution to the housing crisis is all about balance,” said Alexander, the state representative. “We need to recognize that we need to balance the right of a property owner to build what they want on their own property with the right of the municipalities to govern themselves. And there is no easy answer.”