Housing crisis: Through obstacles, seeing glimmers of hope

None of this comes as news to local residents who have suddenly found themselves having to look for a new place to live.

Last spring Melissa Jackson, her husband, and their four sons were forced to move from their Meredith apartment when their landlord told them to vacate because he wanted to renovate the place. They were unable to find a suitable house in the Meredith area, and ultimately ended up buying a house in Ossipee, more than 25 miles away.

“There was nothing else available that fit what we needed,” Jackson said. “Anything else that was in our price range was too small. I can't imagine trying to find something now.”

Jackson works remotely, but her husband and oldest son still work in Meredith. But the other children quit their jobs because of the commuting distance. “Our [oldest] son wants to move back to Meredith ... but there are no long-term rentals there,” she said.

Real estate brokers, planning officials, and affordable housing advocates all acknowledge that the area’s housing stock is out of kilter.

Most of the residential units that have been built in recent years or that are now under construction have price tags far above what most people in Belknap County can afford.

According to the 2020 Census, the median household income in Belknap County is $67,328, an income adequate to purchase a home priced at $189,516, according to Mortgage Calculator. However, the median sale price for a house in the county during the past 12 months was $388,500, according to the New Hampshire Association of Realtors. The median sale price for a condominium was somewhat lower at $318,100.

The hot real estate market has been steadily pushing home prices higher, and the rising cost of building materials will further drive up the cost of units that are under construction or that are on the drawing boards.

The situation for those looking to rent an apartment is even more grim.

In most local communities there has been relatively little increase in the number of apartments. Not surprisingly, Laconia has the largest number of apartments in the county, with 3,3474 as of 2019, according to the state Department of Employment Security.

“We have fallen behind and we are still falling behind,” Laconia Planning Director Dean Trefethen said of the city’s apartment shortage.

Balancing the market

For decades the production of new housing has failed to keep pace with demand in the state, according to the New Hampshire Housing Finance Authority which estimated it will take at least 20,000 housing units to achieve a balanced market.

There are no current statistics on how large the housing deficit is here in the Lakes Region. Hayes said his agency is currently working on a housing study. The last one was completed in 2013.

Add to the shortage the current turbulence in the housing market due to the combination of rising interest rates, soaring building material costs which have risen 35% since the start of the COVID pandemic, and the increasing home prices and rents, all making it just that much harder for for entry-level buyers and renters.

The escalation of home and condominium prices in the region has been enormous.

From June 2018 to June 2019 almost half — 47.9% — of the single family homes in Belknap County sold for $250,000 or less. In just three years — from June 2021 to June 2022 — the number of homes in that price range plummeted to 15.5%, according to the local Realtors group. The drop in the number of condos sold in that price range during the same period was not as dramatic, but still substantial, from 71.3% to 38.7%.

The scarcity of homes and condos for sale or apartments for rent serves to drive prices higher and higher.

Bob Quinn, the chief executive officer of the New Hampshire Association of Realtors, said in a healthy real estate market there would be a four- to six-month inventory of housing units for sale, meaning a unit would typically sell between four and six months after being listed. Today the inventory in New Hampshire is closer to three weeks, he said. The price of a single-family home has increased 45% in the last two years, he pointed out.

The lack of inventory helps to explain why housing units are being grabbed while a project is under construction or in the very early stages of development.

The groundbreaking for the 48-unit Lookout Lake Winnipesaukee condominium project in Weirs Beach was two months ago, and already seven units in the first phase are under agreement, according to Matthew Maggiore, president of Maggiore Companies, the developer. Units at the complex off Endicott Street North are currently priced from the low $700,000s to the high $800,000s, Maggiore said.

More than half of the 32 units at Lakeside at Paugus Bay, which is being built on the former site of Barton’s Motel, are under agreement, according to Frank Roche, owner of Roche Realty Group which has the listing. Prices for units at the waterfront complex currently start at $899,900, according to the project’s website.

Roche is also the listing agent for Brook Hill, a 70-unit condominium complex currently under development off Route 3 in Meredith a half mile north of the Laconia line where 31 houses are under agreement. When the units were first being marketed the price was in the mid- to upper-$400,000s, Roche said. Now the asking price is up to $550,000, he said.

Meeting local needs

While there is a market for these residences, they are beyond the reach of most people who work in the greater Laconia area.

“We don’t need $850,000 condominiums. We need lower priced housing that blue collar workers can afford to live in,” said Renee Kordas, human relations manager at Viant, a medical device manufacturer which employs 170 people at its facility in the O’Shea Industrial Park.

Kordas said the lack of affordable homes makes it difficult to hire people to work at the facility which manufactures medical devices used in non-invasive surgery. She said the company is working on plans to bring in 15 workers from one of its other plants this summer to help fill orders. But she is unsure if she will be able to find housing for the workers during their two- to three-month stint.

Housing availability was the top concern of local business leaders from the Lakes Region and central New Hampshire at a roundtable hosted by the New Hampshire Business and Industry Association last month.

Participants, including representatives from Lakes Region Community College, Meredith Village Savings Bank, Castle in the Clouds, Prescott Farm and several chambers of commerce, outlined top challenges to their growth before brainstorming potential solutions and new approaches to those issues.

Some say the main reason the amount of lower-priced housing has not kept up with the demand is because those projects are seen as unprofitable.

Michelle Palys, owner of the Allegory Inn in Twin Mountain, and member of the Lakes Region Chamber of Commerce as well as the Twin Mountain/Bretton Woods and Littleton Chambers, emphasized that it is impossible to attract workers to your business when there is no available housing, let alone housing within their budget.

“We all want to provide affordable housing,” Roche said, acknowledging the situation. “The problem is the cost to develop a project” — costs such as the price of land, the costs a developer incurs during the planning process, the cost to put in infrastructure such as water, sewer, and roads, as well as the cost to build the residences themselves. Roche pointed out that it cost $4 million for land development for the 50-acre Brook Hill site.

The only way for affordable housing projects to be profitable, he said, is if the developer can access tax credits or federal funds to bring down the up-front costs.

Carmen Lorentz, executive director of Lakes Region Community Developers, a non-profit landlord providing affordable housing, said about 70% of the funds the agency needs to build new housing comes from tax credits or government grants. But even that funding can prove inadequate in the current housing and building market.

Community Developers ended up dropping plans for a 20-unit single-family home project in Wolfeboro when the estimated cost to build each unit came in at $450,000, $100,000 more than what the unit would be appraised for, Lorentz said. The agency is now considering developing a rental project on the same site.

The median household income for the county is $67,328, meaning that half of the households have incomes below that figure. Lorentz noted many of those looking for affordable housing in the 31 area communities the agency serves are single-parent families where the annual household income can be closer to $35,000.

About 60% of the agency’s tenants receive a federal rent subsidy. Thirty percent of their income goes toward the rent with the subsidy covering the rest.

But qualifying for housing assistance is no guarantee of a place to live.

Combating scarcity

Tom Cochran, executive director of the Laconia Housing Authority, said the voucher program is underutilized because affordable housing is so scarce. While 505 people in the immediate Laconia area have qualified for rental vouchers, just 445 voucher holders have found an apartment, with the rest still looking, he explained.

In an effort to provide more affordable housing — if only by a little bit — the authority has purchased a six-unit apartment building on Summer Street, with plans to remodel it to accommodate another one or two apartments. It is also looking to buy a building which once contained professional offices on South Main Street, with plans to turn it into four apartments. And the agency is going through the planning process to add 12 more units to its Perley Pond Townhouses complex on Blueberry Lane.

For all practical purposes the vacancy rate for apartments in the city is 0%. Trefethen explained that the only time an apartment is unoccupied is for one or maybe two weeks between tenants when the landlord goes in to clean and repaint the premises and perform any needed repairs.

Public support across the state for affordable housing has been mixed, but a recently released survey shows opinion shifting in favor of greater support of such initiatives.

More than two-thirds of Granite Staters support building affordable housing in their communities, even if it is in their own neighborhood, according to a survey released last month by the Center for Ethics in Society at St. Anselm College. The study also found that 61% of respondents opposed the idea that such housing be limited to cities.

There have been initiatives designed to improve the situation.

Perfomance zoning

Laconia created an urban-commercial zone about four years ago which allows for a greater apartment density in the downtown area, according to Trefethen. Whereas the former ordinance allowed six to eight residential units per acre in the central business district, the new ordinance permits up to 20 units.

Other changes include the introduction of performance zoning in certain parts of the city which streamlines the planning process, and also allows the Planning Board to grant relief from zoning rules, thereby eliminating the need for a developer to make a separate request to the Zoning Board.

One of the obstacles Trefethen sees is the lack of available land where multifamily housing could be built.

“There’s land available, but it’s not for sale,” he said.

Despite such obstacles, there is some movement in the area of more moderate priced housing.

Plans for a 90-unit apartment complex off Province Street in the city’s South End are expected to come before the Planning Board in August. The developer has said the apartments would be market rate, meaning the rents will be whatever renters are able and willing to pay.

In addition, the former Holy Trinity School is being rehabilitated into 12 apartments. And the owner of Water Street Cafe has told the Planning Department he plans to tear down the restaurant later this year and construct an 14-unit apartment building on the site.

While the Planning Board is aware of the Water Street plan it has not been formally brought to the board for action.

Statewide action

A major initiative to address the problem has been put forward by Gov. Chris Sununu which would put an unprecedented $100 million to provide more workforce housing statewide. The governor is using COVID relief money to fund the InvestNH initiative.

About $50 million will go to developers on projects that are nearly ready to start, with conditional permitting and most financing in place. Some $30 million will go mostly to reward municipalities that permit new multifamily rental housing within six months of application at $10,000 per unit with a maximum of $1 million per municipality. Another $10 million would go to New Hampshire Housing to augment their programs. Another $5 million will be used to encourage communities to revamp zoning regulations to increase housing stock, and $5 million will go to the demolition of vacant or dilapidated buildings which can’t be made into housing, if that building removal would help set the stage for an improvement in the community’s housing situation.

Local officials say it’s hard to tell exactly what impact Sununu’s InvestNH program will have, in part because the details of how it will work and how developers and municipalities can access the funds need to be spelled out.

“We still are waiting to hear the mechanics on how to apply for the money,” Trefethen said.

He said Laconia has already taken a number of steps to incentivize developers interested in building affordable workforce housing, but that the city cannot be expected to shoulder the entire burden for the region.

“We’re cooperative and we’re willing, but in other communities in the state that’s not the case,” he said.

Sununu has said candidly that smaller communities need to step up to the plate to help solve the state’s housing crisis. Recently, in Portsmouth, he told an audience that the idea that multifamily housing was only for cities “is just really antiquated.”

Attitudes around the Lakes Region

Gilford Town Planner John Ayer said the town’s Planning Board has had little discussion about multifamily housing. But, he noted, there are some serious obstacles to building workforce housing in the town, notably most of the town has no water or sewer systems, and the amount of acreage placed in conservation has taken away land that might otherwise be available for housing.

“Our town is fairly pro-development,” he said, but noted that it is willing to look at ways to “make things more inviting.”

Quinn noted that the land-use regulations in many communities date back to the 1980s when the state was experiencing tremendous growth, and it was felt restrictions were needed to prevent overbuilding and to preserve the state’s rural character.

Further, some see single-family homes as the best type of housing because they are symbolic of the American way.

“The older generation tends to see what they wanted when they were young as the ideal,” Quinn said.

While Hayes wondered just how many New Hampshire residents see housing availability as a big issue, Quinn believes the issue is gaining attention and political traction.

“The winds are shifting, but they are not there yet. It’s starting to get the attention of elected officials,” he said.

While the upper-tier residential construction is adding millions to the tax base for Laconia and other Lakes Region communities, the region’s housing stock needs to be more balanced.

In addition to the Holy Trinity and Province Street projects, Laconia City Manager Scott Myers said including starter homes as part of the development of the Laconia State School property could potentially have a big impact on the city’s economy by providing more housing for people who work locally.

“We don’t want just second homes and luxury condos,” he said.

Targeted investments and access to affordable housing could help New Hampshire build a more robust and inclusive recovery, according to Phil Sletten, a senior policy analyst with the New Hampshire Fiscal Policy Institute.

Writing in the institute’s blog Sletten said changes in public policy and targeting money to incentivize the construction of affordable housing have the potential of making it easier for “the state’s residents and newcomers [to] find homes for themselves and their families, bolster financial stability, and grow the state’s workforce.”