Soaring housing costs in New England

[KBCraig]

Note that the article correctly points out that much of the increase is due to government regulation and limits on growth.

When they cite the high percentage of NH residents whose housing costs (mortgage, insurance and taxes) take one third or more of their income, they fail to point out the higher property taxes in NH. And, that those high property taxes actually constitute a net tax savings over surrounding states.

http://www.unionleader.com/article.aspx?headline=The+squeeze+is+on+in+NH+for+affordable+housing&articleId=c6e7d484-89bf-4892-83d9-86546f99dab6

The squeeze is on in NH for affordable housing

By GARRY RAYNO
Union Leader Staff

Concord ? Rising home prices are making it more difficult for native New Englanders to stay here and for businesses to attract skilled workers, said an analyst with the Federal Reserve Bank of Boston.

With the price of homes rising faster in New Hampshire and southern New England than most areas of the country, said Darcy Rollins at the State of Housing in New Hampshire Conference this week, ?high housing costs impact the region?s competitiveness.?

The high housing costs, coupled with a declining number of building permits in the state, could spell trouble in the coming years, say officials from the Home Builders and Remodelers Association of NH and the Public Policy Alliance for Housing, which hosted the conference.

?The state of housing in New Hampshire is teetering and perhaps headed in the wrong direction,? said Kendall Buck, executive vice president of the home builders.

He said if the current trend continues, building permits would be down 25 percent this year from 2005, when they were down 14 percent from the year before. ?That?s alarming. We need additional housing or we won?t be able to sustain the economy or meet the population growth,? Buck said.

Solutions
Don Bealko, chairman of the Public Policy Alliance, said there is no quick fix to the problem, only long-term solutions. ?The local planning board is where the rubber meets the road,? he said.

Rollins, who worked on a recently released study on the lack of affordable housing in New England for the Federal Reserve Bank of Boston?s New England Public Policy Center, said housing costs have increased in New England much faster than other regions such as Phoenix, Ariz., and Raleigh, N.C.

Average increase
The average annual increase in home prices for the Boston metropolitan area was 8 percent from 1995 to 2004, and 7 percent for the Manchester-Nashua area and for Rockingham and Strafford counties, Rollins said.

She said in New Hampshire, 21.4 percent of homeowners spend one-third of their income on housing costs, which include mortgage, taxes and insurance, while the national average is 18.5 percent. An increasing percentage of moderate income homeowners are moderately burdened with housing costs, Rollins said.

With the exception of Vermont, median household income is not enough to afford a median-priced home. In New Hampshire, median household income is 88 percent of what would be needed to afford a median-priced home, according to 2004 data. In the Manchester area, however, the median income is 102 percent of what is needed to purchase a median-priced home, but only 90 percent in the Portsmouth area.

Home affordability has declined in all of New England since 1995, Rollins said, and has gone down steeply in Massachusetts, Rhode Island and Maine.

Young professionals can afford a median-priced house in New England, but not as easily as they used to, Rollins said, and noted affordability is also declining for those with college degrees.

She said there is sufficient supply of affordable housing for median-income households, but not for low-income households who are priced out of the market.

Rollins said easier access to mortgage credit and expectations of house price appreciation drove house prices to unaffordable levels, along with greater regulatory barriers to new construction.

Regulations
More stringent land-use regulations such as increasing lot sizes have been shown to increase home prices by 17 to 50 percent, she said.

To increase housing production some states have set up trust funds and raised local revenue for housing, Rollins said.

Conference attendees were also told about a model ordinance being developed by the New Hampshire Housing Finance Authority to make new housing units affordable over a period of time and about creative ways to include affordable housing in developments by allowing greater density when units are included.

[Russell Kanning]

7 percent doesn't seem like much after I saw SoCal go up 25% a year for a while and Vegas 97% in 2003. Things here don't seem like they are going up much .... but they are already too high.

[FrankChodorov]

land appreciates while buildings depreciate...