The report found that median rent in New Hampshire has risen nearly 10% since 2021

This story was originally produced by the NH Business Review. It is republished by NHPR in partnership with the Granite State News Collaborative.

The already tense rental housing market is tightening further as a shortage of homes for sale and rising prices, along with rising mortgage rates, have frozen existing tenants in place, which in turn has reduced vacancies and increased rents.

Noting that efforts are underway to overcome the shortage of at least 20,000 housing units worsening in the market, the New Hampshire Housing Finance Commission’s 2022 Residential Rental Cost Survey acknowledges, “It will take years to achieve a balanced market for tenants and landlords.”

“A lot of factors have affected the imbalance between demand and supply in the housing markets,” said Rob Dabis, CEO and CEO of NH Housing. He said increased interest rates have slowed the pace of home sales, but have not yet led to a significant drop in home prices. As the prospect of home ownership dwindles, pressure mounts on the rental market.

“We have seen some progress on the production side, but the imbalance between demand and supply has not really changed,” Dabis said.

He said reform of local zoning laws and permitting processes was “very important”.

Dabis said the agency is working with the NH Association of Realtors and the Business and Industry Association to encourage cities and towns “to make a difference by seeing that there is a problem and wanting to solve it. We have a lot of community outreach work to do.”

Dapice noted that InvestNH, a $100 million housing initiative initiated by the governor and managed by the Department of Business and Economic Affairs, has committed $5 million to NH Housing to provide grants to municipalities to improve their land use regulations to expand opportunities for developing affordable housing.

14 years of increases

The report paints a bleak picture of the current rental market.

Between March 2021 and May 2022, the median gross rent for a two-bedroom apartment, including utilities, increased 5.7%, from $1,498 to $1,584, and for all units 9.9%, from $1,373 to $1,510. Over the past five years, average gross rent has increased by 26% for two-bedroom units and 32% for all units. Average rents have increased from year to year over the past 14 years.

Since 2017, average rents for two-bedroom units have risen in all 10 counties.

Grafton County, where growth of Dartmouth-Hitchcock Medical Center drove housing demand in the Hanover/Lebanon market, posted the largest increase of 48%, bringing median rent for two-bedroom units to $1,683. Median rents rose 34% in Hillsborough County, to $1,858, 21% in Rockingham County, to $1,708, and 36% in Strafford County, to $1,572.

In 2022, the United States Census estimated that the median income of renting households in New Hampshire was $48,237, half that of households. Based on income, the affordable rent for a median-income renting family is $1,206. And only 11% of all two-bedroom units are rented at this rate. In Rockingham County, with the highest median renter income of $56,948, only 16% would be within reach of half of all renting households.

Moreover, nearly half of these renting households were paying 30% or more of their income in the form of rent.

Statewide, the rent required to afford the median rent for a two-bedroom unit is $63,400, or an estimated 131% of the median household renting income. The percentage of median tenant household income needed to afford median rent in the ten counties ranges from 113% in Cheshire County to 160% in Grafton County.

Meanwhile, the statewide vacancy rate has declined further, from 0.6% in 2021 to 0.3% in 2022. A vacancy rate of 5% indicates a balanced rental market while a rate of 3% measures current inventory turnover. In Coos and Carroll counties, the vacancy rate for both two-bedroom and all units was above 2%, but it was less than 1% in all other eight counties.

These articles are shared by partners at The Granite State News Collaborative. For more information visit Coopativenh.org.

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