Blame the housing crunch on decades-old rules

After three years of commuting to work in Laconia, Randall Pelletier knows his marathon by heart.

He wakes up at 3:45 a.m. at his home in Berlin. At 4:30 he drives south on Rte. 16, turning onto Rte. 2 in Gorham, then onto Rte. 115, passing the remains of Six Gun City, his favorite landmark in the dark. It is especially haunting when lit by glimmers of sunrise.

In Franconia he feeds from Rte. 3 into Rte. 93. By 6:30 a.m. he is standing behind the counter at Needham Electric on Union Avenue, ready to sell supplies to homeowners and contractors whose days start just after sunup.

Traveling 200 miles a day from Berlin to Laconia and back again is a choice Pelletier makes, he says, because it’s more economical to drive roughly four hours a day than to buy or rent a place to live in the Lakes Region. When Needham Electric closed its Conway store in2018, Pelletier transferred to Laconia  If he sold the two-bedroom house he owns free and clear in Berlin today, he’d have to take out a $250,000 mortgage to purchase a similar one here. Apartments are no bargain either - $1,200 or more a month for a one-bedroom, compared to $800 in Berlin.

Pelletier is caught in a vise –  a housing crunch that’s been building for almost 50 years, ever since land use regulations were adopted to slow the pace of development in New Hampshire in the 1970s. Now, across the state and especially in the Lakes Region, where housing is increasingly priced for wealthier people, the shortage of affordable homes has reached the breaking point for workers who want to live here, and the employers who need them. 

Some housing seekers wait years, hoping for options to pop up online or through word of mouth.  As long as demand for housing exceeds supply, prices will go up – either by creeping or soaring - until something is done to boost supply, according to housing experts.

At this point Pelletier is hoping to find a seasonal homeowner who needs a caretaker, especially during winter.  

“When we know we’re getting a snowstorm, I leave a little earlier. With the radio and Mountain Dew as my coffee and a little breakfast I roll on,” said Pelletier, who is 49 and has been selling electrical supplies for 23 years. “If I get really tired, I pull over.”  He goes to sleep around 8:30 p.m. so he can wake up and do it again the next day.

It’s a routine that makes most people cringe. But commutes of an hour or more to work in the Lakes Region, including for entry level employees, are increasingly common.

For decades, economists and housing experts have pondered the causes and effects of the housing shortage in the Granite State, a problem that seems almost set in stone. It’s a crisis that threatens growing or importing the necessary workforce for an expanding job market in southern New Hampshire and the Seacoast, as well as in the Lakes Region, where small manufacturing and technology-related openings are on the rise, along with vacancies in hospitality and health care. Restaurants are closed more days and hours because of staffing shortages. Potential new hires in almost any line of work contemplate the beauty of the Lakes Region, then ask the question that determines whether they take the job: “Where can I afford to live?”

For aging seniors who want to downsize, empty-nesters looking for right-size homes, families attracted by quality of life, workers who want to relocate and grow their careers, and young adults who want to move out of their parents’ homes, there’s a dearth of affordable places to live.

Last month the median price for a single-family home in New Hampshire was $410,000, a 17% increase in one year, according to the New Hampshire Association of Realtors. In Rockingham County, where prices are highest, the median price for a single- family home hit $515,000, which means half the homes sold for more. In Belknap County, the midpoint reached $352,500. The state’s median monthly rent for a two-bedroom apartment climbed to almost $1,500 – a record.

“There’s a pretty broad understanding that housing costs are high, and there’s not enough housing to encourage young people to stay in New Hampshire or move to New Hampshire,” said Susan Slack, principal planner for the Lakes Region Planning Commission.

The question is what can be done.

Housing creation is a complex problem, a gorgon’s head of related factors. Lumber and steel prices are high, along with the cost of land and bringing water and sewer to rural parts of town. Tradespeople are overbooked, and building contractors are short on skilled help. Town planning boards staffed by volunteers try to keep up with the applications before them, but seldom have time to analyze or revamp decades-old regulations that stand in the way of more housing. Over time, many towns opt for the status quo.

According to a recent poll of registered New Hampshire voters by Saint Anselm College, 63% believe their communities need more affordable housing. And 71% support changing the local review process. But when it comes to individual projects, "Not in My Backyard" is alive and well.

"When we propose changes that are city-wide, they get through," said Dean Trefethen, Laconia's city planner. "It's when a proposal comes in that is affecting a specific piece of property" that people turn out to object. "It's reaction to the specific application and location, as opposed to a general concept. Most people realize that housing is hard to find, apartments are hard to find. But I don't want it next to my house."

“You have to allow denser development to make the houses more affordable – whether they’re small single family homes or attached town homes. They don’t have to be huge multi-story apartment buildings,” said Slack. “We have to be more creative about how we design.”

Jason Sorens, a political scientist and director of the Center for Ethics in Society at Saint Anselm College, recently completed a study, “Residential Building Regulations in New Hampshire: Causes and Consequences,” published by the Josiah Bartlett Center for Public Policy, a free-market think tank. The long-term solution, Sorens says, is an about-face on municipal land use regulations. It’s important to allow the state’s population to grow naturally, he said – unhampered by outdated or unnecessarily codes, and layers of hurdles that make the approval process time-consuming, expensive and intimidating.

New Hampshire has some of the most restrictive land use regulations in the country, Sorens said, and they thwart needed and desirable housing.

“When you don’t build enough, your prices go up,” Sorens said.   

For many residents of New Hampshire’s cities, small towns and beautiful places, population growth is a discomforting thought – especially for those who believe more housing will spell the end of open space, spoil the countryside or change the feel of quaint New England - or that more kids in school will mean property taxes will ratchet higher. Research shows that’s a misconception, said Andrew Cline, executive director of the Bartlett Center and president of New Hampshire School Board Association. To keep taxes low in a state where school enrollment is dropping, the state needs more, not fewer kids in school, and more taxpayers moving in.

Across the country, surveys show that people are relocating from richer states to poorer states, segregating the country by income, Sorens said.

New Hampshire first adopted land use regulations in 1926. Cities such as Dover, Manchester and Nashua are creating moderately priced housing by increasing density, height or both. New Castle, Rye, Portsmouth, Newington, New London and Hanover are currently the state’s most restrictive when it comes to building, followed by North Hampton, Moultonborough, Hampton Falls and Waterville Valley, according to Sorens' report.

Most town planning boards are run by volunteers who do things the way they’ve always been done. When changes are needed, they copy neighboring towns – which doesn’t mean more housing gets built. Often the result is a regulatory “arms race,” said Cline, with municipalities vying to preserve local property values by raising barriers to building, which further limits supply and slows growth.

Housing creation becomes an moral responsibility.

“When it comes to housing, we have an absolute duty to avoid preventing other people from trying to help. Restrictive land use regulations are a clear violation of the duty of non-interference,” said Max Latona, a philosophy professor at Saint Anselm College and executive director of the Center for Ethics in Society.

The common barriers to housing are extensive: Strict requirements for road frontage, setbacks, density and height. View ordinances that demand that buildings be hidden by hedges or other privacy landscaping. Conservation easements on private land designed to preserve open space. Tax subsidies for non-development of land under current use. More acreage required for house lots when smaller parcels would suffice. Subdivision regulations. Prohibitions against all but single-family homes. building codes, including some related to fire safety and environmental protection. Limits on terrain modification. Excessive requirements for off-street parking.

Towns make the process easy or hard. Nationwide, residential building codes and land use regulations have been found to be least restrictive where counties, not individual municipalities, create the guidebook, Sorens said.

Curbing the ability to build housing cost-effectively has far-reaching effects.

“When you make it more costly to build housing, you’re going to decrease supply. That benefits current home owners. But it makes it more costly to hire workers,” Sorens said, which reduces the amount of workers, which drives down the country’s GDP. Gross domestic product, an indicator of the nation’s financial health, is estimated to be 10% lower than if exclusionary regulations weren’t in effect. Restrictive land use regulations drive away middle- and lower-income households most of all, and lead to racial and socio-economic segregation and education gaps.

What would help solve New Hampshire’s shortage – especially the scarcity of affordably-priced housing, including in the Lakes Region?

Easing overly-strict regulations and streamlining the approval and permitting process, said Ben Frost, managing director of policy and public affairs for the New Hampshire Housing Finance Authority. He likens the planning board decision process to “study purgatory.” For builders, homeowners and developers, getting a green light can mean a lengthy wait through an interminable review, with requirements and changes that are onerous or expensive or irrelevant. This delays or discourages housing, and can also drive up the final price.

Training is needed to make planning boards more efficient, says Frost, who has been a planner in New Hampshire since the 1990s.  “Town after town, they’re all using the same formulas for 30, 40, 50 years.  You don’t really need 200 feet of frontage to provide adequate access for a fire truck.”

Frost said many towns opt for spreading out housing, which “actually chews up the countryside and drives up municipal costs” especially when roads, and water and sewer lines need to connect to “house after house after house.”

The goal is to increase density without sacrificing neighborhood character.

Sarah Marchant, community development director for the city of Nashua, said municipalities can do this by relaxing requirements for frontage, setbacks and lot sizes, and instead enacting rules for overall appearance: what a building or development looks like, and whether it fits in with what is already there. The goal is to make going home a pleasant, welcoming journey. The focus should be on public face - not on private space, she said.

“You’ve frozen your community in the 1970s” when regulations are outdated or overly strict, said Cline. “If we roll back some of these, it’s not going to turn us into Boston or New York City. It may let us get back to old New Hampshire in some cases.”