Rents Increase Nearly 15 percent in New Hampshire Over Last Five Years
July 14, 2016
Low vacancy rates and rising rents mean an increasingly tight rental market for the state.
BEDFORD, N.H. (July 14, 2016) – New Hampshire’s housing market continues to pose challenges for renters, a recent survey finds. New Hampshire Housing’s annual residential rental cost survey, which canvasses market-rate units across the state in order to gauge the condition of the rental market, found that vacancy rates dropped while rents increased – a continuation of a long-term trend. The state vacancy rate fell to 1.5 percent, while the median rent for a two-bedroom apartment, including utilities, is at $1,206.
Half the counties in the state show vacancy rates at well below 2 percent. A rate this low is viewed as just turnover rather than true vacancies. Most industry experts consider an average vacancy rate of 4 percent to 5 percent a balanced market. Below 4 percent constitutes a “landlord’s” market and above that rate it is a “renter’s” market. In comparison, the national vacancy rate fell to 7.1 percent in 2015, which was the lowest rate since 1985.
Seven of New Hampshire’s ten counties have lower vacancy rates than last year. Vacancies are significantly lower in the state’s most populous southern tier, where the bulk of New Hampshire’s rental housing is located. Hillsborough, Merrimack, and Rockingham counties all have vacancy rates below two percent and are lower than their 2015 rates.
The state has seen almost a 15 percent increase in rents including utilities for two-bedroom apartments since 2011. Over the past five years, the southern tier as well as Grafton and Coos counties have experienced double digit increases in monthly median gross rental costs. Grafton County’s rent figures are driven largely by the Hanover/Lebanon economy and related housing market. In the southern part of the state, these changes are due to an economic recovery in Massachusetts that is now evident in Southern New Hampshire.
The survey also demonstrates that renter household incomes are not keeping pace with the steady increase in rents. A renter would have to earn 124 percent of the median income, or over $46,000 a year, to be able to afford the statewide median cost of a typical two-bedroom apartment with utilities, but renter incomes actually declined by 4.3% from 2009 to 2014. Housing Needs in New Hampshire, a 2014 study commissioned by New Hampshire Housing, found that almost half of renters in the state pay more than 30 percent of their income on rent, and low-income families are particularly likely to be overpaying for their housing.
“This continued trend of low vacancy rates and elevated rents reflects both a demographic and economic shift in our state,” said Dean Christon, Executive Director of New Hampshire Housing. “Low vacancy rates suggest that there is a need for additional rental housing construction to meet demand.”
Results of New Hampshire Housing’s 2016 Residential Rental Cost Survey are consistent with those found on a national level. The recent State of the Nation’s Housing report published by Harvard University’s Joint Center for Housing Studies revealed that other housing markets across the country are also seeing a tightening of the rental market. Similarly, the nation has seen increased construction of multi-family units that demand rents at the high end of the market. New Hampshire’s market shows a similar trend which contributes to many low- to moderate-income renter households paying a greater percent of their income on housing costs.
For more detailed information, copies of the Residential Rental Cost Survey and Housing Needs in New Hampshire can be downloaded at www.nhhfa.org. A broad look at the current housing and economic picture in the state may be found at NHHFA/studies-publications-presentations. The State of the Nation’s Housing report is located at http://www.jchs.harvard.edu/research/state_nations_housing.