NEW HAMPSHIRE is experiencing a critical housing shortage that has pushed home prices and rents to record levels. The median rent for a two-bedroom apartment is nearly $1,500, and the median price for a single-family home is more than $400,000.

The single largest factor driving this shortage is local land use regulations.

We know from national research that strict residential building regulations reduce population growth and raise the price of housing. We also know that New Hampshire has some of the strictest residential building restrictions in the United States, consistently ranking in the top five most heavily regulated states for housing.

To see what effect local regulations have had on the supply and price of housing in New Hampshire, the Josiah Bartlett Center for Public Policy joined with the Center for Ethics in Society at St. Anselm College to examine these regulations and their effects.

Written by Center for Ethics in Society Director Jason Sorens, our study, released on Tuesday, found that strict land use regulations have choked off the population growth and economic dynamism that characterized New Hampshire in the 1960s, 1970s, and 1980s.

Zoning was first authorized in New Hampshire in 1926, and a few municipalities began using that new authority immediately. But the biggest wave of land use regulations came in the decade between 1966 and 1976, when New Hampshire began to experience an economic and population boom.

In many communities, these regulations have effectively frozen in time the land-use preferences of the late ’60s and ’70s. People’s living preferences have changed since then. But outdated regulations have limited many towns’ housing options to those that were popular 40 and 50 years ago.

For example, many communities banned housing in commercial zones. One such community is Hooksett, where an old Cigna office building sits vacant.

Cigna put the building up for sale in 2019 and switched its employees to remote work. Converting that vacant building into apartments makes perfect sense, and a developer has proposed that. But the town’s zoning doesn’t allow it. It’s literally illegal to turn an abandoned office building into apartments — unless the town grants a variance.

Allowing housing in commercial zones is a small change that would reduce commute times, traffic congestion and air pollution, make these zones more vibrant, and create housing options popular with young adults who aren’t ready for a large house on two suburban acres.

A key finding of our study is that overly restrictive land use regulations have changed New Hampshire communities in unanticipated ways. Tight zoning regulations have driven housing prices up and lower-income households out.

Before the rise of highly restrictive zoning ordinances, New Hampshire communities had greater income diversity. Towns and cities with more regulation of housing supply have seen their median incomes rise faster, but their populations grow less quickly, implying that the restrictions repel middle- and lower-income families.

Consider a 1,500-square-foot house on a half-acre lot, built in 1950, with three bedrooms and 1.5 bathrooms. In Keene, Warner, Conway and Rochester, all right around the statewide average for housing regulations, this house would have cost about $223,000 in 2020. In Hanover, this house would cost about $496,000, in Portsmouth $556,000.

That huge gap in price is driven primarily by local land use regulations that have made it difficult to build new housing in Hanover and Portsmouth. By artificially reducing supply, overly restrictive regulations push prices of even modest homes far above levels that are affordable for most families.

The five municipalities where land use regulations have had the largest inflationary effect on home prices are New Castle, Rye, Portsmouth, Newington and New London, the study finds. (Hanover is sixth.)

Driving these home price increases are a combination of restrictions, such as needlessly large minimum lot sizes and frontage setbacks, and restrictions on multifamily homes. In much of Hanover’s territory, for instance, single-family homes are required to be built on a ridiculously large 10-acre lot. It’s no wonder housing is so expensive there.

Planning boards can bring down the price of housing by changing their regulations to allow more single-family homes on small lots, more mixed-use zoning, more multifamily development, and taller buildings, especially in neighborhoods that are already dense. They can abolish minimum parking requirements and other barriers to dense development in urban cores.

Without changes at the local level, there will be more pressure for the state to get involved. If it comes to that, the state could take steps to preempt the worst property rights violations, for example by passing laws that limit how large a minimum lot size requirement can be or that ban caps on local building permits.

Ultimately, if Granite Staters want more housing, there is only one solution. They have to relax the local regulations that are causing the housing shortage.

Jason Sorens is director of the Center for Ethics in Society at St. Anselm College and lives in Amherst. Andrew Cline is president of the Josiah Bartlett Center for Public Policy and lives in Bedford. The full study is available online at www.jbartlett.org.

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