A new report from New Hampshire Housing paints a bleak picture of the state’s rental market: Prices are high, inventory is low and competition is intense.
“If there's a surprise, it probably is that we just went through a year of the pandemic and that did not seem to substantially impact the market in any real substantive way,” says New Hampshire Housing Executive Director Dean Christon. “In fact, if anything, things got a little tighter during this time period.”
The new data confirms what many have been reporting based on their individual experiences navigating the state’s rental market. Here are the big takeaways from the report.
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Statewide, the median rent for a two-bedroom apartment is just shy of $1,500. That figure jumped by about 6% last year and about 24% in the last five years, according to New Hampshire Housing.
But some parts of the state have seen even sharper increases. Grafton County’s rents have increased by nearly 29%, a trend state officials say is largely driven by Hanover and Lebanon’s housing market.
Strafford, Hillsborough and Rockingham counties also saw faster rent increases than the rest of the state over the past five years. Those areas have long been influenced by the high costs in the Boston area and “tend to have the highest level of stress” on their rental market, Christon says.
New Hampshire’s rental vacancy rate is just under 1%, and in some parts of the state it’s even tighter. State officials say the vacancy rate in a “balanced” rental market, where there’s a healthier supply of open rental units compared to the number of people seeking a place to live, is ideally about 5%. New Hampshire hasn’t seen a vacancy rate above that level for a decade.
The rental market appears to be tightest in Coos, Sullivan and Merrimack counties, according to New Hampshire Housing, where the vacancy rates are close to half of one percent — though Christon cautioned against drawing too many conclusions based on small variations in different counties, because the results could vary depending on sample size and who responded to the state's rental survey. Both areas saw the steepest decreases in vacancies over the last five years, as well.
Cheshire County appears to have the most room to spare, with a vacancy rate of about 1.7% — but that’s still far below what’s considered a healthy supply of open housing.
Christon says things are likely feeling extra tight on the rental market right now because the real estate market is also really competitive. Renters who might otherwise be moving into their own homes are finding it harder to do that.
“The inventory of homes has been so tight, and the demand has remained so strong, that the pricing on homes that are available has increased, and frankly the competition for them is intense — as intense, I think, as almost anybody can remember,” Christon says.
And since there’s just not enough housing, rental or otherwise, that’s driving up competition for everyone.
About 40% of rental households are spending at least 30% of their income on rent, according to New Hampshire Housing, but rents are likely eating up an even larger chunk of take-home pay for lower-income families.
Statewide, housing officials estimate that people need to earn nearly $60,000 to afford a two-bedroom apartment, but the estimated income for renter households is only about $47,000.
In Belknap County, only about 6% of two-bedroom units are available at an affordable price to most renters, according to New Hampshire Housing.
Christon says the tight, expensive housing market could make it hard for the state to sustain its economic recovery in the long run, as businesses continue to struggle with recruitment because their employees can’t find a place to live. But more than that, they’re likely pushing more people toward homelessness.
“In a market like this, there are people who are homeless simply because of economic challenges that they face,” Christon says. “They simply can't afford to find someplace to live or there simply is nowhere available to them.”
Editor's note: This story has been updated to correct information about the counties with the lowest vacancy rates in New Hampshire.
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