The
Senate Executive Departments and Administration Committee is considering
a bill that is intended to encourage the development of affordable, workforce housing.
The text of that bill can be found at the Senate
Executive Departments and Administration Committee web site. On February 6,
2003, I testified before the committee in support of the bill. This is the text
of my comments:
The purchase of a home is the average American’s
largest single purchase, and to most of us, it’s the one we make with the
greatest pride. Today, more than two thirds of the households in this country
own their own home, all knowing how hard they worked to get there.
Unfortunately, to those who don’t yet own, it is getting harder and harder to
buy that first home. To those with growing families, it is getting harder and
harder to buy that next home.
I closely watch the Seacoast real estate market
and can see that dream slipping away on a daily basis. One national study ranks
the Seacoast region as the eighth most unaffordable region in the country. As
an example, in 1997, a basic three bedroom ranch style home in Portsmouth cost
$113,000. Last year the price for that same home was $210,000! That’s an 85%
increase in only five years! Over the same period, median family income
increased only 20% and the consumer price index increased by only 12%.
Securing access to decent, affordable housing is
fundamental to the American Dream. Like all Americans, New Hampshire residents
want to live in good-quality homes they can afford without sacrificing other
basic needs. They want to live in safe communities with ready access to job
opportunities, good schools, and amenities. Parents want their children to grow
up with positive role models and peer influences nearby. The system we now have
in place seems assured to deprive our residents of these hopes. There is only
one solution to not being able to afford that home – move somewhere else. We
must stop that … our economic vitality depends on it.
Last year, the relocation department of one of
New Hampshire’s largest real estate companies conducted a statewide poll of
human resource managers at 264 companies. Seventy one percent of those
responding said that housing has become an issue for their employees. 54% said
that housing prices impacts their ability to relocate new hires and 27% said it
impacts their ability to retain existing employees. The most alarming finding,
I think, is that 70% of respondents indicated that housing issues impact wages.
The cost of housing makes everything more expensive.
A few months ago, an article about Lonza
Biologics that appeared in the New Hampshire Sunday News voiced the same
concern from an employer’s perspective. Lonza is one of the largest employers
in the state and is now in the middle of a major expansion. That newspaper
article contained this quote:
“What Pease and the
Seacoast Region in general do not have going for them, when it comes to future
Lonza expansion and the ability to attract other biotechnology companies, is
affordable housing, an absence that makes it increasingly difficult to attract
qualified personnel”.
We must facilitate the construction of
“workforce” housing to keep the economic engine running. Workforce housing is
not low income housing, or subsidized housing, its housing for the typical
working family. It’s housing for our teachers, nurses and firefighters. These
people have to compete with everyone else out there and that competition is
fierce. Last year the median sale price of a single family home in Portsmouth
was $270,000! A buyer putting down 20% would need to have an annual income of
$65,000 to qualify for a mortgage. How many teachers do you think make $65,000?
There is so much talk about the quality of education on both the national and
the statewide agenda – tell me this… how do our children benefit when the
newest teachers can’t even afford to come teach in New Hampshire?
Senate Bill 95 encourages the development of
homes that “ordinary” people can afford… not the wealthy… not the poor.
According to the criteria established by Senate Bill 95, it’s a family making
$46,000 per year, putting down 5% on a $170,000 home. There is no such thing as
a $170,000 home in Portsmouth right now. That’s the point! They are not being
built. Out of 58 homes now listed for sale in Portsmouth, the lowest price is
$185,000! The average price is $365,000! To purchase a $365,000 house, a
family’s income must be over $87,000 per year. Something must be done to
encourage or facilitate the development of housing that the average working
family in New Hampshire can afford.
Senate Bill 95 also encourages the development of
rental housing. According to its guidelines, in the Seacoast, workforce housing
would be an apartment that rents for no more than $1,150 including utilities.
This past Sunday’s Portsmouth Herald [February 2, 2003] advertised
twenty rentals with three or more bedrooms – the average asking price was
$1,450 plus utilities. What’s the solution… make people commute farther?
That’s just shifting the burden to another community and ignores the fact that
this is a regional problem that demands regional solutions
All I am asking here today is that you open the
door to the development of housing that working New Hampshire families can
afford in the communities in which they chose. It is very clear
that the municipalities need a push. Take the lead! Senate Bill 95 is not a
welfare bill, or a land use bill… Senate Bill 95 is about business. It
is about giving New Hampshire a competitive edge. It is about attracting and
keeping workers. It is about helping businesses to keep costs down. New
Hampshire needs Senate Bill 95 and we need it now!
Steven H.
Berg, MAI, SRA lives in Portsmouth and is the owner of Sargent Consulting, Ltd.
He is a graduate of Connecticut College, where he earned a Bachelor of Arts
degree, cum laude, majoring in economics and sociology. Steven has been
appraising a variety of property types in New Hampshire’s Seacoast area since
1987. He specializes in providing consulting services and litigation support
and has amassed considerable classroom education on a wide range of related
topics. Steven is both a residential and general member of the Appraisal
Institute. In addition, he is a member of the Portsmouth Housing Endowment Fund
Advisory Committee, is on the board of The Portsmouth Economic Development Loan
Program and serves on an advisory panel to the City’s Assessing Office.