Housing advocates like to say they already know the approximate causes of the acute shortage of workforce housing statewide: the Four L’s of lumber costs, labor shortages, land prices and local restrictions. 

As lawmakers brace for another legislative session in which the housing crisis is once again expected to be a top agenda item, they might also want to familiarize themselves with what might be called the Three W’s – what is workforce housing, who’s it for and where is it needed in New Hampshire? 

Business and political leaders largely seem to agree in general that more housing is obviously and desperately needed. Yet, very little has been done in recent years as single-family home and condominium prices continue to skyrocket due to a severe supply-and-demand imbalance. 

“It’s one of those issues that people talk about and nothing ever gets done,” said Jim Lee, head of RE/MAX Shoreline in Portsmouth and president of the New Hampshire Association of Realtors. “Things seem to be getting worse.” 

Indeed, the latest data from the Warren Group, publisher of The Registry Review, shows year-to-date single-family home prices through September have soared statewide by 31 percent, to $374,000, since 2019, just prior to the pandemic. Condo prices have increased by 32 percent, to $270,000, over the same two-year time period. 

Think the steep price increases have mostly occurred in the more densely populated southern region of the state? Wrong. Coos County, the least populated and northern-most county in New Hampshire, has seen the highest year-to-date spike in single-family home prices since 2019, or by 54 percent, to about $170,000, according to The Warren Group. 

“It’s rather shocking,” Ben Frost, managing director of policy and public affairs at the New Hampshire Housing Finance Authority, said of the huge price increases occurring across the state as a result of the high demand and low supply of housing. “A lot of local people are being priced out of where they’ve lived for years, sometimes generations. Housing is needed everywhere.” 

The terms “affordable housing” and “workforce housing” tend to be used interchangeably, even though there may be technical and legal nuances differentiating the two at times.  

“People use the term ‘workforce housing’ broadly,” said Elissa Margolin, director of Housing Action New Hampshire. “It’s a totally fair term to use in general. What we’re really talking about is housing affordability for people who live and work here in New Hampshire.” 

What Is Workforce Housing? 

Most Granite Staters may not know that “workforce housing” is specifically defined under state law.  

According to a summary of the law by the NHHFA, workforce housing is housing that’s “affordable” to a renter family of three making 60 percent of an area’s median income and to a home-owner family of four making 100 percent of an area’s median income. 

The definition of “affordable” is no more than 30 percent of a household’s income being spent on housing (rent and utilities; or mortgage principal and interest, taxes and insurance), according to the NHHFA. 

Obviously, this means that affordable workforce housing varies from county to county, city to city and town to town in New Hampshire. But it gives an approximate idea of what workforce housing entails. Think: smaller, as in smaller homes/units, smaller lots and smaller amounts of required materials and labor, all of which are necessary to build affordable workforce housing. 

Most experts agree that more rental units should be a top priority in New Hampshire, and that means more densely packed multifamily complexes. 

According to NHHFA data, the rental situation in New Hampshire has become dire, with the vacancy rate for two-bedroom rental units now at 0.6 percent and with the vacancy rate for all rental units at 0.9 percent. Not surprisingly, rental prices for two-bedroom units have risen by 6 percent, to $1,498, over the past year and they’re up 7 percent for all other units. 

Experts say new condos and smaller single-family homes, located on more densely packed lots, are also needed across New Hampshire – and they’re a key part of the housing-shortage solution. But more affordable rental units, right now, are essential, whether they’re located in larger structures, townhouses or small units within single-family homes, experts said. 

One last point on the “what is workforce housing” question. Chris Masiello, CEO of Better Homes & Garden-Masiello Group, said it’s important that new multifamily dwellings also include sufficient green spaces, such as decks, porches, patios and even small park-like settings. 

Renters and entry-level homeowners, often with small families, increasingly need and want such green amenities, especially after last year’s pandemic lockdowns and social-distancing rules, he said. 

Who Is Workforce Housing For? 

As the state’s legal definition states, both the “what” and “who” of workforce housing are tied to median incomes. Though household incomes vary from region to region across the state, the statewide median household income is $77,933, according to U.S. labor data.  

In general, the statewide median provides an approximate idea of who needs workforce housing – and that means largely blue-collar and many middle-class, white-collar residents. This includes, among others, construction workers, restaurant and hospitality employees, bank clerks, schoolteachers, nurses, truckers and delivery drivers, firefighters, recent college grads and elderly people living on fixed incomes.  

“Housing affordability covers a huge number of people who are getting priced out of the market,” said Lee.  

And note the word “household” when it comes to median income and the references to the number of “family” members when defining workforce housing in New Hampshire. In other words, the “who” is not just about affordable housing for individual workers, but also for their families as well. 

Where Is Housing Most Needed? 

Most experts s that, in general, workforce housing is most needed in the more populated portions of the state – counties such as Hillsborough (including Manchester and Nashua) and Rockingham (Portsmouth and the general coastal area, along with Salem).  

Real estate prices have been skyrocketing in those counties for years, and the higher prices are pushing many long-time residents farther north in search of more affordable housing. Experts said a southern workforce-housing strategy would relieve the housing crisis there and, at the same time, help ease the problem elsewhere in New Hampshire. 

But the argument for a southern strategy starts to break down because many central and northern counties need more workforce housing now in order to attract and keep employees – such as in Grafton County, home to Dartmouth College, major health-care organizations and hospitality-industry operators serving winter and summer tourists, and Belknap and Carroll counties with many of their own hospitality businesses built around the region’s spectacular lakes and mountains. 

Carmen Lorentz, executive director of the Lakes Region Community Developers, said her area of the state desperately needs more workforce housing – and has been trying to do something about it in Wolfeboro.  

The planned Harriman Hill Homes development would add 20 “starter” single-family homes, each about 1,200 square feet in size and on smaller lots, and target those with household incomes of $56,000 to $90,000. But the project has been in the planning stages for four years now – and it can’t reach its goal of more affordable homes at $250,000 each without public subsidies, says Lorentz. 

The Lakes Region Community Developers hopes it can soon secure those state funds via a new single-family affordable home program run by NHHFA, Lorentz said. 

“Hopefully, it will serve as a model for other communities seeking to build more affordable housing,” she said. 

But that gets into the “how” of workforce housing – how to build more units, how to overcome high construction costs and local zoning laws, and how it will all be funded.