Workforce homes don’t lower values
Economist: Affordable housing not the culprit
By Steve Gilbert Sentinel Staff
Falling property values in Cheshire County are directly attributable to the recession-fueled national housing bubble, not local affordable housing issues, a state economist said.
“This is not your fault,” said Dennis Delay, an economist with the N.H. Center for Public Policy Studies and the New England Economic Partnership. But you still have to deal with it, he added.
Delay said workforce housing, defined as affordable housing for people who work, as opposed to subsidized housing for the unemployed, is not responsible for driving property values down in Cheshire County. It’s not a case of declining values because of declining neighborhoods.
Rather, he said, the recession caused by the sub-prime meltdown, which peaked in 2008, primarily accounts for the record-high 3,900 foreclosures in New Hampshire last year, and more than 3,000 so far this year.
“Falling property values had nothing to do with workforce housing and everything to do with the (housing) bubble,” he said.
Delay spoke Friday at a business leaders breakfast at Keene State College’s Alumni Center. It was sponsored by Heading for Home, a Keene-based nonprofit housing coalition that is studying how to stimulate more workforce housing in the Monadnock Region.
Heading for Home organized a day-long, region-wide housing summit in June, and Delay’s presentation was an outgrowth of some of those findings. In what’s an ongoing process, the coalition has identified barriers that workforce housing advocates face in the region, and offered possible solutions to some of those barriers. Education — accumulating as much information as possible — is one of them.
“(Workforce housing) is critical to a vital community,” said Gordon Leversee, outgoing president of Heading for Home. “It’s a changing landscape both financially and in many other ways. But we’re small enough (in the Monadnock Region) to get our hands around these issues.”
For instance, Keene State College has added about 200 housing units in the past two years, and more housing is being built by private developers. That could free up some single- and multi-family homes that had been housing college students, a development the coalition is looking at closely.
Delay said that unlike many parts of the country and New Hampshire, data indicate the Cheshire County housing market has stabilized. He said the region has already rode up the housing bubble and back down the correlating market correction.
“You are unique relative to the rest of the state and world,” he said. “You’re very close to being through the housing bubble and correction, at least locally.”
But that doesn’t mean good times are ahead. The average price of a house in Cheshire County today, adjusted for inflation, is the same as in 2000, prompting Delay to call it “the lost decade.”
The N.H. Housing Finance Authority reports that the average cost today for new and existing homes is a little more than $150,000, compared to about $200,000 in 2008.
Because so many houses are in foreclosure nationwide, data suggest banks are withholding them from the market because the return would be so low, Delay said. That means existing inventory has to work its way through the correction, resulting in an unpredictable future.
“We don’t really know where this is going to go,” he said. “Everybody’s playing this waiting game.”
Hence, the title of his presentation: “Stuck in Neutral.”
Delay said his presentation is strictly data-driven and non-partisan. “We’re here to educate, not advocate,” he said.
Other points he made:
New Hampshire’s “Great Depression” actually came in the early 1990s when the state lost 10 percent of its jobs. He said whereas homeowners could count on their homes for 10 percent of their disposable income, it has since dropped to negative-3 percent. “You can no longer use your homes as ATM machines,” he said.
Home vacancy rates today are at what’s considered a normal 5 percent in Cheshire County, compared to 12 percent in the early 1990s.
Two-bedroom rental units are becoming available at a faster rate in Cheshire County than anywhere in the state.
Home ownership by young people continues to decline in Cheshire County. In 2000, 42 percent of residents 35 years old and under owned homes; today it’s 39 percent and dropping, according to the housing finance authority. For those over 35, the share is 70 percent.
The building of new houses statewide has dropped from a peak of about 20,000 per year in the late 1980s and 10,000 in 2005 to under 5,000 per year now.