Tight NH rental market leads to sticker shock
By KEVIN LANDRIGAN
New Hampshire Union Leader
MANCHESTER — New Hampshire’s white hot rental market has led to a 15 percent increase in rents over the past five years, according to a new survey from the New Hampshire Housing Finance Authority.
Property owners don’t dispute that for the most part there are more people chasing apartments than there are available dwelling units. But some believe the group’s survey fails to properly count the lower end of the market, where cheaper prices and subletting lower the out-of-pocket cost.
The statewide median price for a two-bedroom unit today is $1,206 a month, including utilities. Housing Finance Authority Executive Director Dean Christon said the survey revealed that supply and demand are out of whack.
“This continued trend of low vacancy rates and elevated rents reflects both a demographic and economic shift in our state,” Christon said. “Low vacancy rates suggest that there is a need for additional rental housing construction to meet demand.”
Seven of the state’s 10 counties have vacancy rates below 2 percent; the barometer for a balanced rental market is a 4 to 5 percent vacancy rate. Even the 7.1 percent national vacancy rate in 2015 was the lowest since 1985.
The U.S. hasn’t been near a 2 percent vacancy rate since 1960.
“I would agree the rental market is pretty hot right now; we receive more phone calls for apartments than we have apartments to rent,” said Chris Schelyer, chief operating officer for Elm Grove Companies in Manchester.
“There is a lot of product that aren’t showing up on surveys,” Schelyer said.
The authority’s report notes that it samples only some of the apartments with more than 10 units to reduce the bias that the survey could have toward larger complexes.
Median rents for two-bedroom apartments vary widely by county from that $1,200 average.
They can be as low as the average $790 per month in northernmost Coos County, to as high as $1,321 in Rockingham County. How much rental rates have risen also varies widely by county.
Debbie Valente, president of the New Hampshire Property Owners Association, said the vacancy rate is made lower by the practice of some landlords of taking units off the market when they have problems evicting bad tenants.
“I would not agree we have a shortage of rental units,” Valente said. “The court system is very unfriendly to property owners; it’s so inconsistent.
“A lot of
landlords turn tenants over as quickly as they can and will leave the unit vacant until they can find someone qualified to replace that person.”
Two other national barometers underline the fact that New Hampshire’s rental market is costly and suggest it’s not going to change anytime soon.
The Apartment List or Rentonomics survey last month listed Manchester with a 7.5 percent increase since June 2015, the fourth-highest in the country.
Only Colorado Springs, Colo. Long Beach, Calif. and Vancouver, Wash. had higher average increases.
Then there’s the Zumper National Rent Report, which compares major cities around the country. New Hampshire’s statewide $1,200 median rent would put it 22nd if ranked against the 50 largest cities in the U.S. just behind Houston.
Hsiu Chang rents 90 affordable housing apartments, mostly in Manchester’s downtown, and thinks the average rents quoted in the report are inflated.
“It is very tight right now,” Chang said. “Most of my properties are three-bedroom for $900. Even then there are a lot of people applying; many are not qualified. They end up falling behind after only a few months.”
Fixed costs keep rents high here. Chang said property taxes and insurance each consume one month’s rent from every tenant every year.
“I feel the fixed cost of doing business is very high — not much I can do to lower it,” Chang said.
Here are some other findings in the survey:
• Utility costs: Ours remain among the highest in the country, but the average cost for power in rentals has gone down nearly 7 percent over the past five years.
• Household income: The yearly income needed to afford to pay for a two-bedroom apartment ranges from $31,600 a year in Coos County to $50,800 a year in Rockingham County.
• Median income outpaced: In all 10 counties, the income needed to afford those rents is more than 100 percent of the median income wages that renters in the county earn.
The new availability of higher-end apartments points to the strong rental market. Elm Grove is building 32 luxury studios for $1,000 a month on Hanover Street, while Bill Binnie is putting residential units costing up to $2,200 per month in the Citizens Bank building on Elm Street.
“We both feel comfortable the market will absorb those units in a reasonable amount of time,” Schelyer said. “The market has been strong since 2009 and I don’t see any letup.”