This article was originally produced by the NH Business Review. NHPR is republishing it in partnership with the Granite State News Collaborative. The piece below has been lightly edited.
Young families who move into a community with school-age children drive up property taxes. Right?
Wrong, says the New Hampshire Association of Realtors.
The association commissioned a University of New Hampshire economics professor to study the issue, and the conclusions, according to association CEO Bob Quinn, are a “counter to erroneous thinking” that bringing more children to the local schools with new housing would result in higher property taxes.
“It seems to be believed at least in some circles across the state that if you build more housing in a town and that brings families with children into town, the additional school enrollment will raise local property taxes,” said the study’s author, Richard England, Ph.D., and professor emeritus of economics at the UNH Paul College of Business and Economics.
“My research found that it simply isn’t true,” he added. “One cannot say that if you bring more children into town and they entered the public schools, that the property tax will go up. It simply isn’t supported by the data or by logic.”
The New Hampshire Association of Realtors has released two videos aimed at dispelling some of what it calls “misconceptions” about adding more affordable housing stock to the Granite State, particularly among zoning boards that use their zoning by-laws to throw up roadblocks against certain types of housing.
“Busting the Correlation Myth” covers the topic of kids and property taxes. The other video — "Defining Workforce and Affordable Housing" — talks about workforce housing and affordable housing, what they are, and what they are not.
The videos are part of an ongoing effort by the state’s real estate organization to help tackle the dearth of housing stock here. According to the New Hampshire Association of Realtors, housing inventory is at an all-time low in New Hampshire, but many of the local zoning boards that oversee housing development have misconceptions that stifle certain projects.
“Our intent in creating these videos was, first, to provide clear explanations of the facts to our members, and, second, to have a tool to counter erroneous thinking among zoning boards,” said Quinn.
The 2024 president of the association, Joanie McIntire, said members will use the study and these videos to address local zoning boards about the needs and the myths.
“Realtors can speak at the local level at their town meetings and at their zoning boards, one that there’s the shortage, two that increased housing is not going to mean their taxes are going to go sky high because of increased students,” McIntire said in an interview soon after her December inauguration. “That’s the sort of misinformation that’s perpetuated, and we can show in lots of different studies where there’s really not a good correlation.”
More housing for more workers
For several years, according to the realtors' association data, the median price of a single-family home in the state has increased, while the ability to afford the higher-priced property has decreased, exacerbated by a declining amount of inventory. The same has been true for residential condominiums/townhouses.
“If our agents can help at the local level, educate the people, it will help our economy as well. It will grow our economy if we have more housing for more workers,” said McIntire.
According to Quinn, the effort to dispel the myths blocking housing development was ultimately driven by New Hampshire Association of Realtors members.
“Our members are the front line of all our advocacy and all our policy initiatives,” he said. “In this case, they reported that local zoning boards were making it hard for communities to create the housing they needed, especially workforce housing, and they turned to us for help countering the most common arguments — which were the same mistaken assumptions I’d been hearing from some state representatives.”
If property taxes are going up, according to England’s research, increased enrollment isn’t the cause. In fact, he noted that his research has shown that even with a decline in student enrollment in many communities, taxes nevertheless have increased.
“We can’t just assume that if we enroll more kids in the schools that the tax rates will go up. And to assume that is to guarantee that we’re going to continue to have a housing affordability problem in New Hampshire,” said England in his presentation.
“So what are the long-term implications for a town and a state with fewer kids? After all, working-age people generally have school-aged children. If the public policy position of a municipality is to keep children out of its community by limiting the housing supply, it should logically mean that it will also have fewer working age residents. Without those workers, employers will not have the employees to expand and help to grow New Hampshire’s economy,” he said.
The issue of workforce housing vs. affordable housing is addressed in the New Hampshire Association of Realtors video by Matt Johnson, a lawyer at Devine Millimet and legal counsel to the association.
Legally defined, according to Johnson, workforce housing is different from affordable housing, and they are both distinct from low-income housing.
He said all expenses related to affordable housing (rent/mortgage, taxes, utilities, etc.) shouldn’t be more than 30% of the household’s gross annual income. Workforce housing, he added, is defined as housing where, for a family of four, the cost is not more than 100% of the annual median income as determined by the U.S. Department of Housing and Urban Development for a particular area.
As examples, a workforce home in Manchester should have a price point of no more than $358,000. In Nashua, it’s about $420,000.
In Belknap County, according to the New Hampshire Association of Realtors presentation, the estimated affordable housing purchase price is $349,000, in Carroll County $333,000 and in Grafton County $320,500. By comparison, the NHAR real estate report from November 2023 shows the median price of a house in Belknap was $437,250, in Carroll $479,900 and in Grafton $362,250.
“There are a couple of places where the law requires municipalities to provide for affordable housing, they can’t set unreasonable conditions or make it difficult for the workforce housing to be achieved,” said Johnson in his presentation. “They also have to look at regional impacts. So they cannot just look within the four corners of their town, and they must also consider potential future needs for workforce housing when they’re analyzing developments.”
Economic impacts
Johnson also pointed to how zoning roadblocks affect the economy.
“So what are the long-term implications for a town and a state with less workforce housing? If the public policy position of a municipality is to make workforce housing difficult, if not impossible to develop, that will mean fewer working-age residents,” he said. “Without those workers, employers will not have the employees to expand and grow New Hampshire’s economy.”
The New Hampshire Association of Realtors commissioned the student–taxes study with the help of a Consumer Advocacy grant from the National Association of Realtors. These grants, according to the national association, allow local and state associations to create consumer advocacy activities in their communities that seek to strengthen the real estate market, promote property ownership and build strong communities leading to a healthy economy.
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