prospective middle-class homeowners.
Editor’s note: The Seacoast is one of the best places a person could live. But it isn’t cheap. Luxury condos and large-scale developments are the most visible signs that the region is more popular, and more expensive, than ever. And while that development has helped fuel plenty of debate, it only tells part of the story. During the next few months, The Sound will look at the cost of living in the Seacoast from various perspectives. We want to hear from you, too. Email us at [email protected] or join the conversation on Facebook and Twitter.
Julia and Ian McIntosh were feeling confident when they started looking for a home in the Seacoast in 2012. Their Cabot Street condominium in Portsmouth sold in three days for $222,000, which gave them a good start toward upgrading to a single-family home. And with dual incomes and no children, their budget was healthy — $250,000 to $350,000.
“We had a reasonable budget to get a reasonable home,” Julia McIntosh said.
Portsmouth was one of their top choices for living in the Seacoast. But the couple quickly discovered the numbers didn’t add up if they wanted to stay in the city.
“You always have to make sacrifices (when buying a home),” McIntosh said. “But in Portsmouth it was like, ‘We have to give up a garage, and a yard, and this other thing, and it needs a lot of work.’ It ended up being a lot.”
In the end, adding renovation costs on top of already high home prices was too much. When the couple found a turnkey four-bedroom home on an acre of land in Stratham — for the same price as fixer-uppers in Portsmouth — they didn’t hesitate to leave the city.
“We loved living in Portsmouth, it just wasn’t worth it,” McIntosh said.
A look at housing and rental numbers in Portsmouth reveals that the McIntoshes’ story is becoming more common. In terms of housing costs, it’s more expensive than ever to live in Portsmouth.
A recent study by the Center for Housing Policy named the Seacoast the 20th most expensive rental market in the country, beating out Miami (34th), Seattle (44th), and Chicago (60th). New York City, where residents proudly swap war stories about apartment rentals, was 14th in the rankings. Meanwhile, housing prices in Portsmouth are increasing rapidly — faster than the rest of Rockingham County, faster than the rest of New Hampshire, and faster than similar small cities.
Housing experts are worried that pricing young homeowners like the McIntoshes out of the city could lead to negative consequences in years to come.
Faster, faster, faster
For the first half of this year, the median purchase price of a home in the Port City was $359,900, almost $135,000 more than the median purchase price for the rest of the state, according to data provided by New Hampshire Housing Finance Authority, a public benefit corporation created in the 1980s to address the lack of affordable housing in the state.
Over the past 20 years, that median purchase price has skyrocketed nearly 213 percent. In the past decade, home prices in Portsmouth have increased 28.7 percent, despite the housing market crash in 2007 and stagnant inflation.
Even in nearby Dover, which also has seen significant growth in recent years, price increases held to 3.5 percent over the decade and 175 percent in the past 20 years. Prices in both Rockingham and Strafford counties declined between 2004 and 2014, at rates of 3.2 percent and 3.7 percent, respectively. Over 20 years, Rockingham County home prices increased 127.9 percent and Strafford County homes were up 140.8 percent.
That’s a data-heavy way of saying Portsmouth is expensive and getting more so. The median home price in Portsmouth — $359,900 — is far out of reach for typical homeowners, according to New Hampshire Housing, which identifies homes as “affordable” if monthly payments don’t exceed 30 percent of a family’s income. The median household income in the Seacoast area is $84,300, which equates to a maximum affordable home price of around $284,000.
Renters in Portsmouth are also being squeezed, though at a slower pace than prospective homeowners. According to New Hampshire Housing, median rent in the city, including utilities, was $1,237 per month for the first half of this year. That’s a 15.4 percent increase over the past decade and 97 percent increase since 1994.
Those changes are more dramatic than in Dover, which had a median rent of $958 — a 6.2 percent increase for the decade and 82 percent over 20 years. However, the change in Portsmouth’s rental prices tracked similarly to both the state and Rockingham County. For the entire state, median rents grew 15.7 percent over 10 years and 82 percent over 20 years.
“The challenge with Portsmouth is that both rental costs and purchase costs are very high,” said Ashlee Iber, executive director of the Workforce Housing Coalition of the Greater Seacoast. “We have new units, but many are high-end luxury units, and that’s not helping this category.”
“Portsmouth is the most cosmopolitan community north of Boston. But, if it gentrifies to the point that all we have are $500,000 and $600,000 condos downtown, I think we will really lose what is special about this community.”
A difficult path
In October, 24 condos were sold in Portsmouth, totaling $7.7 million in sales, according to the Rockingham County Register of Deeds. As of press time, a review of the real estate website Zillow showed 38 condos for sale in the city. They ranged in price from $3.125 million for a three-bedroom, 4,340-square-foot penthouse on Vaughan Street to $126,900 for a two-bedroom, 804-square-foot unit on White Cedar Boulevard. Six condos were listed at more than $1 million and more than half — 22 units — were priced above $400,000.
The increase in the number and visibility of luxury condos in downtown Portsmouth has helped fuel a debate about whether the middle class is getting priced out of the city. But the real problem, according to Iber, is with the rental and real estate market as a whole.
The typical path to homeownership has, historically, started with years of renting and saving money before buying a home. But, with high rents, saving money for a down payment can be difficult. Combine that with rapidly rising home prices and Iber said the city could have a problem with too much housing stock in 10 or 20 years.
“Prices have essentially doubled,” Iber said. “Who’s going to buy those houses?”
So far, the gap has been filled by people buying second homes in Portsmouth, Iber said. And, while tourism is widely regarded as a boon for the city, some caution against becoming too reliant on tourists at the expense of locals working in the creative and public sectors.
“We want to be able to preserve what is special about Portsmouth, and I think what is special is the diversity we have here,” said Craig Welch, executive director of the Portsmouth Housing Authority. “Portsmouth is the most cosmopolitan community north of Boston. But, if it gentrifies to the point that all we have are $500,000 and $600,000 condos downtown, I think we will really lose what is special about this community.”
Driving up prices
The biggest factor driving home prices is land — specifically, the lack of it. The Seacoast, and Portsmouth in particular, is largely built out. With land prices at a premium, the prospect of building affordable housing can become financially impossible for some developers.
In other communities, like Stratham and parts of York, Maine, developers are hesitant to build workforce housing projects because of a lack of public water and sewer, a factor that can disqualify them from receiving tax credits and incentives, Iber said.
Public perception also comes into play. Neighbors often worry about how potential workforce housing projects would affect their communities. Concerns range from uncertainty about the “types of people” who would