LEBANON — William Harrington and Krystal Laundry are already looking forward to their new living arrangements, even though it will be roughly a year before construction is complete on a house in Lebanon they are purchasing through Upper Valley Habitat for Humanity.

“We figured out everyone’s bedrooms when there were just studs in here,” Harrington, 33, said of Laundry and their three sons.

Habitat for Humanity volunteers began construction in May on the single-level, three bedroom house, which is the third and final home planned for a parcel off Meriden Road.

As of Nov. 1, the roof had been shingled, the exterior siding was in place and the front door and windows were installed. The interior walls are still in their skeletal form, frames of interjoined studs and plates awaiting the placement of electrical wiring, insulation and drywall.

“We are just thrilled, and the kids are very excited about it,” Harrington said in an interview.

“They still don’t understand that it’s going to be a while.”

But at least there is a light at the end of the tunnel for Harrington and Laundry, who will purchase the house for the cost of construction. They were among 24 families to apply for the house. Executive Director Eva Loomis of Upper Valley Habitat for Humanity said it was the most applications ever received by the nonprofit.

Applications sent to Upper Valley Habitat for Humanity vary in terms of housing needs and family sizes, Loomis noted. Some are large families seeking four or five bedrooms. Others are older couples who want a smaller home.

“We are chipping away at the need,” Loomis said. “But we are just a small player in a very large picture.”

The shortage of affordable single-family housing in the Upper Valley is notorious, persistent and without a quick solution.

An oft-cited housing study of the Upper Valley by three regional planning commissions estimated that the region will need to add approximately 10,000 new homes by the year 2030 to meet demand.

While there is new housing being built, most recently completed or pending commercial projects are apartments, predominantly studios or one-bedroom units with market-rate rents, instead of houses.

“What we don’t have being built are either smaller single-family units that can be purchased, like condominiums or townhouses, or what we call ‘starter homes,’ typically smaller two- or three-bedroom projects,” said Lebanon Mayor Tim McNamara, who works as associate director of facilities operations and management at Dartmouth College.

While Lebanon continues to increase its total housing stock — including the recent approval of a 152-unit apartment complex downtown across from Colburn Park and a 196-unit complex at the former Kleen laundry facility on Mechanic Street — city officials said they want to increase the overall diversity of housing options as well.

Over time a person will often transition through multiple types of housing, McNamara explained. A young adult or newly married couple might initially move into an apartment. Should the couple decide to have children, they may move to a single-family home. When the couple’s children have grown and moved out, the couple may wish to downsize and move into a smaller house, or a condominium or apartment.

Increasing the availability of smaller, affordable single-family homes in Lebanon would serve two key populations, McNamara noted.

But the cost of a single-family home can be prohibitive, especially for homebuyers who are just starting out. The median home price in Grafton County is currently $368,000, according to the New Hampshire Association of Realtors.

For 12 years. Harrington and Laundry have lived in a two-bedroom mobile home in Enfield, a 1970s model that they purchased from its previous owners.

During that time they had three sons: Killian, 11; Jameson, 8; and Rory, 4.

Killian, who has significant special needs, sleeps in one bedroom by himself. Jameson and Rory sleep in the second bedroom with Harrington. Laundry usually sleeps on the sofa in the living room, Harrington said.

In addition to being cramped, the mobile home has become dilapidated, according to Harrington. The floors have suffered excessive water damage and are rotting, and the continued cost of repairs have exceeded the value of the home. The cost to replace their mobile home, including to dispose of their current one, is estimated around $200,000, about the starting cost of a single-family home in some Upper Valley communities.

Harrington and Laundry were ready for a larger home. But they also faced a challenge that has become familiar for many families in the Upper Valley: severely scarce supply, coupled with limited appetite to build by local developers who view single-family homes as not profitable and too high-risk due to rising construction costs and cumbersome zoning.

“We saw an ad that (Habitat) was looking for applicant families,” Harrington said. “We were shocked when we heard back.”

On the other end of the homebuying cycle, McNamara said, are retirees or empty-nesters who seek out smaller homes to reduce their living costs or unburden themselves of the maintenance of a larger property or home.

New Hampshire and Vermont have among the fastest-aging populations in the country. The median ages in New Hampshire, 43 years, and Vermont, 42 years, rank below only Maine, 45 years. According to 2020 U.S. Census data, the number of New Hampshire residents ages 70 and older — approximately 171,000 people in 2020 — is projected to double by the year 2040.

Housing and math

Asked about the disproportionate attention of developers to building apartment complexes rather than townhouses or small single-family homes, developer Chet Clem, owner of Lyme Properties in Lebanon, pointed to balance sheets.

“The simple answer is math,” he said.

In the current industry conditions, Clem said a developer cannot make a profit building single-family homes. The current cost of materials and labor alone can make building a new house more expensive than the median home price, which in Lebanon is approximately $355,000.

And on top of that cost, the arduous process to navigate local planning and zoning regulations is also a major deterrent to developers. Some projects can take years to be approved, and the cost of designs, studies and permits during this period adds up. The time a developer invests during this phase also equates to money that could be earned in other ventures.

Multi-family projects like apartment complexes get developers “the biggest bite of the apple,” Clem explained.

This truth is not lost on Lebanon officials, who are currently proposing a series of zoning amendments to incentivize the development of small or affordable housing projects, including “cottage housing,” a cluster of four to 16 single-family units, called “cottages,” built around a common open space.

“A developer is looking to maximize their profit margin,” McNamara said. “That profit margin is likely to be in a larger multi-family rental housing complex (or) really high-end family homes in the $500,000 or $1 million range. You can make money on those. But you don’t make money on starter homes under current zoning laws.”

The ordinance changes would enable developers to build more units within a parcel and increase opportunities to maximize development of vacant or unused city spaces, also known as “infill development.”

The city hopes that local developers, including nonprofit organizations like Twin Pines Housing Trust, will pursue these types of projects if they can be profitable, explained Assistant City Manager David Brooks.

“If the numbers don’t pencil out, nobody is going to touch it,” Brooks said. “And nonprofits can’t afford to lose money either. If it’s not going to pencil out, they have to find grants and other sources to make it work.”

The city is also applying for a grant through the New Hampshire Housing Finance Authority, a nonprofit agency that facilitates access to affordable housing, to fund a pattern zoning project.

In pattern zoning, a municipality licenses a number of pre-approved building designs that already meet city regulations, streamlining planning and saving developers cost and time to design the homes.

“So if someone comes to us saying they have a piece of property or a big backyard and want to build (a housing unit), we can show them a design and say if they build this, they can be off and running,” Brooks said.

The grant, if awarded, would fund the cost of contracted architects who would come to Lebanon and design housing units sought by the city that align with the style and character of existing neighborhoods.

Sustainable and smart growth

At a joint meeting in September of the Lebanon City Council and Hartford Selectboard, officials from both communities expressed a similar worry about the impacts of shouldering too much of the burden to create housing.

While both Lebanon and White River Junction have committed to cultivating housing growth — both have added more housing units over the last decade than any other Upper Valley town — the board members also noted that addressing the region’s housing crisis needs involvement from all the communities.

“We are the Upper Valley, and we need to work together to find the solution,” Hartford Selectboard Vice Chairman Dan Fraser said.

But a lack of infrastructure in many small, more rural communities limits the capacity for housing growth. Even in Lebanon, developing in the city’s outskirts is impractical, officials said.

“The ability to create housing opportunities in new outer zones depends on having a source of water,” Brooks explained. “And the costs to extend water and sewer lines to these outer areas is prohibitive. These are areas where individual homes are connected to wells and private septic systems.”

For this reason many communities, including Lebanon and Hartford strongly favor in-fill projects, which build upon underutilized spaces that are often within the town or city center and are within the existing water and sewer lines.

Hartford Planning and Development Director Lori Hirshfeld, speaking last month at an Upper Valley housing summit, noted that a number of houses in Hartford are actually located on “double lots,” which opens opportunities for a homeowner to build an accessory dwelling unit (ADU), a smaller, secondary residential dwelling, such as a single-family house or apartment.

Most Upper Valley towns allow for ADUs in their ordinances, though the regulations vary for each town. In Claremont, for example, the owner must reside on the property, whereas some towns do not require owner-occupancy.

Woodstock created a program that increases access to affordable housing without building at all, by incentivizing people to rent their homes or attached apartments to middle-income professionals at below market rate.

In June, Woodstock launched the Rental Incentive Pilot Program though its Economic Development Commission, a sustainable planning group. The program pays owners of short-term rental units to instead rent to longer-term residents. The program pays landlords $3,000 for each unit with a one-year lease or $7,000 for each unit with a two-year lease. In exchange, the landlord agrees to cap the maximum rent at $1,000 for a studio, $1,500 for a one-bedroom or $1,000 per bedroom in a shared multi-bedroom unit.

Jill Davies, a housing development planner in Woodstock, said the program has so far has created three long-term rental units in town.

“The number may seem really small, but it’s like the low-hanging fruit you can do for small money and get extra units,” Davies said.

Patrick Adrian may be reached at 603-727-3216 or at padrian@vnews.com.

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