Special Board of Aldermen 10-27-2020 Page 7
The map on the right shows the sales price activity over the last ten years and sort of looking at that
citywide and what locations in the City are selling for prices higher than other locations. Again, higher
priced housing tends to be located on the edges and in some of the historic areas in the City while lower
prices tend to be found in the older neighborhoods, kind of more in the center portion of the City.
It was kind of interesting to see the sale price data corelating with the median household income data as
the overlay goes on the map. Rents are also up over 19% over the last 5 years with the greatest increases
seen in units renting from between $1,500.00 a month and just under $2,000.00 a month. Some of this is
the result of new product coming online in the City, but much is likely attributed to the steady rent increases
keeping up with the market over time. So the pressure is not just on owner market but it is also on the
renter market and changes in the renter market tend to disproportionately impact lower income households
as well, particularly in the Downtown area where we have those concentrations.
So let’s just take a minute to talk a little bit about household income and what different households can
actually afford from a housing perspective. So this first chart shows households in Nashua broken down by
income and it shows how many households are within each category. We refer to these from bottom to top
as lower income tier, moderate income tier, and upper income tier. About 35% of existing households
couldn’t afford Nashua’s median sales price or median gross rent today. 66% of those existing households
couldn’t afford the median sales price alone. Really that upper income band, those who are earning say
over $75,000.00 a year are the ones who can pretty much afford the median rent prices and the median
sales price for a home in Nashua today.
Housing affordability is also looked at from the perspective of HUD programs, Federal Housing and Urban
Development Programs and the income restrictions that those place on housing units. That’s done by a
formula to determine basically what a household should pay based on the area median income for the
Greater Nashua’s HUD region. So this table shows the percentage of households within each of those
income brackets. These actually closely align with the breakdown that we were just showing on the
previous slide. This information is important as we think about affordable housing, deed restricted housing
and any HUD or City programs that are targeting — that are sort of using targeted programs and using area
median income thresholds to target those programs.
What we like to do when we think about housing supply and potential demand is to look at any mismatches
that we might have between a household in a particular income bracket and then compare that to the
number of owner or rental units that are priced to those households. So the graph on the right shows
owner households and the units. And we can see there’s a huge gap between the number of owner
households earning over 120% AMI and the number of units that are technically affordable to those
households based on what they can pay for housing costs based on their income. This likely means that
higher income households are purchasing housing that’s actually at a lower price than what they could
otherwise afford, because that’s sort of Nashua’s market and a lot of the housing units that are coming
online, even though those prices have been going up they are still very affordable to households earning at
those top income tiers.
What ends up happening is because those folks who can technically afford to pay a little bit more, but might
not be able to find housing that is sort of priced to their income range are ending up having to what we call
“buy down”, they are probably buying houses that are in the 80% of the AMI range and 100% of AMI range.
And what happens a lot of times when we see a big gap at the 120% of AMI and above, is that those
households have a really strong ability to compete in the housing market. They have more income they
have the ability to generate a higher down payment; they could potentially pay cash for a house. They
have better credit oftentimes, all the things that create competition in the middle of the market end up
driving prices up bringing the vacancy level down and creating a lot of times ends up creating bidding wars.
Now | don’t want anybody to walk away from this presentation and say, “Eric said we should go out and
build a whole bunch of $800,000.00 or $900,000.00 houses to satisfy people at the top of the market”. But |
do think it is important to recognize that there are segments in the market that may not be potentially
served to the level that they could be and sort of the impact that might be having on the housing market.
