By Russ Thibeault , President
Applied Economic Research

The past decade has been one of growth and
rising prosperity in the Upper Valley economy. Some of the highlights of the Upper Valley’s recent economic performance are:

▪ The Upper Valley (including the 35 communities in the Hartford VT- Lebanon NH Labor Markets) added 10,800 jobs between 1991 and 2000.
▪ These same communities saw their population rise to 90,300 in 2000, a growth of 8,600 new residents, an 11 percent increase during the decade.
▪ The housing inventory grew by 2,800 units, a 7 percent increase between 1990 and 2000.
▪ The area has experienced the lowest unemployment rate in New Hampshire and Vermont, with unemployment rates consistently below the national average, as reflected in the chart below that contrasts the experience of the Upper Valley’s New Hampshire communities with that of the US.

Without an adequate supply of workforce housing, employment growth will likely be constrained.

Employment growth has been stronger on the NH side of the border than in the Vermont communities. New Hampshire houses the region’s major growth generators including the Dartmouth Hitchcock Medical Center and Dartmouth College. Furthermore, the lack of a sales tax in New Hampshire has fostered a concentration of retailing activity in Lebanon that draws shoppers from both states.

A recent analysis completed by Applied Economic Research for the Upper Valley Lake Sunapee Regional Planning Commission indicates that the region stands to continue to add about the same number of jobs in the coming decade as in the last decade, if the region’s housing supply can keep up with rising housing demand. Without an adequate supply of workforce housing, employment growth will likely be constrained. That study, The Upper Valley Housing Needs Analysis, points out, however, that an adequate supply of housing to accommodate future Upper Valley employment growth is not assured:

▪ The region began the past decade with a surplus of housing, but is beginning this decade with a housing shortage.
▪ The pace of housing construction in the last decade did not keep pace with increased demand. Housing price increases in recent years have exceeded income growth, resulting in a shortage of housing affordable to service and retail workers.

AER’s study concludes that the Hartford VT/Lebanon NH market area will need to add about 6,700 new units during the next decade to address current housing shortage issues and provide an adequate supply of labor for the region’s expanding economy. This is more than twice the subdued pace of construction experienced during the past decade. In the absence of higher rates of housing construction, the pace of job growth and nonresidential tax base growth will be below the region’s performance in the past decade. Furthermore, without higher levels of production the region’s current housing shortage will continue—an especially difficult burden to the region’s retail and service workforce.

Russ Thibeault is the President of Applied Economic Research in Laconia, New Hampshire. The firm provides economic and real estate consulting services to public and private clients in New England.