Lebanon’s Barrows Street homes back in limbo after lottery falls one buyer short

LEBANON — Three months after the City Council approved $2.05 million to build five homes on city-owned land on Barrows Street, the project’s future is uncertain again because not enough qualified buyers applied.

The city needed five qualified buyers to move forward, but “we only got four before the deadline,” Deputy City Manager David Brooks said Tuesday.

The city opened the lottery in September and accepted applications through Oct. 5. The drawing was tentatively set for Oct. 7.

Brooks said the city is “running out of time this fall to start, and it will only get more expensive in the winter. I don’t see prices getting any lower this spring.”

City staff will “be updating the City Council and seeing how we will move forward with the project,” Brooks said.

‘The best opportunity’

Chris Johnson is one of the four qualified applicants. He works as a video producer in Dartmouth College’s Office of Communications and has rented in Lebanon for nine years, he told the Valley News.

Johnson said he emailed the city on Oct. 8, after not hearing whether the drawing had taken place. City Manager Andrew Hosmer wrote back that day, Johnson said, telling him the city had received only four qualified applications and it could not move forward at this time.

A follow-up email from Brooks said the city would need to go back to the council that approved the project and its funding to ask whether to change the requirements or open it to a wider range of applicants, according to Johnson. Johnson said the email also noted that going back to the drawing board could mean higher costs.

Johnson already lives in the Barrows Street neighborhood. He said he heard about the project through the city’s email updates.

“I thought, well, this is probably the best opportunity one could ask for if you’re planning on staying in the area,” he said. “Obviously, no other houses are being sold at cost to potential buyers.”

The median sale price for a single-family home in Lebanon was $585,000 through August, up from $480,000 at the same point last year, according to New Hampshire Realtors.

Johnson said he liked “the idea that I could sign up to buy this house and that would be it, and no one would try and snipe it from underneath me” with an all-cash offer or a higher bid.

“The additional time and stress and money that comes with buying houses these days is unappealing,” Johnson said.

Johnson called the $425,000 target price realistic given rising construction costs. He said he “could afford to purchase a house at that price” but would “definitely have to do some budgetary planning.”

“Four-twenty-five kind of feels like it’s feasible, but it’s definitely going to be work for me,” he said. “If it was, let’s say, 500K, OK, that’s already a huge difference, especially when you factor in a 7 percent mortgage rate.”

Johnson said he has not put down any money. Selected buyers were supposed to learn the final price before a $10,000 deposit came due Oct. 19.

He said he doesn’t know who the other three applicants are, and he’s curious why so few people applied.

“Is it purely financial? Was it insufficient communication?” he said. “Is the city just not reaching the people that would be interested in this project?”

Johnson said the city’s emails sounded just as disappointed as he was.

“I can only imagine how much work and effort the city put in just to make this project happen,” he said.

What it takes to qualify

Whether a lender approves someone for a mortgage depends on several things, said Edward Bidlack, a vice president and senior residential banking advisor at Ledyard National Bank. Those include how much the buyer can put down, how much other debt they carry, the home’s property taxes and the interest rate at the time of purchase.

On a 30-year, $425,000 loan at 7.5% interest, the monthly payment would be close to $2,971, Bidlack said. Add about $660 a month in property taxes, plus insurance, and the payment comes to about $3,800 a month.

A buyer would need about $10,000 a month in income, and even that might not be enough, he said. At that income, the house payment alone would take up about 38% of a buyer’s monthly income. Lenders try to keep total debt, including car loans and student loans, under 45%, he said.

Bidlack said he “recently was not able to approve someone who makes $120,000 on a $200,000 mortgage.”

Asked whether $425,000 is affordable, he said, “I would not consider it low income.” For low- and moderate-income buyers, he said, “that just doesn’t work.”

Timing matters, too. “Rates went up a whole point this month,” Bidlack said, calling the market “ever changing and all about timing.”

“And that’s the problem,” he said. “People think, ‘We’re doing good, let’s buy a house.’ Then we start looking at the numbers and it doesn’t add up.”

How the project got here

The project has been about four years in the making. On April 21, 2022, the City Council unanimously adopted a “Resolution on Housing” that directed the city manager to address housing needs the market wasn’t meeting.

One step called for a “demonstration project” on “a city-owned parcel with high visibility and an opportunity for a reasonable number of units to help overcome barriers to affordability.”

Barrows Street became that project in 2024, when the city began planning homes for municipal and school employees on two city-owned lots off Hanover Street. The city used a $440,000 grant from InvestNH, a state workforce housing program, to cover early design and permitting, the Valley News reported at the time.

The project nearly stalled in February when estimates put the homes at about $430,000 each. The city redesigned it, and in July the council approved the $2.05 million package, which was expected to produce homes priced just under $400,000.

By September, the target price was back up to about $425,000. The city planned five homes, each roughly 950 square feet on its own lot. To qualify, applicants had to have lived in Lebanon as of July 15 and show mortgage pre-qualification for at least $425,000 or proof they could pay cash.

At the time, Hosmer said interest had been lower than the city expected because many middle-class families were asking whether the homes were affordable.

Johnson said that for now, he’ll keep renting.

“If it had moved forward, I think pretty likely I would have gone ahead and purchased the house,” he said. “If this project comes back around, then yeah, I would definitely be interested.”

Hosmer and City Councilor Tim McNamara, who has led the project alongside city staff, did not respond to requests for comment before deadline.