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Editorial: Vermont’s housing needs still aren’t being met
by John Fairbanks

According to the weather forecast, temperatures could drop below zero tonight over much of our state, and 4,000 Vermonters — one-fourth of them children — are going to be out there, homeless. Our shelters will be filled to capacity, so most of these people will have to make do with whatever temporary shelter they can find. Some will be lucky enough to sleep on the floor at a relative’s house or a friend’s apartment. Some will be sleeping in abandoned buildings. Others will spend the night in their cars.

This is the harshest example of many problems created by Vermont’s persistent affordable housing shortage. We simply don’t have enough housing to meet our needs, and we’re not building new housing fast enough to keep up with the growing demand. This hits low- and moderate-income people the hardest, but the housing shortage has become a problem for middle-class Vermonters as well.

Housing prices are soaring. According to the latest report on housing and wages in Vermont — “Between a Rock and a Hard Place” — the median price of a home in Vermont hit $165,000 last year, a 67 percent jump since 1996 and a 10 percent increase 2003. Rents are up there, as well, rising 24 percent since 1996. There aren’t a lot of Vermonters who have seen their wages rise that quickly.

To afford that $165,000 home, a Vermont family would have to earn a little over $62,000. Unfortunately, the median household income in Vermont is only about $43,000. That buys a $114,000 home.

This means that individuals and families in Vermont are paying more and more to keep a roof over their heads. When we talk about housing being “affordable,” we mean that a household isn’t paying more than 30 percent of its income for rent and utilities or for a mortgage, taxes and insurance. But nearly half the Vermonters who rent are paying more than 30 percent of their incomes to keep a roof over their heads, and the number of Vermonters pay 50 percent of their incomes for rent and utilities is growing.

The average Fair Market Rent for a modest two-bedroom apartment in Vermont is estimated by the U.S. Department of Housing and Urban Development to be $698. To afford that rent requires an income of $13.42 an hour, or about $28,000 a year. Fifty-seven percent of Vermont’s workforce is employed in jobs that pay less than $28,000 a year.

And Vermont’s housing experts say HUD’s estimate is too low, the product of a new formula that does not reflect the reality faced by Vermonters who rent. But even if HUD is correct, rents are still not affordable for thousands of people in our state.

This hurts our people, and it also hurts our economy. Employers around the state say Vermont’s housing costs make it harder to attract and keep workers, which limits business as it tries to grow.

Why is this happening?

There are lots of reasons. On the homeownership side, the great majority of new housing being built is at the high end. In 2004, for example, the median price for a new home in Vermont was $294,000, an 11 percent jump from 2003. An analysis of available real estate sales data for 2004 showed that not a single new home sold in Vermont in 2004 was affordable to a household earning the median income.

Another problem is the loss of a portion of our housing stock each year to the second-home/vacation home market. About 10 percent of the primary residence sales in Vermont in 2004 were converted to second homes or vacation homes.

Vermont’s housing market is also become a magnet for speculation. Investors, seeing a safe and profitable market, are putting money into Vermont real estate, and that helps drive up prices.

We’re still short of supply. In many areas of the state, studies show we’re hundreds, even thousands, of units short of the homes and apartments we need to adequately house our people. One of the reasons for this shortage is local opposition to housing development. Another is local zoning that discourages affordable housing.

And all this is happening against a backdrop of federal budget cuts and a state budget squeeze that threatens to take away greatly-needed resources for affordable housing development.

We all own a piece of Vermont’s housing problem, because it affects us all directly or indirectly. We need a solid commitment across the Green Mountain State to build enough affordable housing; because every Vermonter deserves a place to call home.

John Fairbanks is public affairs manager of the Vermont Housing Finance Agency