Report: Housing costs in Vermont escalate, even in recession

Montpelier resident Nancy Smith said she was priced out of many apartments last fall and found herself touring "sub-livable" rentals when she moved to Vermont last fall Photo by Josh Larkin.

Montpelier resident Nancy Smith said she was priced out of many apartments last fall and found herself touring "sub-livable" rentals when she moved to Vermont last fall. Photo by Josh Larkin.

The national economy might be improving, but Vermonters still struggle to afford rent, according to a 2011 report from the Vermont Housing Finance Agency. A panel of state lawmakers and housing authorities painted a bleak picture of the future of affordable housing and warned that cuts in the federal budget could worsen an already dire situation, at a press conference at the Statehouse Thursday.

“Rental housing doesn’t seem to be aware that there’s a recession going on,” said Sarah Carpenter, executive director of the Vermont Housing Financing Agency. Citing stagnant income, low vacancy rates, and a 7 percent increase in rent over the last year, the report found a “growing gap” between wages and rental costs.

The study also found that owning a home remains out of reach for many Vermonters. Low interest rates on mortgages lessened the burden of buying, but housing prices have climbed 3 percent since 2009 while Vermont’s median income declined.

The gap between Vermonters’ incomes and affordable housing is nothing new, according VHFA research. Affordable rent slid beyond the state’s median wage earners in 2000, and home prices have outpaced Vermont’s median income for over a decade.

Federal budget cuts and expiring subsidies for Vermont renters, however, exacerbate an already tenuous situation. With a rising number of homeless families with children using emergency shelters—and finding little affordable housing available for a transition out of homelessness—the report concludes that Vermont has “cause for alarm.”

17th Worst in the Nation

Nearly half of Vermont renters and 38% of owners pay too much for their housing, jeopardizing their ability to afford healthcare and food, says the VHFA report. The numbers rank Vermont 17th worst in the country for affordable housing.

VHFA Executive Director Sarah Carpenter. Photo by Josh Larkin.

VHFA Executive Director Sarah Carpenter. Photo by Josh Larkin.

With incomes effectively the same for a decade, said Carpenter, the problem is on the rental side. “People are staying put, not buying,” which tightens the rental market. Since Vermont, unlike many western states, didn’t overbuild in the housing boom, vacancy rates in the state are exceptionally low.

Homeowners fared better by comparison, with the number of houses sold in Vermont rising 8 percent in 2010 and foreclosures remaining well below the national average. Foreclosures continue and closing costs are rising, however, and Vermont’s median home price is $195,000, up 3 percent from a year ago. A $6,000 gap persists between a mortgage most Vermonters are able to afford and what they’ll need to spend on a new home.

Sen. Vince Illuzzi, R/D-Essex-Orleans, highlighted the problems of homelessness. Although emergency shelters received more funding this year, the increase in services tracks with the increased demand: a state study found that the average stay at homeless shelters increased to 34 days in 2010, up from just 13 days in 2000.

“Despite our best efforts to increase our funding of affordable housing,” said Sen. Illuzzi, the state is failing.

“Our workforce housing”

Nancy Smith, a resident of Montpelier, moved to Vermont with her daughter in September and sought a two-bedroom apartment. Addressing the media at the press conference on Thursday, she said she found herself priced out of acceptable housing, touring rentals she described as “sub-livable.”

Smith and her daughter, Lilly, eventually rented from the Central Vermont Land Trust’s North Branch Apartments on Elm Street, a block of housing set aside for low-income renters. With the future of funding for housing subsidies on the line, she says many of her neighbors “aren’t going to be able to handle it if things get any worse.”

Lawrence Miller, secretary of the Agency of Commerce and Community Development, emphasized that Vermont rentals — “our workforce housing” — are worst hit, in no small part because of the high cost of heat. The VHFA reports that 74 percent of Vermont’s rentals were built before 1979 under lax efficiency standards and building codes. Nearly half of Vermont’s homes use fuel oil for heat, as compared to 7 percent nationally, making them susceptible to unpredictable prices.

The VHFA found that affording a “modest” two-bedroom apartment in Vermont requires a household income of $39,595—more than twice the state’s minimum wage at full-time employment. And while some households have more than one wage earner, nearly two-thirds have only one or fewer.

Compounding the issue is Vermont’s job market. In a survey, the VHFA tallied over half of the state’s non-farm jobs with median salaries below the $39,595 minimum. “An estimated 34,000 renting households…were paying more than 30% of their income for housing costs,” states the report. According to the VHFA, housing costs (including rent, mortgage payments, utilities and upkeep) must remain under 30% of a household’s income to qualify as affordable.

“We’re going to have to innovate”

With a longtime dearth of affordable housing, the VHFA report concludes that Vermont needs to invest in upgrades and new construction. While the VHFA report is sanguine about new homes — “construction is a great economic engine” providing jobs, wages, and $1.10 generated for every dollar invested — Carpenter says the private sector won’t invest in building until profits return.

With federal budget cuts looming and a large portion of the state’s 6,600 housing vouchers at stake, there’s little good news for Vermonters. Illuzzi said that the legislature hasn’t identified anything currently in existence that could solve the affordable housing problem. “We’re going to have to innovate,” he concluded.

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  • What’s telling in this article is this phrase: “The VHFA reports that 74 percent of Vermont’s rentals were built before 1979 under lax efficiency standards and building codes.”

    Saying that pre-1979 was characterized by “lax efficiency standards and building codes” is another way of saying that AFTER the legislature required these standards and codes, new construction became significantly more expensive, and we have faced a tighter housing market since then.

    When combining that legislatively-caused problem with the costs imposed on employers trying to create new jobs (again, by the legislature), is it any wonder that housing continues to be out of reach for more and more folks?

    Given this background, it seems absurd for the state to suggest that this problem requires the application of yet more of their centralized wisdom. It’s their “innovation” that contributed to this problem in the first place.

    • Steven Farnham

      Good Morning, Mr. Kheiry.

      Hope you’re enjoying this… well, it was a sunny day…

      To quote a famous politician whom I would guess you admire far more than I, “There you go again.” Let’s say you want to install a gas appliance or two in your home. For example, suppose you want a gas stove. And let’s say that there is a small add-on room on one corner of your house which you can never get warm enough in the winter, and you figure, why not install a small gas heater to get you over the hump in those coldest of days and nights. And let’s say your only qualifications for this work is that you’re kind of handy. Ready? Can you do it?

      Yes, you can. You can install the entire setup, and it can be built according to acceptable standard, and it can be tested safe. Now, can you use it? No. You can buy the vessel in which to carry the fuel, and you can fill it and bring it home–but you cannot connect it to your system, because in order to do so, you need a regulator. And no one will sell you that regulator unless you’re “qualified” to install it. If you think this is some more of that insufferable government regulation, you’re partly right.

      The idea behind this regulation is that if some winner of the “Darwin Award” installs his own gas system and fails to build it correctly (that is safely), he could blow himself, and anyone else in his home (and possibly anyone else in the same block) clear into the stratosphere. So the much-ballyhooed logic and motive for this regulation is public safety. Sound good so far?

      Bovine excrement. When was the last time you heard of a house or city block destroyed in a propane or natural gas explosion or fire? In my entire life, I’ve heard of two, and I cannot tell the specifics of one but both were attributed to mistakes made by the gas company (or their agents). Have you ever heard of a propane house explosion or fire resulting from homeowner’s poor workmanship? I never have. Are we to believe this is because nobody ever works on his own gas lines connections and appliances? If you have ever seen an RV, a fishing shanty, or a backyard barbeque, you know better than to think people don’t tinker their own gas appliances, and by the way, they’ll sell you as many of that grill-sized regulator as you have money (or borrowing power) to do so.

      Over a thousand people die every day in this country from unsafe use of gasoline (or unsafe use of the thing that burns it), and this is despite the fact that training and a license is required to operate a gas buggy. Should we make it illegal for people to buy automobiles? So what’s up with this ridiculous “regulation of (propane gas) regulators”? Why the prohibition against their sale to the general public?

      Let me ask another question. When is the last time you heard of someone dying in his or her own home from inhalation of toxic septic system gasses? I’m not saying that septic fumes are without their hazards, but I have never heard of anyone dying from “septic gas inhalation.” Yet, as God is my witness, a few years ago there was a series of advertisements in the Barre-Montpelier Times Argus urging people to call their state representatives and senators and request passage of a bill that would prevent an “unauthorized person” (my words) from tinkering his own plumbing, and possibly creating a “hazardous situation.” I do not know if any law was enacted, but either way, who was behind that one? Probably another one of those meddlesome do-gooders who are always up to anything but good, right?

      Well, if you think so, you’d be wrong in both cases. The government has nothing to say about propane gas regulators. It is perfectly legal to purchase a gas regulator for your home gas system. It’s just that the gas companies won’t allow you to buy them. And I do not know whether the tinker-your-own-plumbing ban passed or not, but if I recall correctly, it was some plumbing or plumbers’ association that was paying for the ads. Funny that, eh?

      This all may be of little consequence to you, but if you ever have a home equipped to burn gas with its own tank and regulator, it’ll get your attention when the price of your fuel triples in early January. Just try switching gas companies⎯I dare you. The new company will charge you rent for a new tank, charge you for a new regulator, and charge you to install all of it and, charge you to inspect the system, and then charge for the fuel to fill the tank. Meanwhile, your previous gas company will refuse to pick up their tank and regulator (which you may not mind), but you will mind that they continue charging monthly rent for something cluttering up your yard which you no longer need, want, or use.

      You can buy a regulator from a certified technician whom you hire to install on a tank which you may also buy and own. Problem solved, right? Now if your gas company is sticking it to you, you may just hop over to the competition which is priced more reasonably since the whole system, tank, regulator and all is yours, right? Well if yours isn’t the gas company’s tank, good luck finding a gas company that will fill it.

      You see, not all costs associated with owning a home now can be correctly attributed to “government regulations,” as many are not of the government, and many that are serve the interests of some industry or special interest, and never could pass the “straight face” test relating to “public safety.”

      And don’t get me started on the insanity one must endure these days to get a septic system installed. Mind you, I have no issue with the original intent. Groundwater resources are a common good, and I agree that one ought not be able to make inappropriate use of them even on one’s own land. However, the law forbids one to design and build his own septic system even if it’s inspected prior to burying it. One must endure the insane cost of an engineer to do this, and then it still has to be inspected prior to burial. That is state law. Wonder who pushed that through? My guess is a bunch of septic engineers who were out of work.

      You see, it isn’t government regulation per se, which is evil. For the most part, it’s industry and their lobbyists that are the problem. Suppose a movement was started to regulate the fuel economy of automobiles sold in Vermont, and bill was written to ban the sale of any car which produces less than sixty miles of travel out of a gallon of fuel. Should such become law, my guess is that most auto dealers would close up shop and go to selling bicycles.

      Is this bad? Would Vermonters like it if they had to go out of state to buy cars? I guess it’d be kind of inconvenient, but I think most could deal. After a while, the law would most likely be repealed, or amended to mandate a more reasonable and attainable standard like, say 45 miles per gallon. I would also guess that many Vermonters could see the possibility of such an outcome, and would oppose the 60-mpg bill in the first place.

      But what harm would be done if for a little while, the law of Vermont banned the sale of less than 60-mpg automobiles? None, as far as I can see. No one would die because of it. And to my way of thinking, it is the people’s right to enact a law, however foolish, with having to fight off the corporate industry mafia.

      It is my guess, Mr. Kheiry that you and I will never agree that government regulation is good or bad, but I would feel like it there was a touch more sanity out there if we could at least agree that industry lobbying mafia ought to banned from the hallowed halls of the people’s government.

      Sorry this was so confounded long. 🙁

      Best regards,

      Mr. Farnham

      • Mr. Farnham,

        Great stuff. You are absolutely right that when special-interest lobbyists convince lawmakers to pass legislation that benefits them and their members, the rest of us pay the price, and it’s usually not worth it.

        But I guess I’ll also disappoint you: I don’t agree that we should outlaw the industry lobbying mafia from Statehouses across the land. Instead I believe we need lawmakers who have at least some semblance of a spine, so they can remain upright when subjected to the pressure to pass self-serving legislation.

        Perhaps I’m being unrealistic.

  • Tom Pelham

    Here’s a critque of VHFA’s annual affordability \study\.

    http://www.vermonttiger.com/content/2011/04/softer-rock-harder-place.html

  • First, the rental housing cannot and does not speak. The owners of and managers for these housing facilities do speak. I am an owner. See my website above. Are the numbers being thrown around, ie percentages, based on all of Vermont or only Montpelier and Burlington, cities? I ask because my property is considered affordable housing. I work now with the VSHA as did my parents, now deceased, since 1970. WE have great buildings. One was built from the ground up in 1970, the second was completely renovated in 1978 from a farmhouse with one apartment to a four unit apartment building. It is beautiful. We now have a new oil burner, Buderus, in each building and new water heaters.
    WE have had to raise rent because the cost of oil has skyrocketed. I pay on receiving my bill and thus get the cash price, but even so, my last bills wer $3.99 a gallon. I cannot stop heating the buildings because I can’t afford oil. But I cannot afford to rent either as I cannot get the money to cover not only my mortgage, but taxes insurance, water and oil! Oil has quadruple since my parents death in 2004. At that time the rents were $500 and $600 with EVERYTHING included. My parents were good hearted but this coudlnt be maintained. Thus, our rents are $800 for a large one bedroom or a tidy 2 bedroom, with all included except electric. We live in a small town. We have lost 4 tenants n the fall of 2010. Three went over the RIVER to NH, no state income tax among other things, the fourth moved in with her son for the winter as she had been told by VSHA that she w as on the \list\, the same list that closed in September 2010 for lack of federal funds. She was told she was to be officially accepted for a voucher in 3-4 months. Yet when I called on her behalf I was told,\ no it was going to be 3-5 YEARS! Who is confused here? A housing trust in Bradford Vt bought/had several buildings that were completely renovated at state/federal expense a few years ago and they get discount oil, but they are very vacant! They kicked out all the poor people and only rent to so many below a \certain threshold.\ I spoke to the lady in charge there last year, who told me and this is a quote that I also gave to VSHA, who were shocked that this was stated to me,\ At the end of the day, Sukie, I have no debt load! Well, strike me dead because at the end of EVERY day, we have a debtload. WE got no govt money. We had to go to oru bank and borrow it. WE dont get a state discount on our oil. We do not discriminate, we rent to folks with jobs and money to pay the rent and good references. We like kids and old people and anyone is welcome.
    We are being discriminated against. I have called and written to Sanders and Leahy and Welch/They refuse to respond. How can they, when we have Leahy on continued current use for his little estate in Morrisville that pretty closely matches on e of my rentals.
    I am ashamed of our legislature and our Congress. Most of them lack the knowledge, much less the expertise to handle the job of informed law making.
    I know Senator Illuzzi personally, ask him. He has lots of poor people in his district. But one last fact, for someone who pays $800 a month with that figure representing a third of hi/her/their income,would be making 3 x $800 for a total of $2400 a month times 12(months) is a yearly income of $28,800, not $39,+/-thousands. It can be done, numbers do not lie. So some of these important peole quoted here, above, need to re-examine their math and the numbers and VSHA and VHFA need to pay attention to all of the facts. Perhaps, just perhaps they are making too much money. I am not suggesting anyone wants to live on $28,800 but I am saying that it is a bottom line figure not even mentioned here.

  • RE the comment just above my first one, I agree that no lobbyists should be allowed in our lawmaking processes. READ CORRUPTION. DOES ANYONE IN MONTPELIER OR DC FOR THAT MATTER HAVE THE BALLS TO END IT? Hell no.
    Bunch of cowards.

    Sarah Carpenter and the rest of these folks need to get out into society, ie rental areas, and really visit and see the situation and talk to folks, not only potential tenants, but the really good landlords who are all suffering. We live 30 mintues from DHMC in Hanover. Someone there just put up a new complex of 250 UNITS and they are offering and giving 3 FREE months rent to get folks to sign u p and live there. Do you think I can compete with a conglomerate? Duh, NO!!!
    Govt is screwing us all, painfully slowly. Armageddon talk will seem like a fairy tale when Americans who have had enough to the point of too much, finally really rise up and complain. This country and its governments had raped us financially while supporting the crooks in the big banks. I FOR ONE AM FED UP.
    I AM NOT A TEA PARTIER, BUT I AM EDUCATED AND HONEST AND HARDWORKING AND I WILL NO LONGER WORK FOR SOMEONE WHO IS AN IDIOT
    GIVING MY MONEY AWAY TO THE REST OF THE WORLD WHILE I SWEAT ALL DAY FOR LESS THAN ZERO. WE HAD A $32,000 LOSS LAST YEAR. WHERE THE HECK DO YOU THINK THAT CAME FROM? WAke up America.

  • John Fairbanks

    As one who worked in affordable housing in VT for eight years, and who supervised the production of the housing/wages report for seven years, I feel qualified to weigh in here.

    First, re: Art Woolf’s annual critique of the report:

    I say, “annual,” because Art always says the same thing about the report (of course, the h/w report usually says the same thing, so that’s a wash). Art’s take has always been that we should measure affordability by what “households” can afford, but as the report notes, a large number of “households” do not have two wage earners. I don’t know how he’s approaching it these days, but Art, in the past at least, has pronounced housing in Vermont affordable based on the analysis of what “households” filing married/jointly could afford. (That, as I recall, was about one-fourth of filers, and tended to be the better-off filers.) As he and I have discussed in the past, that’s one way of looking at it, but it’s a snapshot being presented as a landscape. It is quite true that, for households earning $58,000 and above, there is affordable housing available, but that doesn’t make housing in Vermont “affordable.”

    Every Vermonter needs a room over her/his head. So it is germane to look at what housing costs are relative to the entire income-earning population. Housing advocates would not maintain that everyone deserves to own a home; in fact, they usually argue that we put too much emphasis on homeownership and don’t provide enough affordable rental housing.

    Art is correct in his statement that ill-conceived public policies and poor regulation created the mortgage mess that still plagues us. We de-regulated the financial industry and then tried to create the “ownership society” (that was George Bush the Younger’s idea, BTW) through the market rather than with public subsidies. We all know how that one turned out.

    To Art’s point that Vermont has a high homeownership rate, it has been noted in the past, and will be here again, that most VT homeowners purchased their homes before 2000, when things started getting crazy in our market.

    His contention that if we build more expensive housing, that will free up less expensive housing for occupancy, has never, to my knowledge, been borne out in practice. In fact, if people are stuck in rentals or current ownership, that more expensive housing won’t help them one whit.

    Finally, his criticism of VHCB as wasteful because it funded the renovation of a store in Putney is, frankly, dishonest. Given the enormous number of housing and conservation projects VHCB has funded over the years, pulling out one example – and we don’t even know if that was a waste; we only have Art’s opinion – is nonsense.

    As to Mr. Kheiry’s predictable lament that it’s all government’s fault, I say bollocks. I don’t know how long Mr. Kheiry has lived in Vermont, or how much housing he has seen, but I have been in a lot of pretty ratty old housing traveling around the state, and I don’t think loosening building and safety codes is the way to make things more affordable. And, if that was driving the costs up, we would have seen the price curves skyrocket much, much sooner.

    One of the biggest drivers of housing costs – in a way, the result of government action – is the lack of density. Too many towns in the state have zoning and planning commissions stocked with people who don’t want affordable housing in their communities. So they require densities that make it difficult or even impossible for developers to build enough units to spread out the cost and keep prices and rentals down. More than one developer i talked to during my housing years said that, “if you could give me one thing that would help me build more affordable housing, give me density.”

    One other driver, at least in the early “oughts,” when I was editing this report, was the market, money flowing into Vermont that pushed up the costs of owner-occupied housing. I remember when I sold my first house in 1990, and a lot of people told me to advertise in Boston, because people down there were so enamored with Vermont, I could charge more. (I sold to a Vermonter, BTW.)

    But what is often overlooked in the housing/wages report is the wage side. It really boils down to the fact that an awful lot of Vermonters work in jobs that don’t pay very much. As long as that condition exists, as long as The Market that Mr. Kehiry and others revere so, keeps wages down, this situation, along with the unaffordability of other necessities, will continue.

    • John Fairbanks

      One perhaps illustrative addition:

      My household purchased our house in Montpelier in 1998. At the time, my household income (I was the only income-earner at that particular time) was 63 percent of the price of the house, meaning it was easily affordable. We refinanced 8 years later, and by then our two-income household was earning 57 percent of the now-doubled market value of our home. Still affordable, certainly (I am in Art’s preferred universe of households), but less so than when we purchased originally.

      So, if our household lost ground, think of what happened to those many thousands of Vermonters unlucky enough to have to live on more modest incomes.

  • John Fairbanks
  • As the dollar declines, energy prices and the prices of goods and services that are based on energy, will go up, putting more pressure on households whose after tax incomes are stagnant, and will be stagnant for some years, meaning living standards will decline for at least the bottom 90 % of households. the top 10% of households will still be OK.

    energy efficiency needs to be at the top of the list, followed by the most efficient renewables of which utility scale wind is the best and residential small wind is the worst. EE should be subsidized before all renewables, because it is more effective per invested dollar.

    Effective CO2 emission reduction policy requires that all households eagerly participate. Current subsidies for electric vehicles, residential wind, PV solar and geothermal systems benefit mostly the top 5% of households that pay enough taxes to take advantage of the renewables tax credits, while all other households are required to pay for them by means of fees and taxes or higher electric rates; the net effect is much cynicism and little CO2 reduction. Improved energy efficiency policy will provide much greater opportunities to many more households to significantly reduce their CO2 emissions.

    Energy efficiency will have a much bigger role in the near future, as energy system analysts come to realize that tens of trillions of dollars will be required to reduce CO2 from all sources and that energy efficiency will reduce CO2 at a lesser cost and more effectively. Every household can participate.

    Energy efficiency projects:

    – will make the US more competitive, increase exports and reduce the trade balance.

    – usually have simple payback periods of 6 months to 5 years. 

    – reduce the need for expensive and highly visible transmission and distribution systems.

    – reduce two to five times the energy consumption and greenhouse gas emissions and create two to three times more jobs than renewables per dollar invested; no studies, research, demonstration and pilot plants will be required. 

    – have minimal or no pollution, are invisible and quiet, something people really like.

    – are by far the cleanest energy development anyone can engage in; they often are quick, cheap and easy.

    – have a capacity factor = 1.0 and are available 24/7/365.

    – use materials, such as for taping, sealing, caulking, insulation, windows, doors, refrigerators, water heaters, furnaces, fans, air conditioners, etc., that are almost entirely made in the US. They represent about 30% of a project cost, the rest is mostly labor. About 70% of the materials cost of expensive renewables, such as PV solar, is imported (panels from China, inverters from Germany), the rest of the materials cost is miscellaneous electrical items and brackets.

    – will quickly reduce CO2 at the lowest cost per dollar invested AND make the economy more efficient in many areas which will raise living standards, or prevent them from falling further. 

    – if done before renewables, will reduce the future capacities and capital costs of renewables. 

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