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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5 years 7 months ago
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… Read more »
Steven Farnham
5 years 7 months ago
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… Read more »
5 years 7 months ago

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
5 years 7 months ago

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

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

5 years 7 months ago
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… Read more »
5 years 7 months ago
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… Read more »
John Fairbanks
5 years 7 months ago
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… Read more »
John Fairbanks
5 years 7 months ago
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… Read more »
John Fairbanks
5 years 7 months ago
5 years 7 months ago
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… Read more »
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