[A] new report says Vermonters need to earn $20.68 per hour to rent a two-bedroom home.
The National Low-Income Housing Coalition, which released the report, ranks the state as the 13th-most expensive in the country for renters — the same as last year. A Vermonter working at the $9.15 minimum wage would need to put in 70 hours per week to live in a one-bedroom home, according to the report, titled “Out of Reach.”
Vermont has been described as unaffordable for renters in several studies in recent years. “Out of Reach” ties rental cost to the wages required to afford different homes and marks the first time Vermont’s median “rental wage” has exceeded $20 per hour.
In areas of the Northeast Kingdom, the rental wage for a two-bedroom apartment is about $15 per hour. Several counties hit near the report’s median housing wage for Vermont, $20.68. Burlington’s rental wage is $25.54 per hour, and drives up the statewide median.
Housing market experts in Vermont agree that the rental affordability problem is a combination of lower-than-average wages in the state, and a low supply of rental units. About 70 percent of homes in Vermont are owner-occupied, according to Erhard Mahnke, coordinator for the Vermont Affordable Housing Coalition. The low supply of rental units drives up the price of those that are available, Mahnke said.
In response, Vermonters have developed a high proportion of “unconventional” housing units, according to Sarah Carpenter, executive director of the Vermont Housing Finance Agency. That means people have converted houses into multi-unit apartments and rented them out. However, still only between 1 percent and 2 percent of rental units are vacant, according to another study from the Vermont Housing Finance Agency.
“Vermont still ranks among the most expensive, and interestingly, among the most expensive without a metropolitan area,” Carpenter said.
According to the study, the other states with high rental wages share metropolitan areas, such as Boston, New York City, Philadelphia, Washington, D.C., or Seattle. Hawaii was first, Washington, D.C., was second, and California was third.
The fair-market rent for a one-bedroom apartment in Vermont is $836, and $1,075 for a two-bedroom unit. The mean hourly wage for a renter in Vermont is $11.78, according to the report. That wage can pay for a $613-per-month rental if the household spends 30 percent of its income on housing.
“We have more or less lower wages and still really high rents,” Carpenter said. “It’s a tight market, and you can charge what you can get. It becomes, I think, a landlord’s market.
“You get in the rural areas, and there’s really nothing to rent,” she said. “You can’t build a rental unit for what a lot of people can afford to pay, and that’s really the dilemma.”
Meanwhile, leaders in Vermont are working with affordable housing advocates on two strategies to improve the housing situation: helping middle-income people buy homes and increasing the supply of rental housing units for low-income people.
Increasing Rental Unit Supply In Burlington
Burlington’s rental wage for a two-bedroom unit is the highest in the state, according to the “Out of Reach” study. Even a one-bedroom unit requires a person to make $19.56 per hour.
Mayor Miro Weinberger said he has been working to address the affordability problem in Burlington, where renters spend spend an average of 44 percent of their incomes on housing. The U.S. Department of Housing and Urban Development says anyone spending more than 30 percent of their income on housing is “cost burdened,” and may have trouble affording food and clothing.
“It’s why we’ve put toward the Burlington City Council this 18-point housing plan,” he said.
A housing report from May 2014 attached to Weinberger’s plan says that more than 8,000 Burlington students, including commuters, live off campus. Weinberger said he knows for sure that at least 3,000 are living in rental housing off campus, and he said building as many as 1,500 student housing units would pull some of them out of the traditional rental market.
“Student households are able to pay, or willing to pay, $750 or more per bedroom, which is not the way a couple with one child would be thinking about rent,” Weinberger said.
The mayor’s housing strategy report found that several people with low-wage jobs commute to Burlington so they can pay cheaper rent, and also, that affluent Burlingtonians are supportive of building high-end condominiums in the downtown area.
But Weinberger said because the majority in the city are renters, the rental market should not be ignored. He cited the 2007 recession as one reason not all families should feel obligated to buy homes.
