Editor’s note: This commentary is by Fred Jagels of Cabot.
Affordable housing in much of the U.S., including Vermont, has become a pipedream. Half of all households can no longer afford to buy a home. According to City Lab’s Richard Florida, this is “bound up with the broader financialization of housing — the transformation of housing from shelter into yet another investment vehicle.”
For more than 30 years, new construction has focused on the high end of the market — upscale homes, second, shoreline and ski area homes, urban condos. That is where the money is. In the more affluent parts of the country, any habitable space has potential for price appreciation, encouraging investors and flippers to scour neighborhoods for anything that can be upgraded and resold. Of the homes suffering default in the Great Recession, 40% were snapped up by investors, often by corporations and hedge funds. Simply put, residential housing has become an alternate stock market. Too much money has poured into it ratcheting prices upward, perversely eliminating a basic human need like affordable shelter. As commercial builders have abandoned the low end of the market it is left to nonprofits and manufactured housing to try to fill the gap.
There is another way.
When I first moved to Vermont everybody and his sister was building a house for themselves. Some of those opportunities have disappeared, but Vermont is still uniquely situated to host the owner-builder. As one of those builders, I know from experience that the owner-built home effectively cuts through the bloated and gentrified American housing market. In exchange for one’s time and sweat and settling for small and simple, the price of entry is pennies on the dollar.
Consider this.
- Many town centers in Vermont are losing population, losing schoolchildren, losing business. Access to land is the major roadblock for the owner-builder. What if those town centers bought up and divided land and made it available to owner-builders on favorable terms?
- Younger people no longer have the manual skills common to their grandfathers, separated as they are by generations of consumer and digital culture. What if the nonprofits now engaged in (too) slowly providing affordable housing, extended their mission to equipping this generation with building skills?
The construction of a modest house is not rocket science. Hundreds and hundreds of owner-built homes have been successfully built in Vermont. If the owner does most of the work, as much as 80% of the cost of commercial construction can be eliminated. Pay-as-you-go replaces a mortgage. The cash needed up front for tools and building materials can be much less than the down payment needed for an existing home.
Entry-level housing, post World War II, averaged about 700 square feet. By keeping within size and structural limits, a single person can build such a home with little assistance and with minimal use of heavy equipment. Basic building materials have remained remarkably stable in price. Usable recycled components are often available. The owner-builder concept is actually more feasible now than ever. Real improvements in materials, tools and techniques have emerged. There is a revolution in onsite energy and waste disposal technologies. The internet provides free instruction and design assistance in real time.
Here in Vermont the owner-builder does not face the administrative gauntlet that amateur builders confront elsewhere. Fees and mandated compliance measures of $20,000 or more mean nothing to the commercial builder of a half million dollar house. They are prohibitive for the first time owner-builder. In Vermont most towns only require a low cost permit to get started (after state water and wastewater and town zoning requirements are met). Given the opposite incentives that are in play, code enforcement is not that essential. The owner-builder does not have the labor, materials and time constraints that encourage the commercial builder to cut corners. Rather, as future occupant, the owner-builder is incentivised in the opposite direction. Code compliance itself, of course, is essential. Future lenders serve as police.
Although the main advantage is dramatically reduced cost, the owner as builder can design for energy efficiency, for simplified future maintenance, for site orientation and other choices that are simply not available on the market. The low end of the market today provides an array of glittering appliances encased in vinyl siding, a fate the owner-builder can avoid.
Any program like this would have its own set of rules. In return for access to a building lot, there might be stipulations regarding resale, deadlines for completion, site maintenance, etc.
The owner-built home could address a variety of contemporary problems:
- True affordability — the opportunity for those locked out of home ownership to begin to build wealth.
- Revitalization of town centers.
- Reverse the loss of manual skills — equip our young people with the resilience needed to face a warming world.
(For doubters, your scribe built a year-round quality home, including septic system, in the ’80s for under $25,000 and a seasonal home in the ’00s for under $15,000).
