About half as many apartments were constructed in Chittenden County last year as in each of the half-dozen years before, according to a South Burlington real estate appraisal and analysis firm.
Allen, Brooks & Minor has tracked the number of new apartment units constructed in Chittenden County every year since 2000. The 20-year average is 286 units per year, but construction picked up considerably around 2015, said Brad Minor, a principal at the firm.
From 2015 through 2019, the average number of apartments completed in Chittenden County was 482. In 2019, 645 units became ready for occupancy. Last year, just 301 units were constructed in the county, Minor said.
Part of the reason for the drop is the timing of project completion. Many of the area’s major projects were finished in the second half of 2019. Apartment construction takes place on a long time cycle, so new projects picked up in early 2020 won’t be ready for occupancy until at least next year.
But Minor said the construction stoppage ordered by the state as a result of the Covid-19 pandemic last spring also contributed to the 2020 drop. More than 530 apartments are expected to open in Chittenden County in 2021, according to Allen, Brooks & Minor, which tracks commercial real estate projects closely and interviews individual real estate developers for biannual reports on the industry.
“We had six weeks of essentially a work stoppage in the spring,” Minor said. “So we had no new units coming online in the second quarter of 2020 because they couldn’t, and that pushed about 100 units that would have been built in 2020 into 2021. They are still coming.”
Rental housing is already in critically short supply in the Burlington area. The statewide apartment vacancy rate is 3.4%. In Chittenden County, it’s 1.9%, according to the Vermont Housing Finance Agency.
The shortage has driven up housing costs for many workers in the state’s most populous county. The construction of new housing is seen as a critical need by policymakers, in Chittenden County and in many other areas of the state.
Minor said about 80% of the projects that have been built in recent years offer market-rate housing, with one-bedroom apartments going for between $1,250 per month and $1,800 per month. The other 20% are subsidized by state and federal programs.
State lawmakers have been working for the past several years to promote housing construction. Sen. Michael Sirotkin, D-Chittenden, said last week he plans to propose a second housing bond of $37 million to $50 million to subsidize affordable housing. A $37 million bond that the Legislature passed in 2017 has leveraged federal and state money, tax credits and other resources to build nearly 800 units of housing in Vermont.
Lawmakers are also trying to ease the permitting process to make construction more affordable and predictable.
Permitting was one of the leading topics at the Lake Champlain Chamber of Commerce legislative breakfast this week. Matthew Byrne, a shareholder at the Gravel & Shea law firm in Burlington, told lawmakers he recently worked on a case where a developer was trying to build 35 to 38 units. Permit-related problems had held up the project for 12 years.
“Only the most dedicated developers can build multi-unit housing in a private market sense,” said Byrne on Zoom. “Someone doing a NIMBY-type action can hold up the case forever, essentially.”
First-time homebuyers struggle the most in the Chittenden County market, John Dwyer, president and CEO of New England Federal Credit Union, told lawmakers at the conference.
“The availability of what we now consider the first-time homebuyer level of $250,000 to $350,000 is a very chronic and long-term issue,” Dwyer said. “If anything can be done to expand the supply of that side, it’s certainly what we hear most often from our members as the biggest challenge.”