This commentary is by Zachariah Watson of Montpelier, executive director of the nonprofit Central Vermont Habitat for Humanity. He is a former state representative.
As executive director of Central Vermont Habitat for Humanity, an affordable housing nonprofit, I am concerned by the proposed appropriations of ARPA funds for “affordable housing.”
The majority of the appropriations, over 90%, will go to supporting subsidized rental units. This is concerning because these investments will shape our future housing stock with very little opportunities for homeownership for low- to moderate-income Vermonters.
Depriving residents of one of their only means of prosperity, homeownership, will exacerbate the gap between the rich and the poor and could have far-reaching impacts on the wealth of Vermonters.
There is a need for affordable rentals, but they should not be considered workforce housing, and should not be a primary focus of investment into affordable housing. Subsidized rentals for low-wage earners is a subsidy for businesses that do not pay a livable wage. A worker who earns low wages should be able to build their wealth by investing in their home through mortgage payments and not be forced to rent because that is all that is available.
Regardless of the type of rental, rent dollars go into someone else’s bank account. If we want to attract a good workforce to Vermont who will be a part of our communities, we need to create affordable housing for homeownership.
Rentals can have a negative multiplier effect on the wealth of a worker when their rent goes up as the economy grows, but they do not see their wages grow at the same rate. Renters can become poorer and be even less likely to save enough money to buy a house.
Conversely, homeowners can benefit from economic growth because their home gains value over time. According to a 2019 Survey of Consumer Finances, a household was the largest asset on the balance sheets of Americans. This is significant because if we are not creating opportunities for affordable homeownership, then we are robbing future generations of one of their only means of obtaining wealth.
In the words of state Sen. Kesha Ram-Hinsdale, “Homeownership builds middle-income families.”
Building homes for homeownership is not impossible. The challenge has been created because the state and federal governments have not adequately prioritized or monetized programs that support homeownership and as a result Habitat for Humanity affiliates are the primary organization building homes for affordable homeownership in Vermont.
In a June 2021 Vermont Business Magazine article titled “The Conspiracy of Goodwill,” Gus Seelig, executive director at the Vermont Housing & Conservation Board, was quoted as saying, “Nobody today is building starter homes — that 1,000- to 1,200-square-foot ranch — as a business. … Habitat for Humanity builds them all over the state, but they build seven or eight homes a year.”
In addition to Vermont Housing and Conservation Board subsidies, millions of dollars are available through tax incentives and vouchers that specifically support the low-income rental industry. The uneven distribution of incentives and subsidies has created a housing industry focused on building rentals.
As a result, in 2021, of the 800 housing units subsidized by the Vermont Housing & Conservation Board, only 17 — less than 3% — were built for homeownership.
The Vermont state government can help meet the needs of our housing market and support building more affordable homeownership opportunities by making the following investments into:
- Vermont Housing & Conservation Board, and directing it to commit larger subsidies for homeownership projects.
- The Capital Investment Program, with a fund designated for building workforce housing for homeownership.
- A Down Payment Assistance Program through the Vermont Housing Finance Agency for grants to first-time homebuyers who are also first-generation homebuyers.
- Vermont Housing & Conservation Board to use up to $5 million to fund grants for large employer housing matching grants to create new housing, commercial property conversion matching grants, and a multiagency coordination plan for neighborhood development.
- A missing housing program that will provide subsidies for new construction or acquisition and substantial rehabilitation of owner-occupied homes for income-eligible buyers with shared equity clauses attached to the subsidies.
