This commentary is by Clay Adams, president and CEO of Mascoma Bank.
As the leader of a community bank, I am afforded a broad view of the housing crisis facing our state. At Mascoma Bank, we see this each day through our residential mortgage lending activities affecting borrowers at every point of the socioeconomic spectrum. It is most heartbreaking to see the challenges facing those attempting to purchase their first home.
During the Covid-19 pandemic, the interest rate environment was more favorable for homeownership. However, the unprecedented 11 rate increases and quantitative tightening by the Federal Reserve in 2022 and 2023 led to much higher interest rates as attempts were made to reduce inflation.
These federal actions result in less purchasing power for prospective buyers. There is a very strong likelihood that mortgage rates will come down over the next year, but the larger problem will remain the dearth of housing in Vermont. As a result, home prices will continue to rise beyond the reach of many Vermonters, even if the interest rates become more favorable for homeownership.
In the conversations I have with business owners and leaders throughout the region, regardless of business size, the common refrain is the difficulty finding and retaining employees. Most often employers will cite to me the difficulty employees, particularly those trying to relocate to Vermont, face finding suitable, affordable housing.
This impacts every sector of the Vermont economy. It is not unusual to have someone accept a job and then regretfully retract that acceptance because they cannot find housing. One person told me they never thought they would pay more for rent in this region than in Los Angeles from where they had relocated.
We are also starting to see people leave the region for opportunities in other parts of the country where housing is more plentiful and affordable.
This typically happens when someone has worked and been trained by an employer over a number of years. Quite often this is someone looking to start a family or find something beyond an apartment. Their training affords them mobility, and they can rather easily find another job and purchase a home in another part of the country.
Shortage of housing is jeopardizing the economic vitality of the region, retention of younger workers and ability of businesses to expand their operations or even site themselves in Vermont in the first place.
I also see businesses taking matters into their own hands. Some are leasing large numbers of apartments, subsidizing them and then offering them at more affordable rates for their employees. This may help the business leasing apartments, but it effectively reduces availability for other renters. Others are becoming the developer of housing themselves.
In the Upper Valley, a group of businesses worked with Evernorth to create the Upper Valley Loan Fund. We capitalized this fund with $10 million to be allocated to multi-family, permanently affordable workforce housing projects for those in our communities earning between 50% and 80% of the average median income. The employers receive a 1.5% return on their investment.
This creates a very efficient and flexible capital stack that makes shelter more accessible to a greater number. To date, this fund is being invested in three different projects that will lead to nearly 200 affordable homes — each of them also getting investment from the state of Vermont through the Vermont Housing & Conservation Board and, as an added benefit, will be affordable forever.
All of these examples illustrate two things to me:
- The housing market is under great duress and not operating in a manner that serves all constituencies. It is especially not serving the needs of everyday Vermonters.
- This problem has become so prevalent and dire that every sphere of our regional society — all levels of government, nonprofit and business — are now collaborating more to identify solutions. This gives me some hope.
We must continue allocating resources to housing, especially housing that is permanently affordable, meaning it is held forever at rates that are affordable to low- and middle-income Vermonters. The need here, whether it is multi-family apartments or missing middle homes for sale, is the greatest.
As an initial step, full funding for the Vermont Housing and Conservation Board is essential. The Legislature should be commended for their funding efforts in recent years to go beyond their base funding. Continuing to commit $110 million or $140 million annually will allow housing providers like the Twin Pines Housing Trust in my region, Evernorth and many other capable community organizations to address this need.
One does not need to work for a housing nonprofit or work for a community bank to advocate for housing. The beauty of democracy in Vermont is that local voices matter a great deal. Attending city council, selectboard or planning board meetings and expressing your support for inclusive zoning or specific projects goes a long way toward helping to solve our housing crisis.
