Breaking down affordable housing in Vermont

BURLINGTON, Vt. (WCAX) – Affordable housing is on the minds of many developers and state leaders as Vermont’s housing crunch becomes tighter and tighter.

There are two ways experts talk about affordable housing. The first is defined as a household or person paying no more than 30 percent of their gross income on housing, including utilities. The second has to do with federal and state subsidies spent on developing or paying rent designated “affordable,” for people 60 percent or lower than the median income scale.

In the past 21 years, Seth Leonard of the Vermont Housing Finance Agency says rent has gone up 113%, and the cost of buying a home has gone up 140%. Meanwhile, he says Vermonters’ incomes have only increased by 69%.

“There’s a real mismatch there between how wages have increased in what the cost of development and what it costs to service the debt or to sell the home is,” said Leonard.

Leonard also says roughly 17,500 households pay between 30% to 50% of their income on rent, but roughly 17,000 households are paying more than 50% of their income on rent.

High demand and low supply go hand in hand when discussing housing in Vermont. Leonard says the VHFA was tasked this past legislative session to see how many homes it would take to stabilize the state’s housing. He says they came up with between 30 and 40 thousand homes, with a mix of homeownership and rental units.

“A lot of people want to think that builders or developers will just charge as much as they can for a unit. But I think it’s important to understand that to make a project work at zero income is very difficult right now,” said Leonard.

This past year Leonard says prices jumped 34% from just inflation for materials from plastics to concrete. He says the cost of development has increased by 78% since 2018.

That’s something Twin Pines Housing Trust Director and affordable developer Andrew Winter can attest to. “COVID pandemic and supply chain interruptions are affecting housing pricing. Interest rates have risen dramatically over the last year, which has made it a little harder to finance housing. It means fewer housing units will get built because that is a concern,” said Winter.

Winter says once a unit is built, how much someone pays for it is determined by income broken down by county. “How much is that, and what’s the maximum rent they can charge? We work off of that number. The data is intended to be very particular to the region and the actual housing costs that are affected, that are affecting folks there,” said Winter.

The appearance of an affordable home and who lives inside has evolved over the years, too.

Shaun Gilpin is the Housing Division Director with the state, who says in addition to Vermont’s aging population, family sizes are also shrinking.

“You don’t have the family of six so much anymore. It’s much more often to be a household size of maybe two and change, on average. That is added to the mix a little bit,” said Gilpin.

Gilpin also says some municipalities require a section of new housing to be affordable, called inclusionary zoning, but that’s not the case everywhere.

He adds land use regulations impact how housing is built in Vermont, especially now that people are demanding affordable, reasonably sized homes in attractive areas.

“Especially younger folks who are seeking the amenities of having a walkable area, not necessarily the New York City type experience, but to have a community where you might have some opportunities nearby,” Gilpin added.

This past legislative session, a new bill was passed which creates resources to support the construction of affordable housing. It also lowers land use regulations and municipal zoning laws in designated areas for affordable housing to be built. Winter says he’s hopeful this legislation will minimize barriers to producing the amount housing he says is needed.

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