Keelan: Many obstacles to building housing in Vermont

By Don Keelan

Seven months ago in Arlington, Vermont, a state housing conference convened. In attendance were state officials, local members of the General Assembly, members of the Bennington County Planning Commission, local town and housing organization leaders, bankers, representatives from industry and nonprofits, and members of the public. The consensus was unanimous: we are in dire need of affordable workplace and rental housing.

Don Keelan

Yet, since last October, not one housing unit has been started in the area. Therein lies the problem. We meet, we talk, we pass legislation, and in the end, we still don’t have the housing so desperately sought not only in southwestern Vermont but throughout the State.

Vermont probably has its most significant housing shortage since the end of WWII. While most folks do not question the need, there are many obstacles to building housing today.

First and foremost: are towns and villages willing to accept multi-family housing built in their communities? Are municipalities offering residential sites to developers who have met the requirements for drainage, traffic, flood plain avoidance, wastewater, density, design, and issues from adjoining neighbors? Has the regional Act 250 Commission given its blessing to the site for a planned development? Most likely, they have not.

And then, of course, there are the bankers or mortgage lenders. Are they willing to step up and waive some of the onerous requirements placed in front of mortgage applicants? Credit scores, down payments, interest rate commitment, and long-term car debt and college loan waivers? These obstacles can be insurmountable for many buyers, especially first-time homebuyers. Lenders say it is out of their hands: the regulators set the rules, not them.

Add in the developer/builder and what this person (company) must face in bringing housing to fruition. After the uncertainty of the numerous approval hurdles to a planned housing project, there is the cost.

In today’s housing market, $250 to $300 per square foot is at the low-end of quotations. The math is quite simple: a one thousand square foot home will cost $250,000 or $300,000. Assuming there are no unusual site conditions, off-site mandates from the approving authorities, material quotes that don’t exceed 30 days, and no bottled-up supply chain issues.

Like other industry sectors and the government, builders desperately need skilled and unskilled craftspeople. Combined with an exceptional short building season in Vermont, a lack of workers makes the development of multi-family homes a significant challenge.

Then there is the buyer. A homeowner who is exasperated, confused, and scared. Since last summer, mortgage interest rates have risen and are now close to 6% for a 30-year mortgage. A $300,000-priced home will take at least $109,650 of family income to qualify, and this is before any existing debt beyond one year for a car or college loans.

This is only part of the problem for first-time homeowners. The next is the down payment. The above scenario will require close to $45,000, assuming a 90% mortgage is obtained, and no discounting of rate is requested.

The housing needs of Vermonters and folks wishing to live and work in Vermont are not going away. At this time, we should avoid building; the pricing for new home construction is outrageous.

The state and localities might consider setting up a revolving loan fund to assist first-time homebuyers with the down payment.

While we are waiting for prices to stabilize, towns and the state should have multi-family building sites ready to be developed until the housing market is not facing today’s pricing, labor, and supply chain issues.

Don Keelan writes a bi-weekly column and lives in Arlington, Vermont.

Image courtesy of Flickr/401kcalculator.org
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8 thoughts on “Keelan: Many obstacles to building housing in Vermont

  1. Instead of local and state governments helping Vermonters become self sufficient, there put a block around your neck and then claim how hard they are working to help you. Voters had better wake up if it isn’t too late already.

  2. Zoning, Planning, unreasonable mandates, bureaues, commissions, paperwork delays, always a push-back !!

    Act 200, Act 250, numerous boards of regulation, envirnment, green space forest coridors, wild animals.
    Grumpy neighbors. Hordes of NO< NEVER<WAIT< MISSING PAPERWORK<YOY DIDn't………..,

    No bureaucracy wants to make a mistake of more housing

  3. Gee. If government meddling and regulation of housing, banking, environmental reg’s, energy, insurance, contractors, land use and more is stifling housing, can anyone draw a correlation to what the cause might be?

    • You are correct, the government regulations at both the local and state level have created a crisis so Vermonters will not be able to afford a simple home. The governments answer is to pour your tax dollars into a empty hole called support for the poor.

  4. It’s time to look at converting empty Vermont inner-city commercial space into housing or other productive uses by re-examining restrictive regulatory requirements.

    I drove through downtown Rutland today and looked up at all the empty space above street level in basically all the buildings. Empty space resulting from Vermont’s strangulation type regulations governing converting these vacancies into economically viable space for housing and business use.

    My understanding is that property owners and developers are not interested in converting these tens of thousands of square feet space to productive use because of costs tied to various onerous state and other regulations…….A problem that is likely not to be unique to Rutland City alone.

    If the legislature is really interested in creating more housing without creating sprawl maybe it’s time to take a look at what can be done to convert these non-preforming assets to money makers……Time to fix the legislatively created regulatory barriers holding up the creation of new and much in demand housing units .

    • Hey in Montpelier they did it, at $523/sq foot of the tax payers money. They did one bedroom studios for $323,000 a pop!

      Tax payer money…..see it’s easy.

      For the rest of us it’s insanity. These people are completely drunk on tax payer dollars. So many friends have moved south where the taxes are 75-80% less money than Vermont, on top of that they’ll even pick up your trash too!

      Don’t worry, they’ll to this development for free! Free Money they say.

      They are insane. Our “affordable housing” plan in Vermont is criminal

  5. It’s only government.

    They are making way too much money on their soviet style, inside dealings to change. They will not change but only want more, and of course it’s all rental housing.

    We could easily have home ownership for less than $900 and even $600 per month.

    The only reason it’s not happening is THEY DO NOT WANT IT! It would be competition for their little insider, crony capitalism experiment. Where they build at $500+ per square foot, above luxury home building prices. Where they rent at above market prices….

    And it’s all funded by the tax payer. They aren’t going to give up this gravy train. Its corrupt. It’s very profitable.

    You will own nothing and be happy. they say. They mean it too.

    There is also evidence that loans are magically forgiven, Loans are given out at very favorable rates, 0% 1%…..

    Look under the Vermont hood, it’s completely corrupt. Of course nobody believes we’ve earned a D_ in ethics, yet we still don’t have an ethics panel with any power or money. Convenient huh?

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