Keelan: Substantial quantity of new housing will never happen

By Don Keelan

It appears that many advocates for the poor and disenfranchised, candidates for political office, and economic development proponents have been calling out for the need of affordable and workforce housing. It has been this way for years, and still, so little housing has been developed. Why?

What does not accompany the cries are the multitude of reasons why there has been no housing built, other than a handful of units by the local nonprofit affordable housing entities and Habitat for Humanity — only a trickle, when a waterfall of new housing units is needed.

Many Vermonters just don’t have the savings to buy a house or the income to carry it. Specifically, what does this mean? In North Bennington, The Shires Housing, Bennington County’s nonprofit housing entity, is developing a 22-unit rental housing project at a cost of approximately $325,000 per unit. Assume two scenarios that would be applicable to a private developer: the sale of the unit or the rental of the unit.

Don Keelan

At $325,000 for the two or three bedroom unit, the purchaser would have to provide a down payment and closing costs of $32,500 and $8,000. To carry a 90% first mortgage, at today’s low interest rate of 3% for 30 years, would require an annual payment of $14,892 (before any private mortgage insurance), real estate taxes of $4,875, and insurance cost of approximately $2,000 — or an annual housing cost of $21,767.

The requirement of many housing lenders is that annual housing costs do not exceed 25% of the family’s annual income. In this case, the family’s annual income would have to be $87,000.

Therefore, if a typical new home costs anywhere near what The Shires’ cost is, the potential homeowner would need $40,000 in cash for a down payment and closing costs and an annual family income of $87,000. Either of these amounts is beyond the ability of many Vermonters.

The second scenario is if the unit that cost $325,000 was being offered for rental and not for sale. The developer, looking for a 10% return on investment, would require the annual rent to be $32,500, with the tenant paying all taxes, insurance, repairs, and utilities. The monthly rent payment alone would amount to $2,700 — far beyond the reach of many who look to rent rather than own their housing.

It should be noted that the Shires’ rent payments will range from $550 per month to $1,500 because the rental units are subsidized. This is not available to the private developer — other than HUD’s Section 8 program.

If indeed Vermont wants to make a dent in its lack of affordable and workforce housing, it can be accomplished, but changes are needed, and they are:

  • Open up more land with higher density, such as 5 to 10 units per acre.
  • All local and state approvals and permits are in-hand within six months of the developer presenting plans to the various approval agencies.
  • The land that is made available is not marginal, but has good drainage, water, wastewater, roads, and electric power to the proposed housing site.
  • The developer is not required to pay any municipal impact fees for roads, utilities, fire/rescue, and schools.
  • State laws are to be amended to make it not unreasonable to be able to evict a tenant for nonpayment of rent or being negligent in maintaining the rental unit.
  • The state appoints independent “Masters” located in each of the state’s 14 counties who would resolve an issue if a community/state building agency is being unreasonable with any requirements placed upon the developer.

For years, the state and various groups have been advocating the need for more housing with so little ever getting built. The talking needs to come to an end and address the reasons. Housing developers (been there in my other life) have a keen interest investing in housing projects — so long as it makes financial sense.

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

Image courtesy of Public domain

16 thoughts on “Keelan: Substantial quantity of new housing will never happen

  1. You can buy a lot of house here in Tn. for $300,000. What are these people smoking that make these decisions?

  2. It doesn’t cost $325k per unit for a private developer to build units. This is government bloat at its finest. Rental housing can be done for less than half that cost per unit. No one is able to do it because Act 250 prevents developers from becoming developers in the first place. Too much to discuss here, and no one in Montpelier is listening anyway. ANR controls everything and most of them would love the rest of us to leave the State permanently so they could enjoy it as their private retreat. Disgraceful….

  3. The state of Vermont costs of living and housing will NEVER be affordable, as long as the radical leftist run the state. More money is never enough for them and their idiotic ideas, that never seem to benefit anyone other than themselves. The cesspool in Montpelier has inside trading going on where they ensure their investments prosper at the expense of the working class Vermont tax payers.
    Enough is enough, ( at least that’s what I finally said ) and packed up, and got out the hell out.
    Folks I hate to say it, but we can bitch and complain all we want, but the way these communist have the system rigged, Vermont’s democracy is raped.
    A peaceful solution has been long exhausted, as the radicals strip away your rights and disenfranchise you, day after day
    BTW I’m going to make a prediction here, and say ponytail will be the next Fuhrer of the green mountains

  4. The state taxes the heck out of brand new houses too. What you save on efficiency and maintenance, you lose in the tax bill. So it all just a money redistribution plan in the end. I’m not sure what the ultimate benefit to the homeowner is in the end- moneywise.
    I know several people, myself included, that found out they couldn’t even afford to live in the brand new house they just built. And you often lose even more when you sell these brand new places because of where the market is at vs. the high expense of building. You can find yourself unable to afford to live there and then underwater when you try to bail and sell it.
    We have a friend going through this right now in Vermont. They have just been forced to scrap the finished off basement TV area and instead put an apartment in to help offset the tax bill. He’s mad like you can’t believe, no one wants to have a stranger living in their house when that was not their plan. I have an idea that they’ll wind up moving shortly after it’s all done because I can see already that ain’t gonna work out.

    John McClaughry nails it. The state wants wealthy people and anyone needed to serve them and that is it. Unless of course you are in “The Poor People Business” with a non-profit of some sort.. and these people work and vote to create as many poor people as they can because they are a product they need- all while feeling good about themselves and showing their friends they are working to change the world.
    It’s all really sick and disgusting- more so in that they think we don’t see all of this.
    I’m coming to the point where I don’t blame people for moving out at all, it’s a very abusive and ugly when you come right down to it.

    • When I lived in VT I built I highly efficient well insulated house. The tax man came to my home and noted the high quality construction. Tax bill came around and I got slapped with “above average quality of construction.All my saving instead of going in my pocket when into the city and state coffers. No thanks.

      The high property taxes in VT keep those who are the fence from upgrading their homes from doing so. They know all the saving they will realize will get pulled out from under them and sent to the town coffers.

      • Another thing that happens, that I learned the hard way too that that “above average quality” will only last for just so long. And they don’t update your tax cards and people don’t know to watch for this stuff.

        Someone did a very expensive whole house renovation on our 1700s house, so it then got moved to “excellent” condition and was taxed accordingly.
        Well, that renovation was done back in the 70s.. so all that was done was now old, out of date and ‘Done’ basically. I had the assessor come over, when we bought the place it was a real mess. Luckily the fella was an honest, knowledgeable, decent man and he moved us down to “Fair” condition. He said that there is pretty much no such thing as a house that was built in the 1700s to be in “excellent” condition, the wood is too old, there are just a lot of things that can’t be fixed, it’s rare that people do that level of work because of the cost of it.
        So if he was right, they were over charging for a whole lot of years on the property and luckily we knew to do this- how many don’t? this place coulda gone on for decades being taxed as “excellent”.
        People need to understand all this stuff because no one is going to tell them this.

        • The Honest assessors don’t last long, as the towns want their revenue. Just like the old one for Milton and Georgia. He dropped the property value of several lake front homes along the georgia shore. Why? Because every year the area was infested with algae and you couldn’t even swim in the water more then half the summer. Politics played out and he was shortly replaced, .

    • There might never again be the very affordable small ranch homes, built for the GI”S coming home from WW2.

      Places like the hundreds of affordable homes near Burl. Airport – now buldozed!
      Or Indian Acres and Hiawatha in Essex jct, or Burlington New North End section of affordable homes.
      Lots of those homes in Milton.

      Saith the Planners, Nevermore!”! We must maintain “OUR” standards”

  5. Our family specialized in building smaller apartments. When I sold, the 500sqFt units were renting for about $500, and the biggest for $750, two 300 foot apt’s rented for $400. Couple thrived, some raised young families in the
    500’ers, and saved enough to move directly into into a nice home.
    Decades later I still get hearffelt thank you’s from former tenants.

    And over the time, I made enough toward retirement, almost as much as my small business allowed.

    The building has been sold 3 times so I presume the rents are jacked beyond reason, so be it. Only few “evil landlords” can make the grade with modern mandates and horrible courts for evicting trouble and damage
    and no rent payments. you gotta be big, and you gotta be tough, and push the rents –
    AND specialize in Section 8 welfare.

  6. Vermont and it’s affordable housing scam is the biggest poverty trap ever created. Vt’s plan is to have you rent or live Ina tiny house, no other options, which is why as you so clearly point out we don’t have homes for average people, keeping people from home ownership.

    I was on a local commission for the Mad river valley, on day one I asked, is this going to be a commission that follows the United nations mandate for housing,,,,,which is renting from the state, or state sanctioned organizations and tony homes? Oh no they said. This was all spear headed by the regional planning commission.

    At every turn they did every thing possible to prevent the building of modest homes. The whole plan all along I’d to create rental housing, subsidized by the state to build and to rent.

    I asked the chair a year into it, is the agenda to create rental housing? yes. I was the only one out of a dozen or more that wanted home ownership, we can have home ownership for people on minimum wage, home ownership for less than $600 per month.

    Quite simply, our state doesn’t want it. Nor do many in our town leadership. People connected to these rental projects are making themselves stinking rich off the tax payer subsidies, they don’t want it to ever stop.

    • Ps there are financing options to get people into home owner ship with little or no, money down. The housing ratios have also changed. We could have homes built for $100 to $150k, we are just snobs and don’t want it in our towns, plain and simple.

      That and people are getting rich off Bernies soviet housing plan, renting from the state, notice they are pushing no homeownership now as a platform? Somebody owns the home, if it’s not private ownership it’s state ownership.

      Biggest scam on the planet.

    • Neil, Home Ownership is one big way that normal average people can rise up and they don’t want that to happen. They don’t want families to get ahead or even stay intact because they don’t have damn near anything anymore going on that makes it easier to make a decent life for a young couple. The stress does them in..then they live off the state.
      It’s all so clear when you see it. This is why they call the Democrats “The Party of Destruction” because all they do is seek to tear down and destroy.

      This is another way the state robs the people.
      When we were growing up here, a young couple would buy a modest fixer upper. Live there for 5 years, until the kids needed more space usually, by that time they’d paid it down some and fixed things up. They’d sell this, make a decent profit and the next house was bigger and better. You could do this as much as you felt like it getting further and further along until you wound up with a nice house that was paid off and you might be fairly young still.
      Now you can really start saving because there is no mortgage. That’s often how parents then afforded to pay for the college out of their pocket.
      This is what many people did to really get a leg up in addition to what they were making at their jobs.
      They don’t want all of this anymore, THEY want that money that the people were making along the way. You rent all of your life and you sure as heck aren’t going to come out ahead.
      They want to make it so that there is no choice.
      Buncha crooks, These people are the Mafia.

      • I love your commentary. They are worse than the mafia, the mafia knows the business needs to survive in order for them to get their money for protection.

        Montpelier has a monopoly on gambling, cigs, drugs, alcohol, they want to further their monopoly into pot and prostitution.

        At least when you go into a casino you can see show and have a nice meal, with our lottery there is no chance of winning either.

        Montpelier is a sad state of affairs….

  7. I was talking about this issue when I ran for governor two years ago and will make it a focus of my campaign for state senator this year. One additional note is that at $2700 a month in many areas of the country this would be affordable housing. Vermont has problems on two fronts; the cost of housing as well as the cost in relation to income. Our government has worked against Vermonters completely.

  8. The modern history of Vermont is to regulate out of practicality new housing affordable by working people, especially mobile home parks. That’s largely due to the VNRC mentality. Its donors don’t want affordable housing for unnecessary low and moderate income people. It afflicts “Nature”, despoils landscapes, and clutters up the state with people who the state can do without, except for the required landscapers, plumbers, electricians, and tradespeople who make McMansion living pleasant for the people who can afford it. Thirty years ago I described this as a Vermont of “Shelburne Farms, government office warrens, welfare colonies, and black fly preserves.”

    • VNRC, aren’t they the errand boys for the United Nations, Agenda 21 and the New World Order?

      They should lose their non profit status, they just lobbyists, to which i say should have their income taxed at a minimum of 50% good ideas don’t need millions of dollars to convince people. Bribes are needed to sway people into stupid ideas, like a carbon tax for example.

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