On February 5, 2015

Supply and demand: more housing is key to affordability

By Jennifer Hollar

As too many Vermonters struggle to make ends meet, affordability has rightly taken its place at the center of public debate. Often missing from the discussion, however, has been the cost of housing. If we are to succeed in closing the affordability gap, housing must be central to the conversation.

The shortage of affordable homes in Vermont impacts our lives, communities, economy and demand for state services. It sometimes means growing businesses aren’t able to fill key positions because potential recruits can’t find housing. It means many working families don’t have enough money for food, health care or transportation, never mind saving to buy a home, pay for college or retire. In the worst cases, families fall behind on rent, lose their apartments and become homeless.

Housing is considered affordable when its cost—rent and utilities for renters and mortgage, property taxes and insurance for owners—equals 30 percent or less of a household’s income. Housing costs for 46 percent of Vermont’s renter households are higher. An alarming 22 percent use more than half of their income to cover rent and utilities. Among homeowners, one-third spend more than 30 percent and 12 percent pay more than half of their income for housing. It is little wonder that Vermonters are feeling burdened by these costs.

These were among the findings of a statewide housing needs assessment recently completed by a national research firm on behalf of the Department of Housing and Community Development. The assessment was undertaken to help target state and federal housing dollars to the greatest needs and is the most comprehensive conducted in ten years.

The assessment found an overall statewide vacancy rate of only one percent for rental housing of more than two units, far below the four to six percent that is considered a balanced market. Housing options are limited for households at all income levels and extremely so for those with low incomes. There is a clear need for more multifamily housing.

While the assessment found a significant shortage of affordable housing, it also shows that state programs are making progress. State funding through the Vermont Housing and Conservation Board, coupled with federal resources through Low Income Housing Tax Credits, Community Development Block Grants and the HOME program, are both helping meet this need and bringing investment to our communities.

Every year, these programs make possible the construction of hundreds of new, affordable apartments across Vermont. Hundreds more single family homes are rehabilitated and made more energy efficient. Existing affordable rental properties with expiring federal contracts are preserved and made permanently affordable. Services and rental assistance are provided to help vulnerable Vermonters find and keep their homes. And the Administration worked with the Legislature to make changes to the state’s designation programs and Act 250 that encourage private sector development of housing.

But more remains to be done. Our successes are bumping up against national trends of slow wage growth, increased demand for rental housing, an aging population and strict lending requirements that make it harder to buy a home.

Governor Peter Shumlin’s Fiscal Year 2016 budget proposal reflects the Administration’s commitment to help struggling Vermonters. Despite tremendous financial pressures, the budget maintains funding for the Vermont Housing and Conservation Board (VHCB) and protects Agency of Human Services (AHS) programs that combat homelessness.

The Department of Housing and Community Development, along with the AHS and VHCB, just completed a series of seven community outreach meetings. The cost and availability of housing were the most frequently raised concerns. Similarly, in meetings held around the state last year to develop the first Statewide Comprehensive Economic Development Strategy, the need for affordable housing to support workforce growth came up again and again.

With this input, data from the housing needs assessment, and strategies from the state’s Plan to Prevent and End Homelessness, the Department is now crafting a Consolidated Plan to best target the resources currently available to housing and other community needs over the next five years.

Deliberations at the Statehouse have now begun in earnest.  As lawmakers debate critical issues such as the budget, property tax reform and energy goals, the Department of Housing and Community Development hopes the impact of policy choices on the cost of housing and the needs of Vermonters will be paramount.

Without a stable and affordable home, it is nearly impossible to be a good parent, a motivated student, a productive employee, an effective volunteer or an engaged citizen. It is even more impossible to overcome challenges such as mental illness or addiction. Housing is the foundation of communities and success for all Vermonters.

Jennifer Hollar is Deputy Commissioner of Housing and Community Development and Chair of the Vermont Housing Council.

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