by John Bossange
Vermonters of low and modest incomes desperately need affordable apartments and moderately priced homes of all sorts, including multi-family duplexes and triplexes, and of course, single-family homes they can truly afford. For most of them, their needs are unlikely to be met.
Instead developers are constructing homes that range from $500,000 to well over $1,000,000 creating more of an acute shortage. If we wish to have more employees for a healthier business community and want to encourage younger families to move here to gradually replace the older population, this will need to change.
The so-called housing shortage is a manufactured crisis fermented by builders, developers, realtors, and lending institutions, and collaborating legislators, who know what the open market will bear and are more interested in protecting their profit margins. These organizations profit less by building more affordable homes. For them, that’s a financial crisis but for the rest of us, it’s a long-standing unaffordable housing shortage.
Here in Chittenden County, where many of the job openings are, a building frenzy is underway. Homes at the Spear Meadows development in South Burlington start at $769,500. The massive O’Brien Hillside project has homes that range from $640,000 to $1,200,000. Kwiniaska Ridge development in Shelburne has homes for sale between $850,000 and $900,000. In Williston, a new home will cost between $500,000 and $800,000. It’s mostly the same all throughout the County.
Where are the $300,000 – $350,000 homes?
It’s clear that profit margins continue to drive our affordable housing shortage. Unfortunately, the market for these rates is being decided by too many out-of-state buyers and investors, not by Vermonters with modest incomes or those who wish to move and live here year round, invest in our job market and live in our communities
Today in Vermont, only 72.8% of our existing home stock of 342,375 homes are occupied year-round. In 2020, sales to out-of-state buyers jumped to 38% (3,795 homes) and that trend has yet to slow down. In 2021, 25% of all homes went to out-of-state buyers, and in 2023, 17 % of our housing stock was bought by out of state investors, resulting in a total of 58,038 vacant or partially vacant homes.
It’s not just out-of-state buyers but investors we need to be concerned about as well. For example, we know Brookfield Asset Management from Toronto now owns the Equinox Resort. A major Boston luxury construction company from Boston is developing a restaurant in Woodstock. There is a housing project in Hinesburg funded by Abraham Properties from Atlanta, and a 73-unit housing project near the golf course in Stowe by a group from South Carolina. These homes will not be cheap.
The proposed Killington Village is a partnership with the Great Gulf Corporation of Toronto. In Hartford a farm store is being proposed by a developer from Naples Florida, and the failed Hermitage Club, which privatized Haystack Mountain, was owned by a group that operated a waste management company from Connecticut.
Undoubtedly there are many more out-of-state investment companies with their eyes on Vermont. Do they have Vermont’s best interests and needs in mind?
How can we stop this investment grab, which is contributing to our affordable housing shortage? Can we require out-of-state development companies to build more affordable homes? How can we require our local builders involved in the industry of building new homes and apartments to respond to the housing needs of interested Vermonters and our local business community and not to the out-of-state market of wealthy investors who are willing and able to pay top dollar? These questions must be answered if we hope to address our housing shortage.
Perhaps the 3.62 % transfer tax needs to be dramatically increased again. In 2020, that small percentage raised $1.43 billion dollars. How about making those who live in their second home less than 182 days pay the full amount of Vermont property taxes like the rest of us. Should they be able to claim a non-homestead second home as a primary homestead, and qualify for tax relief? In too many Vermont towns primary homeowners are paying higher property taxes than a vacant or rental home next door, often owned by an out-of-state, non-homestead investor.
Should we make renting a vacant second home as an AirBnB more difficult with more taxes placed on the rental income received? How about eliminating the mortgage interest deduction on a second home here? Other states have done that. What about increasing credit score requirements to take out a loan and purchase a second home, or require a much higher income to qualify for a mortgage to buy a second income in Vermont? We could also adjust the debt-to-income requirements to make it more difficult for investors to buy second homes in our state.
Would we lose some investors and buyers and the revenue they bring to the state if we implemented these and other similar policies? Sure, but I would much rather have a full-time Vermonter living in that home year-round, employed and invested in a community, spending their money in our local economy as a full-time resident.
Decreasing the number of those 58,038 vacant homes in our small state combined with more control of what out-of-state and local developers build will help lessen our housing shortage and make it more difficult for others who stand to make quick, excessive profits to call their fermented shortage a crisis.