Commentary

Keelan: There is just no place to live

CPA describes why no-one is building new homes

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.

The author is a U.S. Marine (retired), CPA, and columnist living in Arlington, VT.

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5 replies »

  1. Don’t “The Bronx” up Vermont.

    Yep, I said it & so did Jimmy Carter(!) make like comments after touring what was done to L.B.J.’s wonderful “affordable housing” multi-family apartment buildings there. The desecration, destruction,
    & burning was done in NYC, all over L.I., in N.J., in Cities in CT, etc. etc. etc.

    No one “deserves” to live in VT. One reaps what they sow as instructed in the Bible.

    Make responsible choices, work hard, don’t abuse drugs, & don’t expect society to pay for your living expenses. That is: Socialism.

    Tough to hear? Well, truth is the new “hate speech”, so…….

    People essentially think they want “projects” here? They want prisons emptied too? They want their elected “liberal” judges not to prosecute criminals? No borders? Want babies being slaughtered even as they pass down the birth canal of “birthing people” (i.e.: WOMEN)….how “virtuous” liberals are!

    Well, I pretty now want the Dakota’s or even New Hampshire pretty soon. We worked very, very hard to get to this once safe, peaceful state. But as usual, it too is being torn apart. How dare people with like values want to live safely after many decades of being a working stiff!

    The elected can alter the VT landscape all they wish. They are, in turn, destroying & eliminating the middle class. This nonsense is how fascism eases into a nation. There’s the wealthy & then the rest of the herd.

    I well recall when your columns were conservative. And please don’t bother describing how altruistic and righteous all these causes are as are folks who advocate for them. They are no more more “noble” than many others. They’ve never likely once been homeless or lived in “affordable housing” themselves.

    Building more & more & more & more for people who aren’t contributing causes more & more & more & more social problems. Truth.

    We were once first home buyers as were most who own. It was TOUGH then, as it is now. Waited to buy until age 30, often worked 7 days per week & recall when interest rates were over 18%!, Delayed starting a family, paid off student debt year in & year out. Eventually built up to what we wanted in our late 50’s. Reality.

    Now is no different.

  2. Vermont used to have jobs that provided decent wages. People could earn a decent annual income, pay their bills, and put some away. The jobs went away and were not replaced. The tax burden is too high for the average person working an average job. Vermont is a small State – roughly 664,000 and a budget of over $7 billion and growing. The course for this State was set three decades ago and now it’s in hyperdrive. Vermont is bankrupt. The only thing propping it up is Federal money, which is our taxpayer money, on top of the taxes we pay here. There is no incentive to stay here, there is no incentive to come here. Vermont is a failed State – the numbers prove it to be so.

  3. very simple…NOT EVERY ONE LIVING IN A ” GOLD TOWN ” HAS ANY “GOLD “…AND THEY WANT TO RAISE THEM AGAIN FOR THE SA ME REASON ! to give the poor towns in which the ” poor children live….what ? heard this song before.

  4. Don asks: Are they (the bankers) “willing to step up and waive some of the onerous requirements placed in front of mortgage applicants?”

    To avoid another major economic catastrophe, the short answer to Don’s question is no……Pushed by politicians, activists and the bankers own short memory for the pain, every time credit standards have been waived this country has suffered a major economic catastrophe…..Does anyone remember the gigantic mortgage lending debacle of 2009 that nearly wrecked the US economy?

    No it’s not time to waive so called “onerous requirements”, what ever “onerous requirements” may be. Historically, when credit standards have been substantially eased……..Everyone suffers…..The families/ borrowers, communities, the banks and even the federal government when the FDIC is called upon to bail out the problem.

    And when borrowers default, the very politicians and activists who have aggressively pushed easy lending standards in the first place (Think of Barney Frank, Maxine Waters and others around 2008). and then blame the banks for being irresponsible and greedy.

    I made my living as a banker going back going back to the early 1970s and have repeatedly seen the damage that arises when responsible credit standards are abandoned……The results are never any good…..For anyone especially the families who got into borrowing situations they couldn’t handle.

    Also, coming soon to a family and community near you, the consequences of a very broken and bloated student loan program…..A program pushed by politicians, activists and colleges that’s about to burst.

  5. Over the last few years, the price of real-estate has dramatically increased EVERYWHERE. There is nothing your local town committee can do to affect the price of housing in Nicaragua, and yet the prices are booming there even more so than here.
    This is the result of inflation. The effect of inflation is magnified and compounded when you’re talking about the price of a loan not just because of interest but also because of investment.
    The reason your kids can’t find a place they can afford to buy is because they don’t realize how much more they will be making in 5 years time as the massive devaluation of our currency achieves equilibrium throughout the economy.

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