by Jennifer Dawson
Vermont needs to build between 24,000 to 36,000 new homes to meet estimated demand over the next five years, a new Vermont Housing Needs Assessment completed by the Vermont Housing Finance Agency reveals.
The state’s steadily increasing population — although in some ways very much a positive development — is a key reason for increased pressure on the housing market.
Fortunately, efforts are being made to boost Vermont’s housing construction. For example, State Treasurer Mike Pieciak recently allocated $55.5 million in a housing investment that aims to build over 1,100 homes statewide.
Rising population puts pressure on the market
Vermont’s population has experienced steady growth in recent years, which has blocked some low-income and unstably-housed people from renting or buying within the state. Notably, the number of people in Vermont without homes has increased by around 18.5% since 2022, and as much as tripled since 2019, the new assessment reveals.
In terms of population growth, a net 3,000 people moved to the state in 2022, and that’s on top of a net of more than 14,000 people who previously moved here in 2021. Additionally, in 2023, 65% of moves to Vermont were inbound, which means more people moved in than out.
“The combined net migration from the last two years exceeds the net migration from the prior ten years combined”, the State Treasurer’s Office noted in a 2023 report.
“People are moving here,” said department Commissioner Alex Farrell. “We were begging them for years and years, and then during [2020 and onwards], they started moving here. … but we’re not ready for people to be here and to come. We don’t have homes for them, and it’s squeezing out the most vulnerable people.”
Remote workers are choosing Vermont
“Thanks in part to the flexibility of remote work, Vermont continues to be a desirable destination for those seeking a better quality of life,” Pieciak said. Indeed, work-life balance is a top priority for young adults (namely, the millennial aged between late 20s to early 30s), who typically move home more frequently than other generations. This, in turn, has fueled the popularity of remote work as young adults look to build their careers from the home base of their choosing.
As Vermont is big on outdoor recreation and offers beautiful scenery, along with a slower pace of life, it’s not hard to understand why it’s an attractive destination for remote workers looking to make a life change.
In an effort to boost housing supply for Vermont residents, the state has so far spent $500 million on housing initiatives pegged for completion next year. Bills have also been passed to make it easier to construct homes.
For example, zoning restrictions have been slackened and the state’s land use law (Act 250) has been modified to allow the development of new housing. “However, other hurdles for private development, like the rising cost of construction, is largely out of our hands in Vermont,” said Farrell.
Low vacancy rates push prices up
But population growth isn’t the only thing responsible for lack of housing in the state. Vermont also has extremely low vacancy rates, which are a problem. In Chittenden County, for example, vacancy rates are 1%, whereas they drop to 0.5% in Burlington.
Low vacancy rates mean houses are scarce, prices get pushed up, and it becomes harder for people to buy or rent. For reference, the average median sale price of a home in Vermont is $411,500, and so buyers need to save $41,150 for a 10% down payment. The average price of single-family homes also increased by 38% between 2019-2023, according to the new report.
Additionally, in 2021, over 30% renters could afford to purchase a median-priced home, but this dropped to just 6% in 2023.
“This shows how important it is to address Vermont’s housing shortage. It’s not just holding back the full potential of our economy, it’s also worsening social issues like homelessness”, said Pieciak. “It is why our office has prioritized housing as our top economic issue, and we’re eager to work with stakeholders to find creative solutions to our housing shortage to support a more prosperous future for all Vermonters.”