by Aimee Lawton
The Vermont Housing Finance Agency (VHFA) released information yesterday discussing the high costs of renting an apartment in Vermont, and how these costs are going to continue to be a problem.
The 2011 update of a report entitled “Between a Rock and a Hard Place: Housing and Wages in Vermont” shows that the cost to rent a small two bedroom apartment in Vermont has increased a staggering 58 percent over the past ten years. The current average cost is about $990 a month, which is a steep 7 percent climb from last year. This means that anyone looking to rent an apartment at this cost would need to make about $40,000 annually.
According to Sarah Carpenter, Executive Director of VHFA and the report’s publisher, “Renting an apartment has been a challenge in Vermont for some time because of rising costs and a low vacancy rate. This report confirms that it continues to grow more challenging, especially for those on the lower end of Vermont’s income scale.”
The cost of owning a home in Vermont is no better. According to the report, 81 percent of occupations in Vermont yielded an average wage lower than what would be needed to own a home. Home prices in Vermont rose three percent from 2010 to $195,000, which means that an income of $58,000 would be needed to own a home.
As a result of these and other findings included in the report, Vermont is ranked the seventeenth worst state in the nation in terms of affordable housing.
“Recent cuts to the federal budget could seriously reduce the state’s limited affordable housing stock and severely hamper the millions of dollars of private investment in housing that is leveraged by those federal resources, “Carpenter said.
This situation is elevated even further by the state’s aging housing stock. Estimates gathered from the report said that the state could lose up to 500 affordable housing units, and that recapitalization of these older assisted housing projects is vital due to the homes’ outstanding and worsening conditions.
Carpenter adds, “VHFA and the state’s other housing organizations are committed to doing all that we can to assure all Vermonters have a safe affordable, decent place to live, whether rented or a home of their own.”
For more information regarding the status of housing in Vermont, visit the VHFA webpage at www.vhfa.org.
What is not mentioned by VHFA is the impact of government policy on the cost of housing in Vermont. In an October 2000 study prepared for the Vermont Business Roundtable by economist Art Woolf entitled “Housing Prices, Availability, and Affordability in Vermont”, the following observation was made:
“Housing prices and homeownership rates are driven in part by public policies that can make housing more expensive and therefore reduce homeownership rates. Policies that raise housing prices result in a state economy that is less competitive with other states and diminish the ability of the state’s residents to realize the goal of owning their own home.”
How do policies affect home prices? According to the study:
“An increase in the supply of housing will reduce the rate of price increase or reduce theprice of housing. Conversely, regulations or policies that limit or restrict housingconstruction will result in higher prices at all price ranges. Limitations on housing supply raise housing prices across the spectrum because of clear linkages between the market fornew and existing housing.”
More specifically, “these policies, such as Act 250 permitting costs, local planning andzoning regulations, sewer and water policies, property tax rates, and subdivision regulations allaffect the cost of new construction and, indirectly, the price of older homes“.