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How can Vermont solve its housing crisis?

A man and woman looking for the best home value for the price.
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Dani Gagnon wondered why it was so hard to find a place to live in her home state. Was it like this for everyone, or was she doing something wrong?

A question from Dani Gagnon of Montpelier leads Brave Little State to find out why Vermont’s housing crunch has become a crisis — and what people are doing about it.

Note: Our show is produced for the ear. We recommend listening to the audio above if you can! But we also provide a written version of the episode below.

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I started reporting this story by doing something I do a lot: scrolling through new Zillow listings. (No shade, I know you do this too!) This time, though, I was browsing on the phone with real estate agent Erin McCormick.

“There’s this one little cute gem that popped up this morning in Burlington. 1,200 square feet on a tiny lot,” Erin says. “It’s super, super cute, though.”

Erin shows me a little blue house with a coral-colored door. Four bedrooms, one-and-a-half bathrooms. It’s listed at $359,000.

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A Burlington listing that realtor Erin McCormick showed me

“I think that that will go very quickly,” she adds. “It will probably go closer to $400,000 if I had to guess, just given the four bedrooms and that location in Burlington.”

I asked Erin if she thinks this house would’ve been listed for $359,000 prior to the pandemic.

“No.”

What does she think the listing price would have been?

“Probably closer to $275,000. Maybe $250,000.”

Erin is full of stories like these. There’s this one house in Essex that she’s helping to sell right now. It was purchased for $419,000 in 2017.

In 2022, that same house is going back on the market … for $700,000.

Meet Dani

Brave Little State reported an episode in March 2019 about Vermont’s housing crunch.

ICYMI: Why does Vermont have such a housing crunch?

Since that episode came out, a little thing called the pandemic happened, and Vermont’s housing crunch turned into a full-blown crisis.

The situation has gotten so bad that a listener named Dani Gagnon reached out to Brave Little State about it. She grew up in Braintree but has been living out of state for the past few years.

Dani smiles for the camera
Dani Gagnon
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Question-asker Dani Gagnon from Montpelier

Then, last fall, she and her boyfriend decided they wanted to move back to Vermont. And what they thought would be a relatively painless move … wasn’t.

“It was really a real challenge to get here! Extremely limited housing options,” Dani says.

She wanted to rent a two-bedroom in or near Montpelier. Her budget was “on the lower end,” as she put it. But she was hopeful, and started looking around on Craigslist. The first thing she noticed? There were barely any listings. When one would finally pop up, she’d get excited. Then she’d look at the price. “And it would be more expensive than what I’d seen in Boston. So it was really surprising,” she says.

She wondered why it was so hard to find a place to live in her home state. Was it like this for everyone, or was she doing something wrong? So, she submitted a question to Brave Little State:

“How are the high housing prices and housing shortages affecting Vermonters? What are we doing, or what should we be doing, to solve the housing crisis?”

Defining the crisis

Like a lot of people, I moved to Vermont last year. (According to United Van Lines, Vermont had the highest percentage of inbound migration of any state in 2021.)

I was living in Washington, D.C., when I got a job here at VPR. I needed to find a place for me and my family to live in just a couple of months. Erin, the real estate agent I interviewed as part of my reporting, is actually the person who helped me buy a house.

Once I moved in and started talking to my new neighbors and coworkers, I felt a little ashamed – even embarrassed – that we had been able to snag a house. I think that feeling ties back to the first part of Dani’s question: She asked, “How is the housing shortage affecting Vermonters?” Who is a Vermonter, anyways? Who deserves to live here and to be a homeowner here?

The answer seems to be a moving target. Residential home sales in Vermont to out-of-state buyers jumped 38% between 2019 and 2020, which means there are lots more newbies in the state.

I heard on social media that this influx of buyers is frustrating many people here who are struggling to find affordable homes to rent or buy:

On the flipside, many of the people who already own houses in Vermont hit the jackpot.

Insane.

There is some sort of “bright side” of Vermont’s housing problem turning into a crisis. Now, pretty much everybody agrees it needs to get fixed – quickly. Everyone also has a different idea for how to fix it.

Build, build, build

Let’s say you’re part of a household that makes the median income here in Vermont — $62,000 per year. That means you can afford a home that’s around $230,000. There’s just one problem: According to one recent estimate, the median price for a home here is $340,000. That’s more than $100,000 more than your family can afford.

“The market is hot,” says Maura Collins, executive director of the Vermont Housing Finance Agency. “It is shocking to look at listings and see how little homes are listed for sale.”

A screenshot of houses listed for sale in Burlington under $500,000
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VPR
At the time of this screenshot, there were only three homes in Burlington listed for sale under $500,000

Maura spends a lot of time poring over Vermont housing data. She says Vermont’s housing prices have been hot for years, but the pandemic has made it way worse. Between 2019 and 2021, the average sale price for a single family home went up nearly 40%.

There are a couple reasons for that. We’ve already covered one: More people are moving here from out of state. Generally, they’re going to Chittenden County, or to ski towns.

“There’s a lot of suspicion that that is being driven by second-home owners, where they are turning those vacation homes into their primary residences and moving here, or they are taking advantage of the hot market and selling those homes at top dollar,” Maura says.

But she’s also quick to note that we shouldn’t pin the high housing prices on pandemic migration alone. There’s actually a much bigger culprit: underbuilding. “We have decades and decades and decades of underbuilding in Vermont to make up for,” she says.

Back in the 1980s, Vermont was building more than 3,000 homes each year. In the most recent decade, that number was down to 400 each year, which is way too low to keep up with demand. And now we’re paying the price — literally.

This brings us back to the silver lining of the pandemic transforming our housing problem into a total crisis: All the powers that be agree that it needs to get fixed. Their number one plan? Build, build, build.

“Even with all we’ve invested over the last five years, we’re still not building enough,” Gov. Phil Scott said during his January 2022 budget address.

Speech text, audio, video & analysis: Gov. Phil Scott's 2022 budget address

“This is especially true for middle-income families looking for affordable homes. Right now, the supply of modestly priced homes for sale is practically non-existent,” Scott said.

Scott cited some pretty shocking statistics during his address, such as how there were only five homes for sale in Chittenden County that were affordable to middle-income families at the time of his speech. “This is the middle-income housing shortage we are talking about,” Scott added.

To fix it, he wants to take tens of millions of dollars that Vermont’s getting from the federal government for COVID relief and put it towards housing for low and middle income people.

“We have a scarcity problem,” says Josh Hanford, the commissioner of Vermont’s Department of Housing & Community Development. “And with the tremendous amount of federal money that we’re seeing coming into the state for pandemic relief, the governor is laser-focused on this.”

Lots of the new construction will be in Chittenden County, but there are other towns that could get ARPA funding to support construction, as well.

Places like Brattleboro.

I called up Joe Wiah, the director of the Ethiopian Community Development Council’s new refugee resettlement office in Brattleboro. He’s tasked with finding housing for 100 newly arrived Afghan refugees. I asked him about his biggest challenge right now, in terms of finding them stable housing.

“Physical structures,” Joe says. “Even though we have families, community people, saying, ‘I have a room here, I have a space here.’”

Basically, Joe has the money to cover deposits and rent for apartments, but there aren’t any open apartments in the area.

Right now, the refugees are all living in dorm rooms on the School for International Training’s campus. There are a bunch of single people, mostly men, and a lot of families too. More than a third of the refugees are children, including five babies.

Joe believes the state’s dearth of housing is the main reason why Vermont’s population is so lacking in diversity, and why Vermont’s population isn’t growing much. “I think the whole affordable housing situation is a conversation that communities across Vermont need to have. We need to be real with ourselves,” he says.

“If we want, you know, to welcome people, if we want to be a diverse community, then we have to make everyone welcome, regardless of whether you come from Afghanistan or whether you come from New York City,” Joe says. “You all should be welcome here.”

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Creatively growing the housing stock

So far we’ve learned that one big reason for the housing crisis is that Vermont is really short on houses. Politicians want to spend a lot of money to help build more, and many people here are really excited about that.

But building a house or an apartment building takes a lot of time – often around 18 months. It’s also really expensive, especially outside of Chittenden County. Much of the state has limited water and sewage infrastructure, so building new buildings, especially outside of town, can be hard. There’s also a law called Act 250. It’s a development review law and some people say it gums up the permitting process for new construction.

“We have tended to be pretty careful with our development in Vermont,” Josh Hanford tells me.

If you want to learn more about Act 250, check out Brave Little State’s 2019 episode about housing in Vermont.

Some communities are looking for housing solutions that are a lighter lift than building lots of brand new homes. Brattleboro, for instance, is wrapping up a big housing study. It found the town needs 500 more units of housing, which is a lot for a town of about 12,000 people.

Instead of constructing hundreds of new buildings, Brattleboro is trying a new strategy: rezoning.

“One of the obstacles we had was our density restrictions and our zoning regulations,” says Sue Fillion, Brattleboro’s planning director.

Sue and her colleagues are taking a hard look at the town’s zoning laws to try to fit more housing units onto some lots. “In some cases it was above a garage,” she says. “Like a separate garage and they could convert space. Under existing regulations they couldn’t do it, but once we removed the density requirements, [property owners] were able to get one or two more units in.”

This type of housing is often called an Accessory Dwelling Unit, or ADU. Right now, there’s a team that’s literally going street-to-street in Brattleboro to figure out where they can fit in more ADUs.

Illustrations and doodles of houses
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Illustration of home cartoon architecture.

Los Angeles, California has been a leader in ADUs. Sue says she’s looking into another idea out of LA: Brattleboro would commission a few architectural designs to make it easier and cheaper to build ADUs. “If we could have a couple of designs that are already done and, you know, easy to permit, that reduces some of the cost,” Sue says.

Rezoning is going to be a big deal in Vermont over the next few years. The Upper Valley released a new housing study that talks about rezoning and Burlington’s been looking at it for different neighborhoods.

Some people even think the state should go even further and get rid of the whole idea of zoning one house per plot of land. Minneapolis did this a few years ago — it got rid of what’s called “single family zoning.” But that probably won’t happen here anytime soon.

“I’m not going to go as far as to say [single-family zoning] should be outright banned,” says Josh Hanford. “But I do share their efforts to allow housing choice in our communities. If a community has very little land zoned for multifamily, multi-dwelling units, that is not fair and equal. It is not inviting folks of varying wealth into their community.”

But what if it’s not just about housing supply?

You know that feeling when you build a beautiful tower of cards and you’re feeling really proud of yourself, and then a macroeconomist waltzes in and knocks it all down?

That is what Joe Ament did to me. He’s a macroeconomist from Vermont, but he’s currently teaching at the University of Leeds in England. When Dani’s question won the Brave Little State voting round, Joe emailed me to share his research on Vermont’s housing crisis.

He had one big warning to give me: Don’t oversimplify the problem or the solution.

“You hear politicians and other economists talking about housing affordability in terms of supply — ‘There’s not enough, we need to build more.’ That’s all you ever hear,” Joe says. “I’m not convinced that the supply of housing is the number one driver of our housing affordability issue.”

According to Joe, the number of houses on the market (or lack thereof) is not the main reason why houses are unaffordable. In short, it’s not just about supply. “Demand is the biggest issue in this price rise, and you can’t address demand through supply,” he explains.

So … how do you address it?

Joe says we have to pay close attention to two big demand-side issues: low interest rates and investors.

Let’s start with interest rates. The pandemic was a doozy for the economy, so the Federal Reserve lowered interest rates. The goal was to make borrowing money easier and to pump some cash into the economy. “And it’s really useful. It works really well. But the thing is, when you drop those interest rates, all of a sudden you can afford to take out a much bigger loan,” Joe says.

Plus, the stock market was doing really well for a while too. People with money invested could sell their stocks and use the cash towards a house. Because of both of these things — the lower interest rates and a gangbusters stock market — there are a lot more people out there who can bid high on houses like that little blue house in Burlington I mentioned previously. We can’t build more little blue houses fast enough right now to keep up with all this demand.

“It’s like all things in policy. Does it fit on a bumper stick? Well, ‘Build More Houses’ does, unfortunately,” Joe says.

As for the second major driver of demand, Joe says that more and more people are looking at houses not as homes, but as business investments. As part of his research, he’s documented how the number of investors buying properties in Burlington has skyrocketed.

“In 1999, 4.8% of medium-priced homes were sold to corporate buyers,” Joe says. By 2018, that number jumped to 20%. “The presence of investors heavily in Burlington is causing the housing market to increase, and I think that is problematic for a lot of different groups of individuals.”

Some of these corporate buyers are putting houses on Airbnb and others are renting them as vacation homes. As of a couple years ago, nearly 20% of Vermont’s housing stock was being used seasonally, not year-round, which is a higher percentage than most other states. And that number has likely grown since the pandemic took hold.

So, Vermont can build more houses, but what’s stopping people from snatching them up for Airbnbs or investment properties and boxing out people like Dani?

Joe says lawmakers could consider more radical solutions, like raising property taxes for corporate buyers. If we do something like that, Vermont might become a more affordable state as well as a more inclusive and diverse one.

“I see housing as a human right,” Joe says. “But we as a society have intricately linked housing and investment, and I think those at least should be questioned, whether or not they should belong together so tightly.”

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Short-term tips

It’s going to take a lot to fix Vermont’s housing crisis. But there are still lots of people, such as our question-asker Dani, who can’t or don’t want to wait to find a home. “I think that in the next couple years, the goal would be to move to buying a home,” Dani says, “but we’re definitely apprehensive about what that will look like. You hear crazy stories. So that’s the goal, but I don’t know how feasible it’ll be.”

Experts I heard from do have some tips. Real estate agent Erin McCormick says you just have to be real with yourself about what you might have to pay. “Like anything, buying real estate right now, you have to have a good strategy,” Erin says. “You have to anticipate that you are going to go 30, 40, $80,000 over asking price. Be OK with that.” That's only an option if you're in a privileged enough financial position, though.

Maura Collins, from the Vermont Housing Finance Agency, says you also can take a breath, focus on building your credit, take home-buying workshops and research down payment and mortgage assistance programs.

Dani is sticking with renting for now. She found an affordable apartment in Montpelier after three months of searching. “There are these beautiful windows in the living room that are tall and always just so sunny, light streaming through them, and it makes me almost forget that I lived in a Boston basement apartment.”

Oh, and that little blue house in Burlington? It was marked as “sale pending,” after just three days on the market.

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Credits

This episode was reported by Mikaela Lefrak, who’s also the host of VPR’s Vermont Edition, with editing by the Brave Little State team: Josh Crane, Angela Evancie and Myra Flynn. Myra Flynn produced and mixed this episode. Digital production by Josh Crane. Ty Gibbons composed our theme music; other music by Blue Dot Sessions.

Special thanks to Liam Elder-Connors and to all the Vermonters who shared their housing stories with us on social media, including Emily, Sam, Dennis, Molly, Shane, Ross and Joslyn.

You can send us a note any time at hello@bravelittlestate.org.

As always, our journalism is better when you’re a part of it:

Brave Little State is a production of Vermont Public Radio.

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Corrected: February 7, 2022 at 9:58 AM EST
An earlier version of this story misstated the price that a buyer earning Vermont's median income would be able to pay for a house. It is $230,000, not $27,500.
Mikaela Lefrak joined VPR in summer 2021 as co-host and senior producer of 'Vermont Edition'. Prior to that, she was a reporter and host at WAMU in Washington, D.C.
Myra Flynn joined VPR as an engagement producer in March 2021. Raised in Vermont, Myra Flynn is an accomplished musician who has come to know the lay of dirt-road land that much more intimately through touring both well-known and obscure stages all around the state and beyond. She also has experience as a teaching artist and wore many hats at the Burlington Free Press, including features reporter and correspondent, before her pursuits took her deep into the arts world. Prior to joining VPR, Myra spent eight years in the Los Angeles music industry.