(07/10/06) Politicians keep talking about the lack of affordable housing and then promote growth-management as a way to protect our open space. These policies are preventing Vermonters from realizing the American Dream of owning a home. They are influencing housing affordability, a different subject altogether.Over the past five years, the median costs of a home has increased 10 percent a year, triple the rate of income growth in Vermont. To purchase a median-priced home, a Vermont household would need an annual income of more than $62,000. But the median household income in Vermont is just over $43,000. A household with that income could only afford to purchase a $114,600 home. As prices increase, more families are without resources to purchase their own home.
Affordable housing refers to a few housing units priced below market value, usually through government mandates or subsidies like we have for most major housing developments in Vermont. Housing affordability is the general price level of housing relative to a reasonable level of household income.
Government-subsidized units or those mandated to be affordable benefit only a few people in this state. Taxpayers pick up the tab in the form of increased taxes and/or higher housing prices to subsidize these buildings. This is a hidden redistribution of income that affects housing affordability in Vermont.
Some of our communities impose “inclusionary zoning” ordinances on housing developments in which they mandate that developers sell a certain percent of homes they build at below-market prices to make them affordable. It’s been estimated that inclusionary zoning causes the price of new homes in a median city to increase by $22,000 to $44,000.
However, affordable housing is a big industry in Vermont. Many non-profit organizations receive subsidies or reduced property taxes from government that allows them to own land and build housing. They’re strongly supported by environmental organizations, which use smart growth and affordable housing pleas in fund raising letters.
The way to lower housing prices is to build more houses, and the way to raise housing prices is with regulations that limit or stop building. When planners and environmentalists address affordable housing needs they push for high-density, mixed use development. But the end result exacerbates housing costs because of all the rules and land-use regulations.
Smart-growth environmentalists say we must also protect our open space and promote urban livability. But open space shouldn’t be an issue in Vermont. According to the 2000 census, Vermont has the least urbanized area in the country and fifty six percent is rural open space, more than any other state.
The time frame it takes builders to apply for, and receive permits is also very lengthy. Because zoning is strict and approvals are slow in Vermont, the price goes up significantly. Some builders estimate that permit lags of six to twelve months can add 10 percent to a home costs in addition to the interest carrying costs for the land, attorney and engineering fees.
If we really want to address housing affordability in Vermont we need to tackle impediments such as urban-growth regulations, lengthy planning process, complicated design codes, restrictive zoning, historic preservation, land conservation easements, wetland mitigation and open space preservation programs which all drive up the cost of housing. Regulations and permit requirements have contributed to the 223 percent increase in land cost since 1996. Both state and local officials take heed….your actions make housing unaffordable.
“If policy advocates are interested in reducing housing costs,” economists Edward Glaeser and Joseph Gyourko observe, “they would do well to start with zoning reform,” not affordable housing mandates and subsidies. This is the only way to keep the American dream accessible to every Vermont family.
Frank Mazur
South Burlington* * * Frank Mazur, a small business owner and former state representative, is chair of the advisory board of Vermont FreedomWorks.