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There is a growing housing crisis in the northwest region of Vermont. Rental vacancy rates continue to drop--at last report they have approached 0% in suburban Chittenden County and just .25% in Burlington--and the number of homes for sale at an affordable price has decreased drastically. Over the next ten years several major firms plan expansions that could result in almost 4,000 new high-quality, good-paying jobs, precisely the kind of job growth opportunity Vermont has sought for years. There has also been continued growth in the service sector, and several hundred lower wage jobs will come online at a time that the unemployment rate is at a record low. These factors will almost certainly result in significant in-migration to the region in order to meet employers' needs, which will undoubtedly put additional pressure on the already distressed housing market.
Since the impact of this population growth will be felt far outside Chittenden County, the study was planned to include the northwest region of Chittenden, Franklin, Grand Isle, Addison, Washington and Lamoille Counties. EPR was asked to provide ten-year forecasts of demographic, employment, and earning projections for these six counties, and from those forecasts, estimate future demand for housing in the region. They were also asked to survey the number of existing housing units, project how many units are likely to be built given current building trends, and estimate the anticipated gap between the demand for and supply of affordable housing in the six-county region. Lastly, the consultants were asked to examine “fair-share” housing initiatives throughout the United States, and identify factors that would be necessary for the successful implementation of a “fair-share” allocation strategy in the region.
What follows is extracted from the summary of the findings, which were released by the Housing Council and Governor Dean on August 17, 2000.
STUDY FINDINGS
- The study estimates that the northwest region currently has a need for 7,400 additional housing units, based on the low vacancy rates in the region. Roughly 5,300 units of owner-occupied housing and 2,100 units of rental housing are currently needed in the region to help achieve a more functional housing market.
- The study estimates that the regional economy will add approximately 44,250 jobs and see a population increase of roughly 41,450 over the 2000-2010 period.
- The economic forecast indicates that over half of the region’s new employment opportunities will be created in the service sector and almost a fifth will be created in the trades – categories of jobs where wages tend to be low and housing assistance needs tend to be high.
- The study estimates that as a result of this projected population growth, more than 23,600 additional housing units will need to be added to the housing stock over ten years.
- Of the 23,600 new units needed, nearly 18,000 are expected to be owner-occupied housing. Of these, roughly 9,800 units are projected to be required for households in the less than 120 percent of median household income categories–the categories generally thought to include those who require housing assistance.
- Of the 23,600 new units needed over the next ten years, approximately 5,600 are projected to be rental units. Of these, roughly 1,700 units are projected to be needed for households earning 30 percent or less of the median income. Another 925 units are projected to be needed in the 31 percent to 50 percent of median income category, meaning that over half of the new rental unit demand will be in the less than 50 percent of median household income categories. Another 1,000 units are projected to be in the 51 percent to 80 percent of median income category. In total, over 70 percent of the projected new rental unit demand, or roughly 3,670 units, is expected to be in the less than 80 percent of median household income categories.
- The study found that this projected need for additional housing will not be met if units are added to the inventory at rates experienced in recent history. Even if market construction and the efforts of affordable housing groups are able to deliver roughly 1,750 units per year to the regional housing inventory over the next decade - a level that is significantly higher than the 1990s but somewhat lower than the 1980s housing boom - there will be an unmet need of more than 10,000 housing units in the region by 2010. That would only meet just over one third of the expected increase in total housing demand over the study period.
- The potential for a significant level of unmet housing demand will place significant upward pressure on regional real estate and housing prices over the next decade. Past experience with unmet demand pressures of this nature and size have led to housing cost increases which have reduced the affordability of housing–particularly for low and moderate income households who have fewer housing choices. The study shows that this affordability pressure is most acute for individuals and families earning less than 50 percent of median household income. The study estimates that the rental unit gap for households earning below 50 percent of median income is nearly 11,500 units in 2010.
- The combination of continuing economic growth, the growing supply and demand imbalance, and significant increases in older age categories will likely further exacerbate housing needs for low and moderate income Vermonters as higher income households may choose to live in and compete with lower income households for housing units. This competition may be a major factor contributing to recent upward pressure on rent levels and housing prices around the region.
- The study concludes that if the housing needs of the workforce are not met, the ability of the six county region to realize its otherwise bright economic development potential may be stymied.
For a copy of the complete summary findings of the study, please contact VHCB at 828-3250.
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