Between the years of 2011 to 2019 the average price of a condominium in New York City soared from $1.15 million to $3.77 million, according to The Atlantic magazine. Almost half of the condominiums that have come on the market in the last five years remain vacant. Meanwhile, New York City is losing 300 residents on a daily basis. Little wonder. The price of housing has forced them to find homes elsewhere.
It’s an extreme example, but the issue of affordable housing is being played out across the nation, including Vermont, where it’s routinely noted that the housing we have is too expensive, and not plentiful enough to meet our needs. For the Vermonters who leave to move elsewhere, it’s often about the cost of housing, just like NYC, except with fewer zeroes.
The issue of affordable housing came up last week when Vermont State Treasurer Beth Pearce told lawmakers she was opposed to a proposed $50 million housing bond that is being pushed by legislators. She’s not opposed to affordable housing, she opposed the cost of the borrowing that would be required. She questioned the state’s ability to handle the accompanying debt capacity.
Ms. Pearce recommended that legislators instead fully fund the Vermont Housing and Conservation Board, which would, she said, result in the building of 500 new housing units.
Ms. Pearce’s reservations have not deterred State Senator Michael Sirotkin and other advocates. The state in 2017 went ahead with a $37 million bond which has leveraged enough state and federal funds to build almost 800 housing units. Mr. Sirotkin wants to push ahead with the $50 million bond, noting that it could help the state’s population growth efforts in addition to addressing health and educational issues associated with homelessness.
Ms. Pearce is correct to warn about the costs of borrowing and how it would be smarter to use cash, if possible. It’s her responsibility as state treasurer to ensure that the state’s obligations are serviceable and understood.
But the bigger issue is that housing is not understood for the impact it has not only on people’s lives but on the stability and strength of the population, writ large.
In a special report published by The Economist magazine, it contends, “…governments across the rich world have made three big mistakes [with housing]. They have made it too difficult to build the accommodation that their populations require; they have created unwise economic incentives for households to funnel more money into the housing market; and they have failed to design a regulatory infrastructure to constrain housing bubble.” It concluded, “…flexible planning systems, appropriate taxation and financial regulation can turn housing into a force for social and economic stability.”
When affordable housing is understood, and accepted as being more than a political cause for the underserved, perhaps we have a chance of making it the broad based cause it needs to be. Consider the language we use. The term “affordable housing” infers housing that is subsidized. It’s become a pejorative. Turn the words around and talk about “housing that is affordable” and the perception changes. It’s something that applies to us all, the poor, the middle income, the wealthy. And truth be known, the strength of our housing market — housing that is affordable — applies from one end of the spectrum to the other.It’s an economic force that can be forged for the collective good.
In Vermont, we pitch affordable housing in the traditional sense, as an issue that addresses housing almost as a right, like health care. The result is that it’s not something understood for the all encompassing importance it holds. The result of this skewed informational track is a statewide labyrinth of housing authorities, each with their own set of advocates, with no coordinated message, and with their own set of expenses.
No one is quite sure why it is that housing in Vermont is so expensive when the cost of building materials, including labor, is basically the same from coast to coast. Josh Hanford, commissioner of the Department of Housing and Community Development was recently quoted as saying, “It’s clear we have housing needs, absolutely. But it’s expensive to build new housing because of permitting fees and other regulation…Ask developers how much of their costs they’re putting toward bricks and mortar and construction.”
Let’s do just that. Ask. Find out. As The Economist’s report lays out, in many places it’s the regulatory environment, and the resulting NIMBY effect, that put the cost of housing out of sight for countless people across the globe.
Where’s the sweet spot? What’s Vermont’s story? How many housing units are needed? At what price levels? Which counties need them most? Until we understand why our housing stock is expensive, and so old, and what the differences are from one county to the next, and what’s needed and what the impact would be, then it’s not reasonable to push ahead with a $50 million bond that is guided in generalities, not specifics.
There is a case to be built. Let’s build it. When this is understood it may be that the $50 million bond is a bargain and leads to other economic development initiatives.
by Emerson Lynn