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Vermont Must Construct 7,000 Homes Yearly for 25 Years to Meet Housing Demand: Study Reveals

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Vermont needs to build 7,000 homes annually for 25 years to meet demand, says new study

A recent study indicates that Vermont must construct 7,000 new homes annually for the next 25 years, adding up to a total of 172,000 homes, to meet housing demand and resolve its persistent housing shortage by 2050.

This task is indeed a formidable one.

The highest number of homes ever constructed in a single year in Vermont was 4,800 back in 1988. In 2023, the state issued building permits for 2,456 homes, which is a significant increase from the record low of 1,300 permits in 2011, but still falls short of the 7,000 homes needed each year as identified by the study.

“We need to accelerate our efforts,” stated Alex Farrell, Commissioner of the Department of Housing and Community Development (DHCD). “These figures confirm what we already know: our pace of adding new homes does not meet the existing demand, let alone support any modest population growth.”

The analysis was conducted by DHCD, in partnership with the Vermont Association of Planning and Development Agencies (VAPDA) and the Vermont Housing Finance Agency (VHFA).

Formidable Goals for the Next Half-Decade

Looking ahead to 2030, the research suggests that to tackle its demographic challenges, Vermont needs to add 41,000 new rental and owner-occupied homes. This means about 8,200 housing units per year over the next five years.

“As regional planners, we understand that these state and regional projections might overwhelm some local municipalities,” said Devon Neary, executive director of the Rutland Regional Planning Commission. “We are dedicated to collaborating with local cities and towns to break these numbers down into manageable targets over time.”

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Neary also serves as the chair of the VAPDA.

Historic Underdevelopment in Housing Over the Past Quarter-Century

In its independent Vermont Housing Needs Assessment for 2025-2029, VHFA estimated that between 79,000 and 172,000 homes are needed by 2050, with the higher estimate reflecting the DHCD’s findings. VHFA calculated that to achieve this growth, the housing stock would need to grow by an average of 0.8-1.6% per year, which equates to between 3,160 and 6,880 homes annually.

For context, between 2010 and 2020, Vermont’s housing stock grew at an average annual rate of just 0.4%, or about 1,178 homes per year. Clearly, the housing targets set will require a significant increase in home construction.

The VHFA study outlined several reasons for Vermont’s housing crisis:

  • The pace of home development since 2000 hasn’t kept up with the desire to live in Vermont. The decade from 2010-2020 saw the slowest annual growth rate in home development since the 1950-1960 period. Consequently, Vermont has some of the oldest housing stock in the nation, leading to low vacancy rates and rapid turnover of homes on both the buying and renting fronts.
  • The housing shortfall is exacerbated by a large number of homes used seasonally or for other secondary purposes. For decades, a significant portion of Vermont’s housing has been made up of such homes; the state has ranked among the top three for the percentage of its housing stock used as seasonal residences since 1940. Currently, over 15% of all homes in the state (around 50,000) are categorized as seasonal dwellings.

  • Vermont has the third oldest population in the nation. Many older Vermonters choose to stay in their homes post-retirement, keeping these homes off the market for younger potential buyers. As a result, many homes are underutilized while the state’s demographic continues to age.
  • Significant net migration into the state was minimal for years, but there was a noticeable increase during 2021 and 2022, likely spurred by the Covid-19 pandemic. While modest in absolute numbers, this uptick has likely influenced the already strained housing market, with home prices and rents in Vermont rising more sharply since 2020 than in the previous five years.

Contact Dan D’Ambrosio at ddambrosi@gannett.com. Follow him on Twitter @DanDambrosioVT.

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