How unaffordable is housing?

The 2008 update of the annual report of the Vermont Housing Awareness Campaign, titled Between a Rock and a Hard Place, was just released.  Is it analysis or a report by a group of advocates?   The basic point of the report is that rents and housing prices in Vermont are high, and too many Vermonters cannot afford to buy a house and are paying too much for rent. 

The report is careful not to draw specific policy conclusions and is selective about how it uses its statistics.  It leaves it to the state's media to do the heavy lifting, and most responded as the authors no doubt intended:

The widening gap between wages and home prices threatens to displace working Vermonters and stunt the economy at large, according to affordable housing advocates.
--Rutland Herald

Actually, the language of the study points to that, but it never goes that far. 

Housing advocates say wages are not keeping pace with the cost of housing and more affordable housing is needed.
--WCAX

Just what the writers wanted the media to report.  Give us more money. 

The Freeps' reporter, Tim Johnson, did what journalists are supposed to do and he found a story and got it right:

 

In depicting Vermont's housing affordability problems, the report cites two telling statistics from the U.S. Census but omits a third.

Yes, he actually went to the Census Bureau and found something that was conveniently ignored in the report.

The first two put Vermont at the bottom or near the bottom of the nation in its rates for homeownership vacancy (1 percent, compared to a national average of 2.7 percent) and rental vacancies (4.9 percent, compared to the national average of 9.7 percent). Homeownership vacancy is the proportion of homeowner inventory that is vacant for sale or rent.

A statistic more in Vermont's favor, not mentioned in the report, is the rate of home ownership, which has been higher than the national average since 1986, according to Census figures. In 2007, Vermont's home-ownership rate was 73.7 percent, compared with the national average of 68.1 percent.  Apparently, many of the Vermonters who could not afford to buy a house these days at average prices are already home owners, although many are apparently struggling with mortgage costs.

Yes, we have one of the highest home ownership rates in the nation.  But notice how the report leads us to just the opposite conclusion.  Take this quote in the Rock and a Hard Place report:

A Vermont household would need an annual income of $65,000....to purchase that [a median priced] home.  Sixty-five percent of Vermont's households have incomes below $65,000.

A reader would logically conclude that 65% of Vermont households can't afford to buy a home.  But as Mr. Johnson notes, 73.7% of households actually do own a home.  There appears to be a disconnect, and a big one, between two statistics:  65% of Vermonters apparently can't afford to own a home but nearly 74% actually do own one.

Unfortunately, Mr. Johnson's surmise, that those homeowners who apparently can't afford to live in the house they own are "apparently struggling with mortgage costs," is highly unlikely.  We do know that 58,000 Vermont homeowners have no mortgage.  That's nearly one out of three homeowners in Vermont.   It's hard to believe that they're struggling.   You won't find that statistic anywhere in the Rock and a Hard Place report, nor any mention of Vermont's high home ownership rate, or the fact that it's increased over time. 

You won't find other statistics that might cause you to think differently about housing or affordability.  Like the fact that housing affordability was at its recent best in Vermont early this decade, just when the Rock and a Hard Place document began to be published.  Or that one out of every four households in Vermont consists of one person living alone in their own house or apartment.   That's a sign of wealth, not of a lack of housing affordability.  Years ago, single people would have to live with their parents or children.  Now they live on their own.

One last thought.  There is a problem of housing affordability in Vermont.  Part of the problem is due to our housing costs (rental and owned housing).  And that's due to the difficulty of building new units--not just affordable units, but all units, as I've written about here.   If the authors of the report really wanted to influence policy, they would soundly criticize the high costs of permits, the delays, and the rules and regulations at the state and local level that put costly obstacles in the way of building any kind of housing in Vermont.  And part of the problem is that poor people can't afford decent housing.  Or many other things.  They need more income.   Building more affordable housing will not solve their basic problem.  Providing more economic opportunities for them will.

Comments

[Tom Licata]

This past Monday night - in Shelburne - as part of the "Vermonters For Economic Health" Town Meeting Forums, Rep. Dave Zuckerman attended along with other representatives and citizens.

This housing subject came up during our presentation and below is a follow-up note that I sent out to Rep. Zuckerman (Our next Presentation is in Bristol, April 16 7 pm Mount Abraham High School):

Dave,

Thank you for taking the time to come out last night. Attached is the slide showing the allocation of income among the various income brackets.

Those on the lower end of the brackets will never move up the income ladder if 0% private-sector job growth continues to be the norm; which has been the case in Vermont for almost a decade now.

These private-sector jobs won't materialize with the kind of anemic housing development Vermont witnesses and hence, its serious housing shortage causing prices to be out of the reach of too many Vermonters; whose incomes are barley keeping pace with inflation.

Something has got to give.

At our first "Town Meeting Forum" in Essex, an older gentleman stood up and barreled out: "you can't eat the scenery".

Please try to impress this upon your colleagues in the legislature.

Trust me - economically - things will get worse from here.

Thank you,

Tom

This past Monday night, in Shelburne, as part of the "Vermonters For Economic Health" Town Meeting Forums, Rep. Dave Zuckerman attended along with other representatives and citizens.

This housing subject came up during our presentation and below is a follow-up note that I sent out to Rep. Zuckerman (Our next Presentation is in Bristol, April 16 7 pm Mount Abraham High School):

Dave,

Thank you for taking the time to come out last night. Attached is the slide showing the allocation of income among the various income brackets.

Those on the lower end of the brackets will never move up the income ladder if 0% private-sector job growth continues to be the norm; which has been the case in Vermont for almost a decade now.

These private-sector jobs won't materialize with the kind of anemic housing development Vermont witnesses and hence, its serious housing shortage causing prices to be out of the reach of too many Vermonters; whose incomes are barley keeping pace with inflation.

Something has got to give.

At our first "Town Meeting Forum" in Essex, an older gentleman stood up and barreled out: "you can't eat the scenery".

Please try to impress this upon your colleagues in the legislature.

Trust me - economically - things will get worse from here.

Thank you,

Tom

[Karen Kerin]

This clarifies the picture considerably. The depressed income of the middle and low class earners is a serious barrier to home ownership. But, the single largest obstacle is the permitting process that has served to drive up the cost of new homes and even remodeled older homes. I can't help but note that the planning and development review boards are a serious brake on the low cost housing with prefabricated or even mobile homes by making them off limits in much of many communities.

[Woodstocker]

Real simple solution:

Outlaw single-person households.

Pros:

1) Huge and immediate increase in affordable housing availability.

2) Sizable statewide decrease in energy consumed for lighting and heating.

3) Senior citizens would be forced to move in together significantly lowering loneliness factor. Saves on mental health costs.

Cons:

Bureaucrats currently living alone, now forced to live with someone, would have to deal with real people on a daily basis... Unless they moved in with each other.

[Tom Licata]

Woodstocker,

Hard to believe because the former is so often forgotten for the latter in this state - but - Vermont's state motto is:

"Freedom and Unity"

I also believe "Freedom" - somewhere - is mentioned in our Constitution; something Ron Paul just might agree with.

[Jon Harrison]

This is a very interesting post, with a lot of subtle analysis. It and the comments on it should be read in conjunction with the "Bad to Worse" post.

The key question in this debate, in my opinion, is whether young people, and particularly young families, are settling here, and if not, why? I believe the statistics show that we have an influx of older people, retirees mainly, and an outflow of youth. I believe these conditions exist in large part because housing in Vermont is not affordable for the typical young family (see my comments under "Bad to Worse").

If I'm right about that, it follows that the solution is for government to get out of the way and let capitalism work. If we establish a business-friendly climate in conjunction with an easing of the government stranglehold on development, we can get the jobs that will attract young people and allow them to buy homes -- homes currently available for purchase, and new housing stock that deregulation would allow builders to create.

Don't we need young people and families in Vermont? Or will we be OK if an ever-larger percentage of the population consists of well-to-do oldsters?