by Zachariah Watson
As the executive director of Central Vermont Habitat for Humanity, an affordable housing non-profit, I am concerned by the proposed appropriations of ARPA funds for “affordable housing.” The majority of the appropriations, over 90%, will go to supporting subsidized rental units. This is concerning, because these investments will shape our future housing stock with very little opportunities for homeownership for low- to moderate-income Vermonters. Depriving residents of one of their only means of prosperity, homeownership, will exacerbate the gap between the rich and the poor and could have far reaching impacts on the wealth of Vermonters.
There is a need for affordable rentals, but they should not be considered workforce housing and should not be a primary focus of investment into affordable housing. Subsidized rentals for low wage earners is a subsidy for businesses who do not pay a livable wage. A worker who earns low wages should be able to build their wealth by investing in their home through mortgage payments and not be forced to rent because that is all that is available. Regardless of the type of rental, rent dollars go into someone else’s bank account. If we want to attract a good workforce to Vermont who will be a part of our communities, we need to create affordable housing for homeownership.
Rentals can have a negative multiplier effect on the wealth of a worker when their rent goes up as the economy grows but they do not see their wages grow at the same rate. Renters can become poorer and be even less likely to save enough money to buy a house. Conversely, homeowners can benefit from economic growth because their home gains value over time. According to a 2019 Survey of Consumer Finances, a household was the largest asset on the balance sheets of Americans. This is significant because if we are not creating opportunities for affordable homeownership then we are robbing future generations of one of their only means of obtaining wealth. In the words of Sen. Ram-Hinsdale “homeownership builds middle income families.”
Building homes for homeownership is not impossible. The challenge has been created because the state and federal governments have not adequately prioritized or monetized programs that support homeownership and as a result Habitat for Humanity affiliates are the primary organization building homes for affordable homeownership in Vermont. In a June 2021 VermontBiz article titled “The Conspiracy of Goodwill,” Gus Seelig, executive director at the Vermont Housing and Conservation Board, was quoted as saying “Nobody today is building starter homes — that 1,000-to-1,200-square-foot ranch — as a business … Habitat for Humanity builds them all over the state, but they build seven or eight homes a year.”
In addition to Vermont Housing and Conservation Board subsidies, there are already millions of dollars available through tax incentives and vouchers that specifically support the low-income rental industry. The uneven distribution of incentives and subsidies has created a housing industry focused on building rentals. As a result, in 2021 of the 800 housing units subsidized by the Vermont Housing and Conservation Board only 17, less than 3%, were built for homeownership.
The Vermont government can help meet the needs of our housing market and support building more affordable homeownership opportunities by making the following investments into:
The Vermont Housing and Conservation Board and directing them to commit larger subsidies for homeownership projects.
The missing middle program with shared equity clauses attached to the subsidies.
The Capital Investment Program with funds designated for building workforce housing for homeownership.
Zachariah Watson is the executive director of the Central Vermont Habitat for Humanity. This is an edited version of a letter that Watson sent to the Vermont General Assembly and Gov. Phil Scott.