In 30 years of working in real estate development, I have never seen construction pricing or supply problems like we are experiencing now.
The raised ranch home is ubiquitous in our neighborhoods around Vermont, and for many it’s what they think about when they think about a home that’s affordable. And for good reason: it has an efficient layout, is easy to build, and as your family grows, you might be able to add conditioned space in the basement. The typical raised ranch is 1,400 square feet, and as little as five years ago you could build one for around $245,000.
Today, if you turn to your local builder, and ask for a price quote, don’t be surprised when it comes in much higher. Since the pandemic, construction prices have increased by more than 30%. Construction cost for new housing is at more than $300 per square foot, making that 1,400-square-foot home start at $420,000, and that doesn’t include the price of the land, the permit fees or the construction loan interest expense.
In 30 years of working in real estate development, I have never seen construction pricing or supply problems like we are experiencing now. I talk with our general contractors, who have decades of experience, and they just shake their heads. “We can’t find rough carpenters, electricians or plumbers” or “We can’t give a price for materials because it will change tomorrow.”
The increased cost to rent or own a home in Vermont is a difficulty for many people. One of the reasons housing costs so much is because there just isn’t enough of it. In April the Vermont Housing Finance Agency projected a need for tens of thousands of new homes and noted that “When too few homes are available to meet demand from people looking for homes to buy or rent, prices and rents are pressured upward.” We’re feeling that pressure, and more.
But it’s not the time to stop building. People need housing, it’s a critical issue for employers and for our communities. For people who have low incomes or who are unhoused, this is especially true.
Building multifamily affordable housing or apartment buildings comes with more rules and requirements than a typical single family construction project and so the all-in building costs end up greater. Even so, the cost to the resident is very affordable.
Evernorth has 3,546 units across Vermont and we’re housing 6,742 people of which one-third are children. The majority of our residents have a household income that is equivalent to $8.50 per hour, but for the majority of these residents, they pay no more than 30% or less of their income for rent. Without our housing, even more people would be homeless in a state with the second highest rate per capita in the country. We are doing well, but we must do more.
Our portfolio of rental housing, along with all the other homes built with public funding from the Vermont Housing and Conservation Board, is a community asset. With good stewardship these affordable homes will serve the community for generations, just like our libraries and schools.
These challenges come at exactly the time we need to be building so much more housing.
Investing today, even when the costs are growing, is necessary. Working together there are ways to build more efficiently, to reduce complexity and to streamline decision making — and create homes that will be affordable in our communities forever.
Kathy is the senior vice president of real estate development for Evernorth, a nonprofit organization that provides affordable housing and community investments in Vermont, New Hampshire and Maine. She lives in Hinesburg.
The original opinion piece ran in the “VT Digger” on 1/19/24 and can be found here: https://vtdigger.org/2024/01/19/kathy-beyer-the-raised-ranch/