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Vogel: Housing Trends

It’s always dangerous to make predictions about the housing market in the United States. At one time, many experts predicted that unlike their parents, Millennials wouldn’t leave the cities for the suburbs. But recent surveys show that in the fifty, largest metropolitan areas, three quarters of Millennials now live in the suburbs.

In contrast, some other changes going on in the rental housing market seem here to stay. The percentage of American households that rent instead of owning their homes is now more than 36%, the highest percentage in fifty years. High construction costs, the burden of student loans and, most importantly, stagnation in middle class incomes has put homeownership out of reach for many young families and others.

Even more troubling, is the fact that the supply of new rental housing hasn’t kept up with demand. For example, over the last five years in Seattle an average of forty people and thirty five jobs arrived every day, but only 12 new housing units came on line. And the pressure from this undersupply of housing results in rapidly rising rents.

In this respect, Vermont has taken some important steps that could become a model for the rest of the country.

In 2016, Champlain Housing Trust, Housing Vermont, and the Chittenden County Regional Planning Commission, along with local leaders and housing activists, launched a campaign called Building Homes Together. They set an ambitious goal of building 3,500 homes in five years in Chittenden County.

In its very first year, more than 900 homes were built - about double the annual average. And of these new homes, more than two thirds were much needed, multi-family rental apartments. Building Homes Together also served as a catalyst in a process that resulted in the passage of a $35 million housing bond which will help to subsidize about 600 more units of housing over the next few years.

But as innovative and proactive as Vermont has been, many families will be unable to make the transition from renters to homeowners as long as housing costs continue to outpace wages.

And if demand continues to exceed supply, rents will continue to increase – leaving more and more families unable to afford even the most basic, safe rental housing.

John Vogel is a retired professor from the Tuck School of Business. His tenure at Dartmouth began in 1992, where he taught Real Estate and Entrepreneurship in the Social Sector, among other subjects. He was named by the “Business Week Guide” to Business Schools as one of Tuck’s “Outstanding Faculty” members.
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