Witnesses Say Labor, Energy Rules and Permitting Are Driving Up Vermont Housing Costs

Kurt Nassar, director of preconstruction at PC Construction, told the Senate Economic Development, Housing and General Affairs Committee on the last day of January that Vermont faces multiple cost drivers that make building housing more expensive than neighboring states. He said the state’s labor supply is constrained, wages are relatively high and successive updates to the Commercial Building Energy Standard add per‑unit costs to multifamily projects.

Those factors combine, committee members were told, to reduce developer appetite for Vermont projects and to raise the price of new apartments and publicly supported housing. "Are we in a housing emergency? I would say yes," Nassar said during his presentation.

Why it matters: committee members and witnesses framed the issue as immediate and consequential for residents and employers. Panelists said developers that initially pursue Vermont projects frequently shift to New Hampshire or Maine after factoring in construction costs and permit timelines. Several witnesses urged the committee to assemble objective permitting‑timeline comparisons and to examine where state and municipal processes duplicate review and add delay.

Nassar described three primary drivers: available labor, construction wages and more stringent energy requirements. He showed data that New Hampshire has grown construction employment faster than Vermont (New Hampshire up about 11% since the pandemic, Vermont roughly 1%); he said Vermont currently has about 15,500 construction workers and that the state’s construction wage level has outpaced New Hampshire by roughly 7.5% over the past seven years. "When it comes to construction costs, less available labor leads to higher cost," he told senators.

On energy rules, Nassar said successive updates to Vermont’s energy codes — including the 2020 Commercial Building Energy Standard and the state’s 2024 CBES update — raise insulation, window and air‑barrier requirements, add electric readiness provisions and increase mechanical and electrical scope. He told the committee those additions are adding $30,000 to $40,000 per unit on average in the multifamily projects he analyzes. Nassar summarized the combined impact as a 10%–15% total premium for Vermont building standards, with roughly 2%–4% coming from enclosure/window scopes and 3%–6% from mechanical, electrical and plumbing work.

Eric Hoekstra, managing partner at Redstone, said construction costs have surged since 2019 and described the policy moment as one to prepare for future cycles: "Construction costs since 2019 are up about 50%," he said, and added that regulatory reform is needed so the state can capitalize when market conditions again support housing development.

Kathy Beyer, senior vice president of real estate development at Evernorth, provided two contract examples and said hard construction costs alone had increased by about $135,000 per unit between March 2022 and July 2024 on otherwise comparable multifamily projects. "For a two‑bedroom apartment, it basically means that the hard construction costs are a $135,000 a unit more from March 2022 to July 2024," she told the committee, and noted escalation has continued since those dates.

Witnesses also discussed permitting and environmental review. Committee members asked for data from the Agency of Natural Resources and other permitting authorities to quantify where ANR, Act 250 and municipal reviews create the largest schedule impacts. Several senators requested a permitting‑sequence visual that would annotate sensitive spots and cross‑jurisdictional duplication for comparison with neighboring states.

Panelists touched on other topics the committee asked them to address: modular/off‑site construction and workforce development. Multiple witnesses said modular construction has not yet produced reliable cost savings in the projects they examined; Nassar and others reported modular bids that were often similar to or more expensive than conventional construction and described Vermont code and inspection requirements as occasionally increasing retrofit cost for factory‑built components.

On workforce, witnesses noted an aging trades workforce and competition from nonconstruction employers and nonlocal subcontractors. Some panelists pointed to H‑2B and other temporary worker programs in other sectors but said a construction‑specific, scalable visa program was not available at the national level. Eric Hoekstra and others said removing regulatory barriers that keep housing supply tight is a necessary complement to vocational training efforts because workforce retention depends on local housing affordability.

Committee directions and next steps included requests that witnesses and state agencies: (1) provide permitting timeline comparisons across municipalities and neighboring states, annotated to show common delay points; (2) share ANR and Act 250 data needed to quantify permit‑related schedule impacts; and (3) provide any available breakdowns showing how energy‑code requirements change per‑unit hard costs. No formal votes or policy changes were recorded during the hearing.

Ending: Senators and witnesses agreed to continue the conversation and to supply data for a follow‑up session. Committee members signaled interest in both lowering avoidable cost and aligning workforce and permitting reforms; witnesses said some cost pressures (tariffs, national material prices) are driven at the federal level and will require federal advocacy in addition to state action.