VHFA director: higher construction costs, program rules and added policy goals are driving up affordable housing per-unit prices

Maura Collins, executive director of the Vermont Housing Finance Agency, told the House General and Housing Committee on Jan. 31 that it “costs more to build housing than it used to,” and that the combination of higher material and labor costs, additional program requirements and how federal tax credit programs are structured has increased the per-unit price of affordable rental housing across Vermont and nationally.

Collins said national price data show material and labor costs rose sharply between 2020 and 2024 compared with 2016–2020, and that while increases may be slowing they have not fallen. She also raised concerns that policies such as Buy America/Build America implementation and higher insurance and disaster-rebuild costs could further raise construction and operating costs.

The practical effect, Collins said, is visible in VHFA application data: the average cost per apartment for projects in one VHFA program rose from about $286,000 a few years ago to “well over $500,000 per apartment” more recently. She used a hypothetical $10 million of funding to illustrate that the same state dollars now produce far fewer units than in earlier years — an example in her slides showed a $10 million allocation that would have built 35 apartments in 2018 would buy 19 apartments under recent cost levels.

Collins reviewed how the Low-Income Housing Tax Credit (LIHTC) system — the largest federal source of affordable rental development financing — affects…