Vermont realtors tell committee low inventory is driving prices; urge by-right permitting and support for small builders

On Jan. 30, at a meeting of the Economic Development, Housing & General Affairs committee, Peter Tucker of the Vermont Association of Realtors testified that low housing inventory is lifting prices statewide and urged policy changes to speed smaller-scale homebuilding.

Tucker told the committee that the market is returning from the pandemic peak: single-family home sales topped 8,000 in 2020 and 2021, fell to about 5,400 in 2023 and remained roughly stable in 2024. He said median sale prices have continued to rise over the period and cited a statewide mid-2024 median for single-family homes of about $415,000. "As supply dwindles, the supply line actually moves up demand curve ... there's less inventory and higher prices," Tucker said.

The Vermont Association of Realtors representative highlighted several constraints on new housing. He said labor availability, high costs of materials and elevated interest rates are making construction—and particularly small-scale homebuilding—hard to "pencil out." Tucker also described financing barriers for rehabilitating dilapidated properties, saying many banks will not lend on properties that are not mortgageable until they are repaired.

Tucker pointed lawmakers to tools and recent policy changes intended to increase production. He demonstrated a public market tool from the association that shows county-level metrics, and he described an interactive map of "interim exemptions" maintained by the Agency of Commerce and Community Development that, in many Vermont downtowns, allows projects up to 50 units in certain zones. He credited recent changes in Act 181 for expanding exemptions that some builders are now using. Tucker said those interim exemptions appear to have triggered a number of projects, including affordable rental developments that have drawn attention in local reporting.

Committee members and Tucker discussed Act 250, wetlands and stormwater permitting as major cost drivers. Tucker recounted an example a member raised of a 54-acre parcel in which wetland and engineering constraints exhausted the owner's funds and stalled housing that otherwise might have been built. He and members agreed the classification and regulatory treatment of wetlands and stormwater permits significantly affect project feasibility.

Tucker and committee members also discussed potential policy levers. He said some in the realtor community favor expanding "by-right" development for small projects—where a project that meets an adopted municipal plan would receive a more administrative permitting path rather than extended discretionary review. Tucker described this as a way to let small builders "do 2 or 3 homes here and 3 or 4 homes there" without the cost and delay that larger projects face. He cautioned, however, that regulatory relief alone will not solve shortage problems driven by labor, materials and capital availability.

On rehabilitation of vacant or dilapidated houses, Tucker said programs such as VHIP and other renovation grants are helpful but limited relative to the number of offline units. He noted the difficulty of sequencing financing—banks often decline loans on uninhabitable properties, complicating efforts to restore them for resale or owner-occupancy.

Tucker also raised geographic variation: condominium development has increased in Chittenden County but remains limited elsewhere; active inventory showed notable year-over-year percentage increases in some counties even if raw counts remain small.

Committee members asked staff and Tucker for links and data sources. Tucker committed to sharing the presentation and public analytics tools, and the committee planned to resume at 10 a.m. for a joint hearing on the governor's housing proposals.

The testimony provided committee members with market context and a set of practitioner perspectives—including calls for targeted permitting changes, continued investment in workforce/trades training, and adjustments to financing tools—while underscoring that multiple, overlapping barriers (permits, wetlands/stormwater rules, construction costs and lending practices) affect whether small builders can bring homes to market.