Developers cite mortgage rates, materials, permitting and labor as primary drivers of rising housing costs

Developers and homebuilders told the Economic Development, Housing & General Affairs committee that multiple, compounding factors are driving up the cost of new housing in Vermont, making homeownership out of reach for many residents.

In testimony to committee members, Jim Bradley, a project manager and developer with Hayward Design Build in South Huron, said higher mortgage rates and rising material and labor costs are squeezing buyers and builders alike. "When mortgage rates move from around 3% to 6½–7%," Bradley said, "every $1,000 that the price of a home goes up, you're pricing about 950 people out of the market." He added that grant subsidies alone can push market prices higher for subsequent buyers and said targeted mortgage-rate buy-downs can be more effective than lump-sum subsidies for expanding ownership.

Bradley also cited recent swings and longer-term changes in lumber markets, including mill curtailments in Canada and existing tariffs, as drivers of higher building costs. "Two-by-tens has gone up year over year 63.2%," he said, and noted that tariffs and reduced Canadian production could further raise prices in 2025. He warned that these material costs are ultimately passed to buyers and challenged assumptions that stricter energy codes would produce only minimal upfront cost increases.

"We're seeing estimates of roughly $30,000 more per new home to meet current residential energy-code increases," Bradley said, noting builders he audits report higher per-unit cost increases than some official estimates. He added that if higher standards are adopted, they need accompanying enforcement, education and pathways to avoid construction or health problems caused by poor implementation.

Colin Frisbie, owner of Sterling Homes, told the committee that permitting uncertainty and local regulation lag are significant cost multipliers. "Uncertainty and risk cost money," Frisbie said. He described projects where state laws (notably S.100 and Act 181) or interim maps have not been reflected in municipal regulations or mapping, forcing projects to undergo additional review such as Act 250 and historic-preservation processes. Frisbie said site-development and infrastructure costs frequently exceed land-acquisition costs and that delays and extra fees can add months and tens of thousands of dollars to a project's timeline.

Jason Webster, co‑owner of Huntington Homes, emphasized a parallel bottleneck on the labor side. "There is no capacity in the system to build more houses," Webster warned, saying many existing contractors are occupied building higher‑margin projects instead of the missing‑middle housing policymakers seek. Webster and other builders urged expanded, better-coordinated workforce training—through CTE programs, apprenticeships and partnerships with manufacturers—to replenish a workforce many described as aging and too small to meet demand.

Committee members and witnesses also discussed impact fees, which they described as a direct pass-through cost to new units (school, transportation, water/sewer connection fees). Builders said fees are often identical for affordable and market-rate units and raised the idea of scaling or providing density bonuses for projects that include affordable units. Frisbie and others noted that natural-resource setbacks, wetlands and terrain constraints often limit achievable density even when statutory density allowances increase.

Manufactured and modular construction came up as part of the supply response. Webster described Huntington Homes' factory-based model and said factory construction can improve quality and reduce on-site labor time, but expanding factory output is constrained by the same workforce shortages and by commercial-scale supply-chain limits.

Speakers asked lawmakers to pursue a coordinated approach that addresses financing (including mortgage-rate buy-downs and targeted programs), permitting friction and mapping updates, strategic use of impact fees or density bonuses, investment in workforce training and ways to stabilize or diversify supply chains for key materials.

The committee did not take votes during the session. Members asked witnesses to submit written testimony and supporting details for the record and to follow up on town- and regional-mapping issues raised during permitting examples.

Ending: Committee staff asked witnesses to provide written testimony and to copy staffers on relevant emails about mapping and Act 181/Act 250 determinations; lawmakers signaled interest in follow-up conversations on workforce training and targeted financing tools.