By: Chad Simmons

December 13, 2022

MIDDLEBURY, VT - With many Vermonters feeling stuck because of the increasing costs of homes and the dire lack of availability, officials announced a new program to build more moderately priced homes across the state. The Missing Middle-Income Homeownership Development Program will provide subsidies and incentives for home builders to construct or rehabilitate modest homes affordable to Vermont homebuyers at 120% of the area median household income or lower. 

Missing Middle Launch December 2022

“We are not building enough homes in Vermont and have not been for quite some time,” remarked Maura Collins, Executive Director of Vermont Housing Finance Agency (VHFA). “With the launch of this innovative, collaborative program, we are creating new homeownership opportunities by investing in the construction of for-sale homes.” 

Administered by VHFA, the program is open to non-profit and private home builders. Eligible types of housing units include: 1–4-unit houses, manufactured or modular houses, condominium units, and houses or apartments owned by cooperative housing corporations. The program includes both a construction loan guarantee as well as a development subsidy for program-eligible homes. Additionally, the program includes a subsidy to income-eligible buyers that reduces the home sales price. At least 1/3 of the program funds will support the shared equity model of home ownership to provide deeper affordability.   

Governor Phil Scott signed legislation in June of this year that provides $15 million in funding for the program, using a portion of the State’s American Rescue Plan Act (ARPA) funding. The program represents the largest single investment in the state’s history to create new homeownership opportunities by investing in the construction of for-sale homes. 

“It’s no secret that housing costs have soared over the last few years, making home ownership out of reach for most middle-income Vermonters like teachers and firefighters,” said Governor Phil Scott. “This creative program was a top housing priority for my administration during the last legislative session and it will help build more homes, quickly bring them to the market and ensure they are affordable for Vermonters”. 

Historic underproduction of housing, rising home sales prices and mortgage interest rates, and extraordinary increases in the costs of construction led to the need for the Missing Middle-Income Homeownership Development Program. Year-over-year home construction costs have increased by more than 12% between 2021 and 2022. In most cases, it now costs more to build a modest single-family home than the home will appraise for at the time of completion. Median home prices in Vermont have increased from $259,900 to $295,000 between 2021 and 2022. In many areas across the state, homes priced at median prices in good condition for potential buyers are almost non-existent. National 30-year mortgage interest rates have increased from 2.74% in early 2021 to 5.52% in June 2022, further putting pressure on the cost of buying a home. VHFA estimates that the increase in interest rates priced 13,400 Vermont renter households out of being able to afford the mortgage on a median priced home, a 50% reduction from the number in 2021 who could afford the median priced home.  

One of the first applicants for the Missing Middle-Income Homeownership Development Program is part of a 200+ unit new construction, highly energy efficient, mixed income community in Middlebury. The project represents an innovative partnership between Middlebury College and Summit Properties to meet local housing demands. The project team also includes Addison County Community Trust and Habitat for Humanity of Addison County. 

“In today’s building environment, affordable housing cannot be built without innovation and really effective partnerships,” said Zeke Davisson, Chief Operating Officer of Summit Properties. “The Missing Middle program is allowing us to bring employers, state agencies, non-profit partners, and lenders to the table to create a partnership that can drive the next generation of economic development and vitality to communities like Middlebury.” 

Builders and developers interested in learning more about the program or applying can visit the program page here.