Increase in Off-site Construction Examined As Possible Tool to Boost Vermont’s Housing Supply

FOR IMMEDIATE RELEASE
January 17, 2025

Increase in Off-site Construction Examined As Possible Tool to Boost Vermont’s Housing Supply

Montpelier, Vt. – The Vermont Housing Finance Agency (VHFA), the Vermont Economic Development Authority (VEDA), and the Vermont Agency of Commerce and Community Development (ACCD) are announcing the results of a new study they jointly commissioned that examines the potential of off-site home construction.  Off-site construction homes are built in factories, shipped, and assembled at the housing site by the manufacturer. Opportunities to Utilize Off-Site Construction to Meet Vermont’s Housing, Workforce and Climate Goals reviewed whether off-site construction could produce homes quickly at a cost competitive with traditional on-site homebuilding. 

“Manufactured and modular homes are high quality and cost less than on-site construction, bringing down the price and allowing more renters to become first-time homebuyers,” says VHFA Executive Director Maura Collins. “Innovating the building process is one way to slow the growth in the cost of housing development.” 

Vermont’s housing issues are well-documented. There are not enough homes for sale or rent at any price point to meet current or future demand. According to the Housing Needs Assessment, Vermont needs to create between 24,000 and 36,000 new homes by 2029. While further assessment is needed, prefabricated homes may help expand the capacity of a constrained construction industry in Vermont.

“At VEDA we help finance Vermont’s future, and the future requires building more housing faster than we are today,” says Cassie Polhemus, VEDA CEO. “In addition to providing Vermonters with a place to live, investing in off-site construction could also result in job creation, growth of the construction industry, and enhancing the state’s economy.”

The report also identified current limitations in manufacturing capacity and the state’s workforce that would hamper efforts to grow the use of off-site construction in Vermont. Building a new off-site construction factory could take millions of dollars in investment. Demographics are also a challenge. Growing the off-site construction industry could be difficult as the number of working-age Vermonters continues to shrink.

“This report represents the beginning of a conversation looking for wholistic, creative approaches to increase supply and lower costs as we tackle our decades-in-the-making housing problem,” says Alex Farrell, Commissioner of the Department of Housing and Community Development which is within ACCD. “We are grateful to our statewide partners for the collaborative approach we are taking to study innovative ideas and determine if they are a good fit for Vermont.”

In the meantime, there are other efforts underway to expand the availability of housing in Vermont. In addition to its typical funding, as part of the HOME Act of 2023 (Act 47), VHFA funded over 400 for-sale and rented homes targeted to middle-income households who don’t qualify for traditional affordable programs. 

There have also been regulatory changes that make it easier to build all types of homes. The Vermont Housing Improvement Program and Manufactured Home Improvement and Repair program rehabilitate and repair homes so Vermonters can stay in them. The Homes For All initiative is empowering small-scale developers to add right-sized housing units that match the character of our downtowns and village centers. ACCD will work this legislative session to reinforce that success and add even more tools to the toolbox, including increasing access to water and sewer to service future homes.

Please read Opportunities to Utilize Off-Site Construction to Meet Vermont’s Housing, Workforce and Climate Goals to learn more about the history of off-site construction in Vermont, the current state of the industry, and opportunities for the future.