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Why Is Vermont So Expensive? (Top 10 Reasons)

Montpelier, Vermont, USA town skyline.

 

Known for its rural character, maple syrup, and ice cream, Vermont is a beautiful state.

However, those who live in or move to the Green Mountain State require a greater number of greenbacks than before.

Becoming a Vermonter is a decision that certainly requires a lot of money.

Here are 10 reasons Vermont is so expensive.

 

Why Is Vermont So Expensive? (Top 10 Reasons)

 

1. Playground For Wealthier Neighbors

A welcome sign at the Vermont state line.

 

Vermont has a lot to offer tourists from other areas.

With a permanent population of 645,000, Vermont ranks 49th among states in population.

Only Wyoming has fewer residents among the 50 states.

Even the District of Columbia has more people living in it than Vermont.

There is plenty of green space for out-of-staters to spend some green.

The beautiful landscape has become a desirable location for those who live in neighboring states, either as a destination for vacation getaways or to invest in a second home.

Neighboring states tend to be wealthier, and some who live in locations such as New York and Massachusetts consider Vermont a nearby playground when they need to escape.

People often associate Vermont with high taxes, but that is a misconception.

For high-income Vermonters, taxes are relatively high, but for low- and middle-income residents, they are not as oppressive as in other New England states.

While residents may not want to think of the Vermont Department of Taxes, those who live in neighboring states consider the lush, largely undeveloped landscape a great haven for a mountain cabin or hillside home.

 

Attracting The Pretentious

As Vermont has become more of a playground for wealthier neighbors, these migrants have brought with them some of their snobbishness.

By one measure, New England states took the top prize among the snobbiest states.

Massachusetts stood atop Mount Snobby.

With Vermont second and Connecticut third, New Hampshire, Rhode Island, and Maine also occupied spots in the “Top 10.”

Within Vermont, competitions sometimes take place to determine which town possesses the greatest outward expression of “self-assessed superiority.”

Stowe has won on occasion.

Once considered a playpen full of winter snow, Stowe’s residents have watched as its environs filled with out-of-state money and pretentiousness.

This is not unique to Stowe, though.

Some traditional Vermonters have expressed concern at how out-of-staters have started to transform the local culture as they have moved into the state or created vacation playgrounds there.

These long-time residents complain that the wealthy interlopers do not appreciate the locals and things in the landscape that have sustained Vermont for many years.

Wealthy transplants do not farm or understand the presence of dairy cows and crops.

They complain about the smell of manure on the fields as they try to carve out high-end destinations and create their version of the “Aspen of the East” or Vermont’s “Vaunted Vail.”

 

2. Insufficient Infrastructure

The sun rising over Camel's Hump from Texas Hill Road, Huntington, Vermont

 

Despite its reputation as a popular tourist destination, some complain that Vermont does not have sufficient infrastructure to connect communities.

Those who live in the outer suburbs have made these complaints, noting everything from an insufficient railway system to the disproportionate reliance the state has on tourism and wealthy investors with second homes.

Complaints about infrastructure focus on many areas.

For some, this describes a less-than-comprehensive network of roads.

Of course, many of the same people who complain about narrow and crowded roads would growl even louder if authorities decided to expand them for the benefit of more newcomers.

The rural nature and sparse population found in much of Vermont limits the tax base for developing significant infrastructure improvement projects.

This becomes an issue as Northern New England winters certainly do take a toll on the condition of the roads.

Infrastructure concerns also involve educational opportunities.

With fewer residents spread across a greater distance, getting to and from school requires greater effort.

Once students arrive in class, the smaller campuses they attend may have fewer electives or educational programs than one would find in larger districts.

This may encourage many kids in high school to look beyond Vermont as they consider college options and career choices.

As they ponder their future, they also think about the bumpy bus ride home on the roads that need repaving.

 

3. Low Wages And Low Industry

Money bag and red arrow down

 

Vermont has the smallest economy among its peers.

With income and job growth expected to lag behind other states in the near future, some wonder how the state can diversify so that the economy is known as more than the leading maple syrup producer in the United States.

Business costs in Vermont rose 12% above the national average.

In the 2019 ranking for best business climate among states, Vermont ranked 45th in the pre-pandemic economy.

Although in the middle when it comes to labor supply, ranking 21st, other measures ranked Vermont much lower.

Quality-of-life was measured at 33rd among the 50 states, with growth prospects hovering at 38th.

The rankings of economic climate (43rd), regulatory environment (45th), and business costs (46th) made this a less-than-hospitable place for entrepreneurs and small businesses to call home.

Some have complained that Vermont has a long-established culture of expecting people to work hard for little or nothing.

Part of this harks back to a time when agriculture on small farms dominated much of the economy, not only in Vermont but in much of America as well.

If a person lived on a farm and something broke, they did not have a phone to call for a service technician to repair the item.

Either they fixed it or it remained broken.

Those who had to master skills to survive have passed that rugged individualism and innovative instinct down to younger generations.

They helped neighbors by sharing a “thank you” or maybe a small meal.

To those who have grown up in such an environment, the presence of out-of-state visitors in fancy cars who cannot even figure out how to lift the hood causes them to scratch their heads.

Vermont craves the talents of high-tech and big-city workers, while the economy still tries to find a way to have these things on back-country wages.

Even for those in carpentry and other hands-on industries, the pay difference between what Vermonters make compared with their peers in New York or western Massachusetts is very noticeable.

This landlocked, highly agrarian state lacks a diverse array of commerce and industry.

Lower levels of industry and lower pay may seem like an inexpensive alternative to higher-paying places, but the people living there must endure a stagnant economy to survive.

This comes at a high cost.

 

4. People Want To Move There

Family Unpacking Moving In Boxes From Removal Truck

 

Percentage-wise, Vermont had a greater proportion of people move in rather than leaving the state.

According to a study released in early 2022, inbound moves to Vermont represented 74% of the relocations that crossed through Vermont.

Some come from the American Southwest, trying to escape drought conditions.

Others relocate from California or the Pacific Northwest, trying to get away from the high cost of living in those areas.

According to the Vermont Center for Geographic Information, the number of real estate transactions that involved residents from other states grew by 38% in 2020.

The value of these transactions also grew substantially, reaching nearly 80% above the previous year.

Newcomers with deep pockets seek expensive homes, as well as more modest residential options if they are transitioning into retirement.

Of those making the move to Vermont, 45% were at least 65 years of age.

Only 10% fell in the demographic group between the ages of 18 and 35.

Nearly three-fourths of these transplants came to Vermont for job opportunities or to stay close to other family members.

Although these newcomers add to the population, the state’s overall numbers generally remain static.

This is the result of the equally large number of younger people who decide to leave Vermont to pursue their dreams in a place that is not as expensive.

 

5. Buying A Home Is Expensive

For Sale Real Estate Sign and House

 

Vermont has had a housing shortage for years.

The situation has become more acute in recent years, even before the pandemic took hold in late 2019.

Available listings of homes for sale declined by more than 50% between June 2020 and a year later.

Some individuals who received job offers in Vermont have had to decline them because they could not find suitable affordable housing nearby.

Those ending their romantic relationships may find it difficult to break up and stay in the same area since there are no available properties.

Young adults stay at home longer, or they take a long-range view of their future and move away.

As the income disparity between rich and poor expands, housing pressures continue to get worse.

Vermont housing prices increased by 9% in 2021.

Those prices will probably surpass that in 2022 unless inflation or interest rates cool this seller’s market.https://www.youtube.com/watch?v=ZOu9t1C_4lA

Housing inventory remains low.

Even with the construction of new homes accelerating, supply cannot meet the demand.

As lumber, steel, and other building materials continue to cost more, the prices of these new homes will increase.

 

6. Rent Is Increasing, Too

Rent Concept Text with Arrow

 

Vermont’s rental market faces similar pressures.

In order to afford a typical two-bedroom Vermont apartment, renters need to earn $23.68 an hour.

However, they only earn $13.83 per hour.

Some renters have been kicked to the curb because landlords decided to sell their property during the recent hot real estate market.

The rental vacancy rate across the state is about 3.4%, but in some communities, it is at or below 2%.

A vacancy rate that balances supply and demand should be close to 5%.

The inventory of rental properties required to meet present demands exceeds 4,000 units.

By many measures, Vermont is at or near the top of locations with the most expensive rent.

The pandemic worsened this trend, especially as workers in a less-than-robust economy suffered from layoffs, closures, and lost wages.

Even in two-income households, the difference between dollars earned and the price of monthly rent has an unfortunately large gap.

This shortfall in rental housing wages is almost $10 per hour, making it very difficult for people to meet their rent, put food on the table, and satisfy their other financial obligations.

This discrepancy hits certain counties worse than others, such as Bennington County in southwestern Vermont.

By some measures, Vermont suffers from the most disproportionate rent-to-income ratio in the United States.

Some may claim it is due to the rural character of the state.

However, this situation of lower salaries and higher rental fees is more a function of a lack of high-paying jobs and very few employment opportunities.

 

7. Expensive Food

Concerned Brunette Woman Sitting At Table In Kitchen, Looking At Bill After Food Shopping

 

Vermonters paid proportionately more for groceries than residents of any other state in 2018.

A July 2021 study had Vermont ranking second, with Burlington residents paying the second-highest grocery bills in the nation after the city of Honolulu.

While the national average was $355.50 per month last summer, those living in Burlington averaged $497.41.

A study from the Economic Policy Institute predicts that Vermont will remain one of the most expensive states to feed a family of four, and this statement was issued before the recent uptick in inflation.

While inflation has implications throughout the nation, it takes an even higher toll in remote, rural areas where many people purchase their groceries at smaller stores rather than large supermarket chains.

Those living far from the larger grid have to drive greater distances to get their groceries.

While farmers may have milk and eggs readily available in their backyards, that can of spaghetti sauce or frozen pizza does not grow from the ground.

When they get to their favorite store, it may be a smaller grocer rather than a spacious supermarket.

 

8. Costly Utilities And Internet

Electric bill charges paper form on the table

 

Although lower than across the border in Canada, utility bills tend to be more expensive in Vermont than in nearby states.

This includes costly heating bills in the winter.

Many still use wood in their fireplaces.

Most other sources used to create energy must come from elsewhere.

Unlike North Dakota, there are no substantial gas or oil reserves ready to tap under much of Vermont.

Unlike Arizona, there are no long summers or generally dry and sunny winters to encourage the installation of solar panels.

Water is readily available, though those who live far away from municipal pipelines may find it cost-prohibitive to connect to such a source.

If they live along a ridge or mountain far away from any towns, they must find nearby sources for their water, such as wells.

Although not considered a utility in the same way as electricity and water, the internet has important utilitarian purposes for many people.

Many remote areas lack high-speed internet.

Using a benchmark of $60 per month to represent the upper limit for an affordable service price, only 1.1% of Vermonters can secure internet access at or below that amount.

Similar to its rankings for business climate, Vermont ranks near the bottom for internet access.

In 2020, the state ranked 47th among the 50 states.

Those hoping to do e-commerce in Vermont must deal with slower connections than in high-tech hubs like Boston.

 

9. Stagnant Residential Patterns For Old-Timers

Vermont, USA early autumn rural scene.

 

Although Vermont has attracted some transplants, those who have lived in the state for a long time tend to stay put.

Families have stayed on the same farm for generations.

Even in urban areas, Vermonters tend to stay in the same home or within the same community.

They do not welcome changes in residential patterns, either for themselves or their nearby neighbors.

Unlike the Sunbelt and other “hot” real estate markets, these stagnant residential patterns have made it difficult to meet demand from outsiders who want to move to Vermont.

The scarcity of supply in the housing market has escalated home prices.

Unlike urban areas in many other states, Vermont’s municipalities never experienced some of the profound demographic shifts that transformed neighborhoods.

They never had residents depart cities en masse or flee to the suburbs.

The terrain of nearby lands made it cost-prohibitive to start developing cookie-cutter suburbs when no actual demand existed.

Although younger people have started to look beyond Vermont for new opportunities, the older population remains firm in its belief that it will remain in the state.

Vermont’s population generally lacks wealthy retirees.

Unlike those who move from colder climates to the Sunbelt, Vermont’s aging population tends to stay at home.

As younger workers leave for better-paying jobs elsewhere and elderly residents of more limited means remain, less capital comes into the state’s economy.

This reduces the income taxes the state collects.

It also lowers the amount of property taxes the state would collect if the circumstances were different.

Although a place with a stagnant economy may seem cheaper than one that is bustling, the long-term effects of this trend will have a high human cost.

With insufficient funds to provide basic services, lawmakers may increase property taxes to make up for the difference.

That will lead to an increase in the price of goods and services.

As this trend continues, housing prices will increase, as well.

 

10. Off The Beaten Path

Burlington, Vermont, USA at Church Street Marketplace.

 

The insular perspective of longtime residents who do not care for outsiders or flatlanders has taken a toll on Vermont’s economic development.

So does the low population density of a state with limited potential for widespread economic growth.

When examining a map that shows economic activity, Vermont seems so far out of the way.

It lacks the vibe of southern New Hampshire or western Massachusetts.

Even areas that are quiet by New York standards on the western side of Lake Champlain have lots of activity when compared with many Vermont communities on the eastern shore.

Except for Burlington, of course.

For those living in the eastern United States who want a state where one could easily create an off-the-grid home, Vermont offers one of the best destinations.

Evidence of this off-the-beaten-path perspective shows in the state’s law against billboards.

While most of us appreciate that billboards do not block our view of the Green Mountains, this lack of advertising also makes financial sense, given the low population of the state.

Vermont joins Alaska, Hawaii, and Maine as the four states with billboard bans.

While billboards would allow businesses to entice travelers with advertisements, others argue that seeing nature is better than knowing which hotels or restaurants are available at the next highway exit.

For many Vermonters who are comfortable with their state’s current condition, the absence of billboards is a positive asset.

A decision that goes back to earlier debates between old-timers and newcomers.

Natives wanted nature.

Out-of-staters wanted to fill the roadsides with advertisements for businesses far and near, foreign and domestic.

Ultimately, the Vermonters won the battle.

Things may be more expensive there, but those Green Mountains look better than endless billboards littering the landscape.

The post Why Is Vermont So Expensive? (Top 10 Reasons) appeared first on The Cold Wire.


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