The housing market in Vermont is currently experiencing some turbulence. With mortgage rates and home prices on an upward trajectory, home sale activity has remained stagnant over the past month. However, there is a glimmer of hope as more resale inventory has entered the market, potentially helping to moderate home price growth to some extent.
While states across the country grapple with tight housing markets, Vermont's gridlock situation is particularly notable. A recent nationwide analysis by the Federal Housing Finance Agency (FHFA) revealed that Vermont experienced the highest year-over-year home appreciation rate of any state, at a striking 12.8%. This rate of appreciation is significantly higher than the national average, highlighting the unique pressures in Vermont's housing market.
Nationally, home prices increased by 6.6% between the first quarter of 2023 and the first quarter of 2024, according to the FHFA. Vermont's home appreciation rate, nearly double the national average, underscores the state's severe housing market gridlock and the intense demand pressures faced by home buyers and sellers alike.
Vermont Housing Finance Agency (VHFA) did a more comprehensive analysis of Vermont trends. Their report also shows a dramatic drop in the number of primary homes sold in 2023: a nearly 26% decrease from the prior year, down to 5,759 homes. The decline comes after a spike in home sales that crested in 2020. Last year saw the lowest number of home sales in the state since 2012, when the housing market was still recovering from the Great Recession, according to VHFA.
That decline in home sales can be chalked up to the fact that Vermont is just not building enough new homes to meet demand. According to Governor Phil Scott, Vermont has a housing deficit of roughly 6,800 units. This means our demand far outweighs our supply - and home builders can’t bridge the gap. Another factor is the lack of motivation by potential sellers who would otherwise be participating in the market. Homeowners who would otherwise be looking to downsize or relocate at this time are instead postponing or just adjusting their plans in an effort to hold on to their lower interest rates. This has been a trend since mortgage rates went up last fall.
On the bright side, we are seeing slight upticks in inventory levels across Vermont. Compared to this time last year, there are 38% more single-family homes available across the state. As you can see in the graph, Vermont’s housing supply has been on a downward trend for several years. While inventory is still historically low, this measured increase may provide some welcomed relief to ease the ever-present buyer demand.
Advice for Buyers and Sellers:
The bottleneck in Vermont’s housing market is manifesting in shorter timelines of home sales. While you see median days on market fluctuate between counties month over month, the majority of Vermont reports around the one week mark. This leaves little room for prospective buyers to arrange financing. The best practice for buyers is to be proactive - talk with your lender about financing options and get mortgage pre-approval. This way, you can act swiftly when a desirable property becomes available, and work closely with your real estate agent to navigate the competitive landscape.
For sellers, there is still opportunity to leverage low inventory and strong demand. In today’s market, the key to a successful sale is your pricing strategy. While we still see some sellers listing above their market value in an effort to ‘test’ the market, this more often than not results in the property sitting for longer than the market average. Have an indepth conversation with your listing agent about market trends and develop a pricing strategy that will yield your best results.
Chittenden County:
In Burlington, last month saw an uptick in activity with 33 new single-family homes brought to market and 14 homes sold. The median time on market was a swift 5 days and the median sales price was $601,375. Based on this month’s sample size, there were 38% more homes available while closings remained unchanged compared to this time last year.
Across Chittenden County, there were 169 new listings of single-family homes in May, up 76% from last month, with 88 closed sales. Active inventory is up 26.3% from this time last year, with an admittedly still limited 1.4 month supply. A 12.5% rise in sale price year-over-year and 16.7% reduction in median days on market indicates Chittenden County continues to be a sellers’ market.
Lamoille County:
In Stowe, there were 20 new single-family homes brought to market last month, with 6 closings. For this month’s sample, the median sale price was $1.525 million. Homes moved swiftly last month with a median 6 days on market. Compared to this time last year, there was a 150% increase in available homes, while median sales price increased 26%. Despite inventory levels cresting over the 4 month supply mark, home values are still holding steady in this resort market.
Across Lamoille County, there were 61 new listings of single family homes in May and 11 closed sales. Year over year, there are 135% more homes available while median sales price has actually decreased 15% to $469,000. Inventory levels have actually reached 8.4 month supply - this would be considered a buyers’ market.
Washington County:
In Barre, last month saw 25 new listings and 9 closings for single-family homes. May saw a swift 6 median days on market, with a median sales price of $280K. Year over year, available homes are up 38.9% and median price is up 7.7%.
In Montpelier, there were 6 homes brought to the market last month, with only 1 sold. Based on May’s smaller sample size, there appears to be 45.5% fewer homes available compared to this time last year.
In Waterbury, there were 2 single-family homes available, while only 2 sold last month. Median days on market was a swift 6 days. In year over year comparisons, available homes are down 72% and there were 67% fewer closings.
Across Washington County, there were a total of 66 new single-family homes listed and 28 homes sold. Another influx of inventory appears to have arrived last month, with inventory levels rising to a 2.4 month supply, a 54% increase compared to May 2023. With buyer demand still holding firm, the median days on market was a swift 6 days.
Franklin County:
Across Franklin County, there were 77 new single-family homes brought to market. May saw 40 homes sold with 7 median days on market. Year over year, new listings are up 13.2% with median sales price experiencing a 2.2% dip.
Grand Isle County:
Across Grand Isle County, last month saw 25 new listings and 12 homes sold. The median market time was 11 days, and sales price was $356,750. Based on this month’s sample, there were 56.3% more homes available while median sales price experienced a 13.1% dip. Inventory levels are currently at a 3.2 month supply - while this range is still within a seller’s market, it’s more approachable than the competitive urban markets at this time.
