Vermont Public is independent, community-supported media, serving Vermont with trusted, relevant and essential information. We share stories that bring people together, from every corner of our region. New to Vermont Public? Start here.

© 2024 Vermont Public | 365 Troy Ave. Colchester, VT 05446

Public Files:
WVTI · WOXM · WVBA · WVNK · WVTQ · WVTX
WVPR · WRVT · WOXR · WNCH · WVPA
WVPS · WVXR · WETK · WVTB · WVER
WVER-FM · WVLR-FM · WBTN-FM

For assistance accessing our public files, please contact hello@vermontpublic.org or call 802-655-9451.
Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations

'We're not out of the woods': Market remains tight for Vermont homebuyers, despite rising interest rates

An illustration shows a home with a "for sale" sign
filo
/
iStock
Though Vermont's real estate market has softened recently, demand still outpaces supply in many cities and towns.

Officials at the Federal Reserve have signaled in recent days that they may raise interest rates again, continuing a trend of rate hikes intended to cool the economy and curb inflation.

That typically means higher mortgage rates, and a corresponding drop in home prices — several factors among many impacting the housing market.

To talk about some of those factors and get an update on where things stand for homebuyers in Vermont, Vermont Public's Mary Williams Engisch spoke with by Erin Dupuis. She’s a Burlington-based realtor with the Vermont Real Estate Company. Their conversation below has been edited and condensed for clarity.

Mary Williams Engisch: Let's start in Chittenden County, where you're based. We know there's been heavy demand for housing for years and not nearly enough supply. We're sort of emerging from the depths of the pandemic. Now, where is that trend in the present day? And how has it impacted home prices?

Erin Dupuis

Erin Dupuis: So that trend basically started in 2020 and carried through up until the present day, with some fluctuations throughout the months. Coming into 2023, we're still seeing that very high demand and very low inventory. So though we've had a slight shift due to those interest rates, we're not out of the woods. We're still in a seller's market, and there's still some challenges out there for buyers.

Within the context of what you do as a realtor with single-family homes, condos, those sorts of things, is there a particular type of housing that Chittenden County is really lacking right now?

Absolutely. So affordable housing is what Chittenden County is lacking. We've seen prices jump from 2018, with the average home price being around $380,000, up to $586,000 in 2021. So that is a huge, huge jump and not a large amount of time. So affordability really is the biggest thing that's lacking in the housing market.

Well, what about other cities, other large towns outside of Chittenden County? Are we generally seeing limited supply and high demand across the whole state?

It depends on how far you go from Burlington. There's definitely pockets in the southern part of the state that are seeing the same trends that we're seeing. The counties that surround Chittenden County are seeing similar trends that basically bled out because things became so expensive in Chittenden County. We saw those five surrounding counties have the similar conditions.

There are still some pockets like the Northeast Kingdom, that though there's been some shift and change, they are seeing more stability with prices. Probably still a lack of inventory, but a little bit more stability on the pricing end of things.

The Federal Reserve hiked interest rates a handful of times last year. It looks like that trend is going to continue for 2023. How have higher interest rates impacted home prices and the gap between supply and demand?

So those hikes and interest rates have had the biggest effect on the buyers, of course, because that change is a direct cost to the buyer. So we haven't seen a huge shift in the prices going down, but we have seen a slight softening in the competitiveness. In 2021 and into early 2022, the conditions were so intense where most buyers were having to waive inspections, appraisals — basically all their sort of typical buyer rights kind of thrown out the door to even be considered in a competitive situation.

So in late 2022, we started to see just a little softening of that. There were still multiple offers, maybe more like two to five offers rather than 15 to 20. And though there may have been some waiving of inspections, the general terms were less competitive. So it's it's been fascinating to watch. Prices, I don't think, are going to plummet. But we are seeing that sort of softening where people are paying maybe just a little over asking, rather than $100,000 over asking.

We've heard about a lot of people that have moved to Vermont during the pandemic. Is that something that you're still observing? Or are you mostly working with homebuyers who already live in-state? Who makes up the bulk of your client base at the moment?

Yeah, the bulk is in-state people, I would say it's probably 60% in-state, and maybe even a little higher than that. But there is still an out-of-state influence. And people are coming to Vermont for a variety of reasons. Climate refugees, political reasons. There's many reasons that people are coming here. So I think we're going to continue to see that.

The pandemic sort of put things in perspective for a lot of people of like, "How do I want to live my life?" And Vermont has a lot of attractive qualities for people. So we are still seeing that out-of-state influence, but maybe not the same amount as 2020 and into 2021.

Have you seen a comparable stretch where the housing market was this tight for this long?

Not in my tenure as a real estate agent. I came in just basically at the end of the crash of '07 or '08, and that was a buyers' market, ultimately. We had much more inventory than buyers. And there hasn't been this lack of inventory since then. I've looked at historical data, and it appears that there hasn't been a time in at least the last 20 or 30 years where there's been this sort of lack of quality inventory. So it feels like a new experience for the Vermont housing market.

What do you see going forward? Whether it's interest rates continuing to rise or something else, what dynamics do you think will determine market conditions over the next several months?

I'm getting that question a lot. And in some ways, it feels like too soon to tell what's going to happen. But as of now, we are seeing that carryover from last year and the prior years that there's a high demand, low inventory. And when the interest rates did originally spike in that high [6-7%] range, we did see a slight softening of the market. And it really was just buyers adjusting to, "Okay, things have changed. I was a little afraid at first and now I'm recalculating and seeing I can still do this."

So it does seem that the interest rates are sort of the biggest factor in how the housing market might be influenced. You know, with that said, I think buyers are becoming more comfortable with this slightly higher rate. And the rates in 2020, they were under 3%; people were locking in at 2.5%. So it's really hard to compare to those rates. But the reality is, if you look at rates as a historic figure, this actually isn't too far from maybe what we could call normal.

Have questions, comments or tips? Send us a message.

Latest Stories