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Tom Thompson

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Vermont housing affordability improved in 2008

02-19-09
Tom Thompson

According to Art Woolf, co-author of the annual affordability study done by The Vermont Economy Newsletter, 3 major factors led to the improvement in housing affordability in Vermont in 2008. Home prices fell 1%, median income increased to $68,000 and mortgage rates dropped to 6%. All of that bodes well for buyers in 2009 since mortgage rates have continued to drop and we expect to see more homes on the market. Woolf also noted "For those Vermonters with good credit and who have saved for a dwon payment, s009 will be a good year to buy a house"

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February inventory in Burlington, Vermont

02-17-09
Tom Thompson

The inventory hasn't gone up since this same time last year. We now have 523 homes on the market in MLS compared to 524 last year. But what has changed dramatically is the sales rate. This year we have have 108 sales in the last 3 months up to Feb 15. Last year during the same period we had 173 sales. That is a drop of over 37%.

On top of that we will likely be having more homes on the market as a result of the recent IBM layoffs that are estimated to be around 300. On the up side we have the new $8000 tax credit for first time homebuyers. That should certainly stimulate the market from the bottom up.

Condo inventory looks to be in similar shape with 267 on the market and 53 sold in the last 3 months. That compares to 124 last year at the same time. A drop of 71%. I guess you could say it is a buyer's market. With a free $8000 credit what could be better!

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Vermont's Sweet Season

02-16-09
Tom Thompson

Though there is still plenty of snow on the ground and the temperatures don't like to get too high above zero, there is one early sign that spring will come again this year. And it is not the robin I saw outside my office window yesterday. It is the steam I've seen rising from the boiling sap in maple syrup producers' sugar houses. The smell of that steam brings back the taste of maple cotton candy from the Champlain Valley Fair that signals the end of summer. If sap is boiling then spring can't be too far off. And lets hope that we have another good year with prices at an all time high, keeping Vermont the number one maple producer in the U.S. Maybe we will be able to lead the country's economy out of this recession?

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Vermont - fewest foreclosures in the country in January

02-12-09
Tom Thompson

Vermont Business Journal reported today that Realty Trac's list of state-by-state foreclosures shows Vermont with the least. They attribute it to the thrifty New England ethic. It might have more to do with our tough winters, somewhat restrictive Act 250 requirements for developers and the fact that no one has figured out how to perc granite. Those factors have tended to keep our inventory under control. Though I think right now the turmoil of the marketplace is keeping a lot of people on the sidelines.

The old "best of times...worst of times" seems to be applying here in Chittenden County, Vermont in early 2009. We've had great snow and Forbes Traveler labeling Burlington among the prettiest cities in America alongside Aspen, Lake Placid, Hanover and Rockport, Maine. But on the real estate side the picture has taken a significant turn for the worse. The numbers say it all.

The number of single family homes sold through MLS in Chittenden County dropped in January to 21 versus 39 the previous year and 55 the year before that.

The average sales price dropped from $336,658 in January of '08 to $267,643 this January, more than a 20% drop.

And the time on market for the average sale went from 72 days to 124 days, a 72% increase.

But there is good news. The number of homes on the market has actually gone down, year-to-year. At the end of January this year we had 513 homes on the market versus 527 a year ago. It's not a big change but it does indicate that inventory is not continuing to build.

All in all, it still says that now is a great time to buy, with good prices and great interest rates.

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Why buy now? Burlington, Vermont

02-02-09
Tom Thompson

WHY BUY NOW?

WHY BUY NOW? (not to be self-serving) 1.29.09

The old saying, repeated by such financial luminaries as Warren Buffett, is to "Buy Low, Sell High". But so often we, the public, do exactly the opposite. The recent run-up in prices that started like a Tsunami in 1998 is a great example.

People bought like crazy as the average price of homes in Burlington went from $141,214 in 1998 to a high of $343,361! That is a 143% increase in 7 years ...and people were fighting each other to pay those prices!! That was the Tsunami. Prior to that the waves were barely lapping the shores. The average price in Burlington went from $132,072 in 1989 to $141,214 in 1998, a 9 year total gain of 6.9%! Would it have made sense to buy a home in Burlington between 1989 and 1998? Of course it would, if you were planning on living in the home for a few years and really were looking for a "home" and not just an investment that could be used like an ATM card every few months or years.

The Burlington real estate market has been through three major price corrections in the last 30 years and each was preceded by a significant, multi-year run-up in prices followed by either a decline or leveling of prices for 4 years or more.

1981 $66,807 peak price. Interest rate: 16.5% ARM. Time to buy?
The first of these peaked in 1981 with interest rates for ADJUSTABLE mortgages hitting 16.5%!! The average home in Burlington was selling for $66,807. Would it have made sense to buy then? Only if you were planning on living in the home for a few years and really looking for a "home".

1989 $132,072 peak price. Interest rate: 11% fixed. Time to buy?
As interest rates came down the average price went up to $132,072 in 1989, a 97.7% increase in 8 years!! Would it have made sense to buy then? Only if you were planning on living in the home for years and making it a "home".

2005 $343,361 peak price. Interest rate: 6.5% fixed.Time to buy?
But then we had the Savings and Loan Debacle and home prices sagged again until the run-up started in 1998 peaking in 2005 at $343,361 as stated above. Would it have made sense to buy then? Only if you were planning on living in the home for a few years and really looking for a "home".

We are now 4 years past that last PEAK and only time will tell what the future will bring for Burlington area real estate values, but the history of the last 30 years would seem to indicate that even buying at peaks pays off in the long run. But we're 4 years past the peak and rates today are as low as 4.75% fixed! If you have seen a pattern emege from my statistics and commentary, that was my intention. As long as I have been in real estate, and even before that, there has been a cyclical pattern to home sales. Although I do not have a precise crystal ball, past experience tells me that history does in fact repeat itself.

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