Vermont Buzz

Market Trends: What's the Wild Card?

Is real estate poised for another boom? The economy appears to be expanding, but not so quickly that inflation is a problem. That could mean steady-to-even-lower interest rates, that could impact housing favorably in the spring.

The wild card right now is what mortgage interest rates are going to do -- and that could be the reason homebuyers are sitting on the sidelines and inventories are rising in both new and existing homes in some areas.

After hitting two-and-a-half year highs in late February, mortgage interest rates have drifted downward on news that inflation may be contained for now and that the Federal Reserve is at the end or may be nearing the end of raising short-term interest rates.

If mortgage interest rates hover at around 6.30 percent for benchmarket fixed rate 30-year mortgages, the spring could see another record-setting housing boom.

- from Realty Times March 23, 2006.

Vermont Real Estate sees Higher Inventories, Fewer Offers

As we have noted from our Multiple Listing Service statistics, business written (the number of new contracts) have shown declines from the levels for  September, October and November over the same period for 2004.  The decline was especially precipitous in September, when Katrina, Wilma, and the resulting spike in petroleum products helped to pull down consumer confidence nationally. Locally, the announcement that two of Vermont's ski companies (Rossignol and Dynastar) were moving to Utah along with the announcement of the proposed sale of medical software company, IDX to GE Medical gave the local market pause to reflect on a long period of appreciation.  October and November's decline was not so precipitous, but there is a clear change in attitude as market times increase and inventory rises.   

Historically, interest rates are still terrific and consumers have recently been complaining about the lack of inventory.  Though there is more on the market, our inventory is still comparatively low.  (There were many more properties on the market in the mid '90's.) Vermont's unemployment rate is rising, but still one of the best in the region.

Vermont Real Estate Appreciates, but Not So Fast

OFHEO Reports on Vermont's Appreciation rates for the 3rd Quarter.

Vermont's rates of appreciation have slowed substantially according to  the latest government reports, but so has much of the rest of the US.

Vermont ranks 15th among the 50 states with a year to date price change index of +12.40%.  The National Avg is 12.02% and the median is 9.5%.   

Leading the way in appreciation is Arizona at a whopping 30.33% followed by Florida at 25.18%.

Our neighbors in New York were ranked 17th at an annual rate of 11.85%.

Other New England States: Connecticut at 24th, 10.62%; Maine at 25th, 10.56%; New Hampshire at 26th, 9.53%; Massachussets at 32nd, 8.02%.

At the other end of the scale is Michigan at 4.01%, which obviously reflects the melt down in the automobile industry.

Within Vermont overal first quarter statistics showed Vermont's annual rate at15.14% and it increased in the  2nd Quarter to 16.42%.

The  Burlington MSA posted similar numbers to the state, slightly less year to date. The first quarter was at15.41%, the 2nd quarter at 16.08%, and the 3rd Quarter at 11.87%. Comparing Burlington MSA to the national rates, we would rank 17th just behind New York and behind Wyoming.

Vermonters take heart, we are doing well compared to our neighbors and peers.