After a strong 2015 real estate market in Northwest Vermont, one question on many homeowners’ and buyers’ minds is whether those trends will continue into 2016.
So far, demand and pricing hint toward another solid year, although with a caveat: since the first three months of the year represent the slowest period for our market, the trends may not be clearer until sales pick up during late Spring and Summer.
Nevertheless, demand was strong in the first quarter, with residential transactions jumping by 10 percent. Median sale prices were little changed, which may indicate a shift to lower-priced properties during the winter months.
Many economic trends in our area remain strong. Local businesses such as Dealer.com and institutions such as University of Vermont and Medical Center continue to hire, bringing new professionals to the region. Technology start-ups are thriving and attracting out-of-state mid-career professionals, as well as hiring graduates from colleges such as UVM and Champlain College. Vermont’s unemployment rate was 3.4 percent in February, one of the lowest rates in the country.
The millennial generation, which is on track to become the country’s largest home-buying demographic within the next few years, is emerging as first-time buyers, thanks to record low interest rates and relatively high rents, which makes home-buying a more attractive alternative. A Coldwell Banker Hickok & Boardman Realty survey last year that found 37% of our clients had just purchased their first home, close to the typical 40% of the market.
Federal Reserve chairwoman Janet Yellen has said the central bank will raise interest rates “cautiously” this year. As a result, mortgage rates remain at near-record lows.
One issue facing our market is affordability, especially within Chittenden County. Buyers are responding to those pressures, with some seeking housing in lower-cost counties such as Franklin County. Within Chittenden County, buyers are most interested in the $250,000 to $350,000 price range, which is especially true for first-time millennial homebuyers. Inventory for reasonably priced housing in Chittenden County remains tight.
Along those lines, Vermont’s housing ranks among the most expensive in the country, although incomes haven’t seen the same gains. That gap between income and housing prices means that many professionals in our region are financially squeezed, which could provide a headwind to the property market.
The impact of Act 46, the education governance reform law passed last year that calls for larger school districts, continues to evolve. We advise homeowners and potential buyers to consider the impact and reach out to their Realtors, local lawmakers and school board members for more information. For instance, some towns are discussing school mergers, which could impact some buyers and sellers.
As always, well-priced homes in good condition tend to see strong demand from buyers. Sellers should consider upgrades to their homes that would make them more attractive to potential buyers, ranging from taking care of deferred maintenance to installing “smart home” technology, such as Nest’s thermostat, to help your property stand out.
Coldwell Banker Hickok & Boardman Realty is forecasting continued steady growth in pricing and sales for 2016. Based on current trends, we believe sales volume may rise about 6 – 8 percent, while pricing could gain about 1% to 2%, or similar to the national forecast from the National Association of Realtors.
As always, it remains that both sellers and buyers need to reflect on their personal situation. Utilizing the local knowledge within this report and the advice of your agent – you can make an informed decision about your next move.