The Vermont housing market has bucked a national trend that projects home values will fall 1.7 percent this year, a noted economist said Tuesday.
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The super-hot Vermont housing market of the first half of this decade has cooled, with home prices stabilizing or even declining in some areas and properties taking longer to sell.
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Home sales in Vermont took a bit of a breather last year, the Rutland Herald reports, following a trend that has seen a cooling of the red-hot housing market nationally.
There were 15,878 single-family homes sold in the state last year, down from the prior year when 17,815 homes were sold.
While the number of homes declined last year, Realtors considered 2006 a good year, with the median selling price for a home on less than six acres increasing to $194,000 from $180,500 in 2005.
For a home on six or more acres, the median price last year was $240,000 compared to $225,000 the previous year.
Despite last year’s dip, Kristen Hewitt, president of the Rutland County Board of Realtors doesn’t foresee the housing boom going bust.
“Things have been pretty steady,” said Hewitt. “We’ve seen a more steadying of the market instead of a really fast-paced market.”
Last year, 1,526 single-family homes were sold in Rutland County, an 18 percent decline from the year before.
At the same time, with fewer houses on the market, the median price of a home on less than six acres jumped to $157,000 from $140,000 in 2005.
So far this year, Hewitt said sales are off slightly from a year ago. As Vermont mortgage costs rise, demand has slipped somewhat. As of March 14, there were 64 homes sold in Rutland County compared to 73 homes for the same period last year.
With the market moving from a sellers’ to a buyers’ market, Hewitt said “people are being a little more choosy,” hoping home prices will drop.
Prices have steadily appreciated over the past few years as demand rose, which put a squeeze on the available inventory of homes for sale. That’s now changed with more homes on the market.
While rising mortgage rates have played a supporting role in the decline in home sales, Hewitt said a more significant factor is simply the housing market going through its normal cycle.
“The market has to come down at some point,” she said.
In the Bennington area, Lynne Miro attributed part of last year’s slowdown to the tight inventory of available homes. The tight inventory also made it more difficult for first-time buyers to find an affordable home.
With the market softening, Miro said there are more homes for sale in the Bennington area. She also said that higher home loan rates, which remain low by historical standards, have not affected the market.
“I don’t think they’ve made a huge difference,” said Miro, president of the Southwestern Vermont Board of Realtors.
Real estate is always subject to the ups and downs of the economy. That’s particularly true for the market for second home buyers. In Vermont, the weather is also a factor, as many second homes have been built at or near ski areas.
According to property transfer records, statewide, 2,034 condominiums were sold last year compared to 2,623 units in 2005. The median price increased last year to $215,000 from $189,900 the prior year.
In the category of vacation homes (combined sales of less than six acres and more than six acres), 2,437 homes were sold last year, down from the prior year when 2,789 homes were sold.
The median price increased from $149,500 to $154,500 last year.
Meanwhile, foreclosure rates and delinquencies in Vermont are on the rise but remain below the national average, according to the most recent report by the Mortgage Bankers Association.
The spike in delinquencies is due in large part related to riskier sub-prime [bad credit mortgages] — loans made to borrowers with a blemished credit history that come with higher interest rates.
However, Chris D’Elia, executive director of the Vermont Bankers Association, doesn’t foresee a major problem.
“In Vermont, we’ve been very careful and responsible in regard to our mortgage lending practices. I don’t think we’re going to see an onslaught of sub-prime foreclosures,” he said.
SOURCE: Rutland Herald
Homeowners across New England seemed to have it all in the first half of this decade: rapid jumps in price made homes stellar investments, and if they decided to sell, buyers eagerly paid top dollar.
But 2006 is shaping up to be the year the region turned into a buyer’s market, with a housing slump hitting New England harder than most of the rest of the country, and predicted to stay that way through decade’s end.
The downturn cuts across the housing spectrum, from Maine to Connecticut. Economists predict New England’s historically volatile market will recover more slowly than the nation’s even if home mortgage costs remain low.
The downturn has sellers going to unusual lengths to unload properties.
The Boston Globe reports that in suburban Somerville, just outside of Boston, an area condo developer trying to sell the last of 18 units slashed prices — to $599,000, nearly 17 percent below what a comparable unit sold for three years in the same project.
“In any other market, this would be gone,” said real estate agent John Schwagerl, who has two potential buyers holding off on placing offers until they can unload their current homes. “The phones are ringing less. But when they do ring, there’s more work involved with it.”
In downtown Boston, the developer of a 14-story condo project held a real estate auction — a sales tool rarely used since the housing downturn of the early 1990s.
Bidders at the Folio Boston project’s October auction snapped up 31 luxury units in less than two hours at an average price of $778,000 — about 20 percent below the average asking price before the auction. The head of the firm that ran the event expects the market slump will lead to more such sales in Boston and elsewhere.
New England saw home prices rise by 73 percent from 1995-2004 compared with 44 percent growth nationwide. Gains in some areas were sharper, with prices nearly doubling in Boston.
Now New England is seeing a return to what it experienced at the end of the last century: prices growing faster than the nation’s through most of the ’80s, only to take a dive when boom turned bust in the 1990s. The region is prone to bigger swings than areas such as the Midwest, making both the ups and downs of real estate far more pronounced.
“The downturn here is more severe because the upside was so big,” said Karl Case, an economics professor at Wellesley College.
New England and the Northeast in general are more prone to wide housing market swings because development is more dense, with less available land to build. There are more restrictions on development, so it takes longer for developers in built-up areas to put up new houses.
The New England Economic Partnership projects the region’s home prices will remain flat through 2010 — in part because of price declines across parts of the region this year — and fall short of the U.S. forecast of 2.1 percent growth per year through the decade’s end.
Among New England’s six states, only Connecticut and Vermont are expected to see housing prices rise at rates above national averages through 2010. Massachusetts mortgage demand is projected to drop by 1.8 percent as the Bay State — the region’s most populous — is hit the hardest.
Meanwhile, permits to build new homes are expected to decline in all New England states through 2010 by 6.2 percent. That compares with a slip of just 0.3 percent per year expected for the nation, which is experiencing faster population growth than New England.
Every state in the region except New Hampshire ranked among the nation’s bottom 10 in housing starts from 2000-2004, the Federal Reserve Bank of Boston reported.
Yet as those interested in buying and selling continue to jockey for position across the New England region, industry officials are reminding area customers that most homes will likely yield some healthy investment returns — provided the owner holds onto the property for a few years.
“People who buy now will come out just fine. People who have a little guts and act now can expect prices will eventually get better,” said Fred Meyer, of University Real Estate in Cambridge.
Lesson #1: Mortgage fraud doesn’t pay.
Nevertheless, a lot of people try it — especially with the current market conditions and the vast array of enticing, dangerous lending options. In this case, fortunately, the offenders were apprehended.
According to the Burlington Free Press, Jeffrey Sanders, 41, and Jeanette Sanders, 42, will spend time in jail on fraud and money laundering charges.
The fraudulent husband and wife mortgage broker team was sentenced in U.S. District Court for their participation in a scheme that bilked investors out of more than $1 million from 2001-2003.
The Sanders’ owned and operated A-Plus Mortgage in St. Albans, Vt., where prosecutors say they defrauded customers and home mortgage company representatives alike. In 2005, Kevin Sanders, Jeffery’s brother, pled guilty as well in his participation in the scheme. He’ll be sentenced this month.
In addition to fraud, the Sanders were also charged with illegally charging customers fees 11 times in 2002-2003, filing bogus mortgage applications that did not disclose fees paid outside of settlement. Additionally, they were hit with charges of money laundering and filing false home appraisals.
Thankfully, they’re out of business for good.