Vermont Housing Market 2023 Report
What’s the Vermont Housing Market Like?
Home prices in Vermont have appreciated above the national level. Looking back at prices in Sept 2019 compared to Sept 2022, prices have increased by 51% in Vermont VS 38% nationwide.
As of Sept 2022, the median price for a home in the state was $365,600, which is up 16.1% above last year’s median price. Looking at the peak of the last three years, prices have decreased 6.4% from the peak of $390,700 in June 2022.
Sales volume has also dropped recently. In Oct 2022, there were 908 homes sold in the state of Vermont, a 7.4% decrease from the previous month. Comparing year-over-year, we saw a 16.8% decrease in sales from Oct 2021, when there were 1,092 home sales.
The sales peak was 1,353 in Oct 2020; compared to Oct 2022’s numbers, we are down 32.9% in the number of homes sold from the peak of the last three years.
It is clear that the recent steep rise in mortgage rates has curved sales activity and shrunk affordability, and the result has been a drop in home prices in Vermont.
How Does The Vermont Housing Market Compare to the National Housing Market?
The Vermont housing market is similar to other markets because supply and demand drive housing prices. Mortgage rates also impact Vermont as the rest of the nation.
Vermont does have some differences from other states. Vermont is known as “the greenest state in the nation”, and one of the most picturesque. Vermont attracts people of a very specific profile for the most part. The state of Vermont is the 2nd lowest populated in the nation, and residents favor the rural feel of the state. The winters are bitterly cold, so those who favor more sunny states year-round will not fare well in Vermont.
Vermont’s home prices and sales numbers have begun to slow down along with the rest of the country. Differences in the regional economy of some of Vermont’s metro areas make those markets more vulnerable and others more resilient to the current economics.
The current median price of homes in Vermont is 9.4% lower than the national average. Over the past three years, the median price of homes has increased by 51.8%, which is about 150% higher than the national average of 38.4%
Vermont Metro Areas With the Hottest Housing Markets
The state of Vermont has seen explosive growth in housing demand in recent years. Due to the small population, there are not a huge number of sales statewide and citywide. We will look at the cities with the highest increase in the median price year over year.
The top with the highest appreciation rate:
- Essex Junction
Swanton is on the NorthWest corner of the state of Vermont. It is a very attractive town that revolves around the Swanton Village center. The hub of Swanton is a vibrant commercial hub with an eclectic mix of family-owned businesses, national store chains, and municipal government locations.
Swanton home prices have been doing quite well over the last few years; in fact, Swanton topped the list of cities in Vermont with the largest increase in prices in 2022 with a 76.7% year-over-year increase. For 2022, October’s median price was $410,000.
In Sept of 2022, there were2 homes sold in Swanton, a 50% drop in sales from the same period in 2021.
The median days on the market is 52, which indicates a balanced market by today’s standards. Compared to Sept 2021, the median days on the market is 9 times compared to Sept 2022.
Milton is a small town on the Northern part of the state. Milton is a historic town chartered in 1763, thirteen years before the US claimed independence from England in 1776. The Milton Real Estate market is currently a competitive seller’s market. In Sept 2022, there were 6 homes sold with a median price of $437,450. The median home price in Miami is up a whopping 33% from Sept of 2021, while the number of homes sold was down 50% compared to the same period.
The median days on the market is 5, and it’s down 16.7% compared to Sept 2022.
Winooski is a small town in Northern New England. The town is the most densely populated city in the region due to its small size of only 1.5 square miles.
Winooski is considered a competitive/hot market right now. In Sept 2022, there were 6 homes sold with a median price of $437,450. The median price in Winooski was up 33% over Sept of 2021, while the number of homes sold was down 50% compared to the same period.
The median number of days on the market for Sept was 5 days which is 16% lower than in Sept of 2021.
Montpelier is the capital of the state of Vermont. Interestingly enough, Montpelier is the smallest population capital of any state in the nation. Montpelier was chartered in 1781 and it is named after a city in the south of France by the same name.
There were only 6 homes sold in Sept 2022, with a median price of $403,750. The median price in Montpelier was up 30.7% from Sept 2021, while the number of homes sold was down 50% compared to the same period.
Essex Junction is a small town in the central part of Vermont. It is the 2nd most populated city in Vermont, nestled between Lake Champlain and the Green Mountains.
Essex Junction is currently a very competitive market, but not prohibitive. In Sept 2022, 16 homes were sold with a median price of $421,250.
The median price in Essex Junction is up 16.1% from Sept 2021, while the number of homes sold was down 30.43% compared to the same period. The median days on the market is 13, up 6 days compared to Sept 2021.
Higher Mortgage Rates Could Slow Price Growth in Vermont
How will interest rates affect the housing market? We are already experiencing the impact of rising interest rates across the nation. Price growth in Vermont has been flattening or on a slight decline for several months in 2022. However, Vermont is such a high-demand destination that it may very well fare better than the rest of the country.
As of mid-October 2022, the 30-year fixed rate mortgage is above 7% on average. That represents a 133% increase in mortgage rates in less than nine months. The Feds are on a “no holds barred” approach to curve inflation, and interest rate hikes have become the norm over the last several Fed meetings. Unfortunately, it seems that rate hikes are not done.. We anticipate at least another 2 or 3 rate increases before the year ends.
Key Market Stats for the Vermont Housing Market:
As of the latest compiled housing report with data through Sept 2022.
- Median home price $365,600 - 16.1% up from 2021.
- Existing home sales: 908 - a 16.8% drop from 2021.
- Months supply of inventory: 2- unchanged from 2021.
- Mortgage rates as of Oct 13th are at 7.2%
Vermont Historic price changes & affordability
The Vermont housing market has seen explosive appreciation for years. The last 3 years have been particularly favorable to homeowners as they saw their homes appreciate by 52% in 36 months.
The steep rise in home prices and mortgage rates has shrunk affordability to record lows in the state. A 52% spike in home prices and a sharp increase in mortgage rates in the last 12 months does not spell good news for the Vermont Real Estate market.
We know that the average person’s wages do not increase by 52% in three years, so we can see why affordability is a problem. The gap between rising home prices and wages keeps getting wider.
- The housing market is clearly shifting, and Vermont housing market predictions for the short term seem to be going down along with many areas of the US. Due to Vermont’s unprecedented growth, many of the state’s metro areas are predicted to drop in home values.
The next 18 to 24 months will be an adjustment, especially for home sellers and Real Estate professionals. Adjusting to a normalized market that is not heavily skewed in favor of sellers will take time.
- Real Estate markets are highly local and even within the same state, there will be areas that are projected to be hit hard by the market shift and others will fare better.
- Timing the market for buying or selling is a big gamble. If it makes sense for you to buy, go ahead and buy a home. For sellers, if you have to sell in the next 12-24 months, you may want to consider doing it sooner than later, especially if you are in an area that may be considered overvalued and has a high potential for house prices to drop.