Vermont homes for sale, already in short supply before the Covid-19 crisis, are in even higher demand now as a number of factors suppress supply and raise the number of buyers.
The number of residential real estate closings dropped one-third in May from the year before – likely a delayed result of the decline in purchasing activity in March, after the governor declared a state of emergency. Housing deals, particularly those that involve financing, generally take about 45 days to close.
But the traditional spring buying season started anew in June, and the market has come roaring back. Homes in and around Chittenden County are now getting several offers and sell within days.
“My agents in Burlington have told me that there have been properties out there that have 10 offers, 19 offers; somebody told me there was a property where there was 35 offers,” said Laurie Mecier-Brochu, who manages a regional Sotheby’s office that includes Rutland, Middlebury, Randolph, Stowe and South Burlington. The shortages are acute in particular price ranges, said Mecier-Brochu.
“Burlington seems to be really needing anything under $700,000,” she said. “Where if you’re in Rutland County, your sweet spot is between $175,000 and $300,000.”
Leslee MacKenzie, president/owner of Coldwell Banker Hickok & Boardman, said she expects June sales volume in her company’s four-county area of northwestern Vermont to match that of June 2019 because of pent-up demand. MacKenzie said the median single-family home price in Chittenden, Franklin and Grand Isle counties was $315,000, down 2.3% from last year. She noted statistics for such a small market area tell only part of the story.
“I think actually on average the prices have remained stable or increased slightly,” she said.
That demand is not evenly distributed, noted Staige Davis, CEO of Four Seasons Sotheby’s International Realty.
“The market in Shelburne is so different from the market in Montpelier; all real estate markets are local,” he said. “So it’s really hard to generalize with data.” And he added that strong sales in June won’t make up for the slump earlier in the year.
“In my own firm, even if the market is really great, it’s hard to make up the hole that was dug in that two months,” he said.
Cautious homesellers
Long before Covid-19 came along, the construction of more residential real estate in Vermont was a top priority for state lawmakers. Business leaders said high real estate prices were making it difficult to hire employees from out of state.
A few new factors are also limiting the supply. While spring is traditionally the start of the busiest season for residential real estate, this spring, as social distancing measures went into effect, sellers seemed reluctant to open their homes for showings, and delayed putting them onto the market, said MacKenzie. While buyers might need to move quickly because of a job offer or a rental situation that is ending, sellers often have more flexibility, she said.
“Some sellers were cautious about having people coming to their homes because of the virus,” she added. “Inventory levels were really impacted by that, and therefore you saw really a pretty high level of demand for buyers looking for property. We’ve continued to see that this spring.”
The state imposed strict quarantines on people traveling from areas with high Covid-19 infection rates. But it created special rules regarding quick trips by real estate purchasers.
Multifamily housing construction has also slowed as a result of Covid-19, although the effect of that won’t be seen until later. But due to schedules and other factors that were in place long before the virus was discovered in Vermont in March, the number of new multifamily units that will be available this year is lower than last year, said Brad Minor, a principal with Allen, Brooks & Minor, a Burlington commercial real estate company.
Over the past five years, an average of about 530 apartment units have been added each year in Chittenden County, Minor said – some of it affordable, much of it market-rate. Last year, 645 units were added to the stock. But only 255 are expected to be completed in 2020, according to reports from builders. Minor said that variation was normal and only in one case – that of a 70-unit building – the result of delays from work stoppages this winter and spring.
“I’ve learned from studying apartment development that it changes every 6 months,” Minor said. “When I’m calling developers to get an idea of the timelines, it’s very dynamic.”
Another factor in the short housing supply: As in other markets, Vermont homes are still being converted to short-term rentals, taking the properties off the market for long-term use.
Plenty of buyers
Meanwhile, there is a backlog of people who need homes, said Steve Lipkin, an agent for Coldwell Banker Hickok & Boardman.
“The last three weeks have been really busy with people making up for lost time,” Lipkin said June 22. He said he’d been asked if he expects houses to flood the market because of the state’s economic problems and historically high unemployment rate.
“It’s been an uncertain time; people thought there would be massive layoffs and people losing jobs and maybe having to downsize or have a quick sale just to get out from under a big mortgage,” he asid. “But I haven’t seen any desperate sellers, really.”
“Just the opposite,” said Luke Clavelle, also with Coldwell Banker Hickok & Boardman, which has been doing targeted marketing in Boston and New York. “We’re seeing more and more multiple-offer situations.”
After two emergency interest rate cuts by the Federal Reserve in March, mortgage rates are very low, at about 3% for a 30-year loan. The low rates also encourage buyers.
Mecier-Brochu said there are more than 2,000 homes under contract now in Vermont. The median number of days these homes spend on the market is 34, according to Multiple Listing Service data.
Mecier-Brochu said she’s heard from urban buyers impressed with Vermont’s low Covid-19 infection rate, and looking for a place to work remotely.
“That is one of the first questions: ‘How is the internet connection?’” she said. She also thinks that the crisis has forced sellers to create better videos of their homes, and buyers to take video more seriously.
“We’ve had video for a long time, but a lot of folks were hesitant to use it. Now we have sellers doing virtual tours with their cellphones,” Mecier-Brochu said. “It really speaks to the future of our business. We don’t know what happens this fall, but I think everyone is going to be more prepared.”
Interest from out of state
After the 9/11 terrorist attacks, there were frequent reports that people in urban areas planned to move to the safety of Vermont. It’s not clear how many of those moves happened, or how long the new residents stayed. But the Covid-19 crisis has prompted the same reports, as well as anecdotes from realtors about interest from out-of-staters.
Lipkin said he doesn’t see a lot of buyers from out of state, although he recently showed a cottage to some people from New York City who were looking for a second home.
Davis, of Four Seasons Sotheby’s International, uses internet search data to where searches for Vermont real estate are coming from, and on a recent June day, he could see that the 12,589 listings in his company’s large catchment area in Vermont and New Hampshire were being viewed by thousands of people in places as diverse as Boston; Brooklyn; Queens; Richmond, Va.; Washington, D.C.; Indiana, Los Angeles, and Springfield, Mass.
“Before the pandemic, you wouldn’t see this; you would see something much different,” he said, adding that online searches in general have doubled since the pandemic began. “The truth is despite the fact that we do a lot of advertising out of state and internationally, most of the buyers are in Vermont, New Hampshire, Maine, Massachusetts, and then occasionally there’s an outlier like Florida. But there is a lot more from New York than it was before and all the suburbs, Brooklyn, the Bronx. You didn’t see that in the past.”
It’s possible to use property transfer tax documentation to get see where home buyers came from. But those aren’t being reported to the state as efficiently as in the past because of the social distancing office shutdowns.
The Covid-19 crisis hasn’t made much of a dent on residential real estate nationally, according to Coldwell Banker’s Real estate of the Union presentation June 17. Realtor Ryan Gorman said home prices nationally rose 4.4% in March, a faster increase than in February. The 7% April price increase over the year before was the 98th in a row, Gorman said. Meanwhile, existing-home sales dropped 17% in March as sellers declined to list their homes. Some Coldwell Markets didn’t see activity drop much at all; the company’s Sea Coast Advantage office in North Carolina saw web traffic and contracts rise nearly 7% over 2019.
“As we’ve heard anecdotally, much of this interest came from folks relocating from bigger cities and other more densely populated states,” Gorman said.
