A new report from the Vermont Housing Finance Agency shows the median home price in Vermont rose 15% in 2022 — the largest annual jump since the state began tracking home sales data in 1988.
The median price for a Vermont home in 2022 was $310,000, according to the report. The 15% increase from the prior year is attributed to both the state’s “constrained supply of available homes for sale and an increased demand to live in Vermont since the pandemic,” the report says.
The median data for newly built homes rose even more, a 21% increase from 2021, producing a median price of $555,264 in 2022, according to the report.
Real estate agents attribute the record increase to lower interest rates in 2020 and 2021, and the nationwide realization that working remotely is a possibility as a result of Covid-19.
“We, as a country, have experienced a lot of growth in the real estate market with interest rates being as low as they were,” said Sandy Palmer, a real estate agent for Vermont Real Estate Co., which has offices in Burlington and Montpelier and does business around the state. “So, a lot of people that may have not been able to afford a home before — like renters, first-time homebuyers, retirees who, let’s say we’re trying to move to Vermont — get in the game.”
Extremely low interest rates and Vermont’s relatively low number of Covid-19 cases pumped up demand in the state’s housing market from out-of-state homebuyers, Palmer said. They were motivated not just by relative safety from the virus, Palmer said, but also because of the realization that working remotely was possible.
“Now they could find a place where they could live here, work remotely, and then enjoy all of the beautiful things that we have to offer on the weekends,” Palmer said.
Nick Maclure, co-owner and managing broker of Century 21 Farm and Forest in the Northeast Kingdom, said people aren’t flocking to Vermont just because of the pandemic.
“We’re also seeing people that are moving here for other reasons: climate refugees, people in areas that are dealing with natural disasters, droughts, or wildfires,” he said. “Vermont’s a pretty safe place to be.”
These surges in demand, when coupled with a relatively rigid supply, have driven prices up, Palmer explained. “Vermont has never had a lot of inventory,” she said. “We don’t do a lot of new building here, generally speaking.”
Palmer said that, compared to places like South Florida or Texas or California, Vermont doesn’t do a lot of housing construction. So, “the homes that are here are the homes that are here,” she said.
Maclure agrees. “Inventory’s super low, so we’ve got a lack of things to sell,” he said. “Demand is still strong and definitely outpaces supply.”
Palmer described the situation as a “Vermont perfect storm.”
Going into 2023, both Maclure and Palmer believe housing interest will continue to be strong, but not at the historic rate of last year, in part because of rising interest rates that are likely to tamp down demand.
“We are still going to see growth this year,” Palmer said. “Vermont remains a beautiful place to live with a lot to offer people who can work remotely.”
“Interest rates have had an effect on slowing demand,” Maclure said. “I think we’ll have another strong year, but I don’t expect we’re going to be breaking any records.”