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Low Rates Drive Vermont Real Estate Market

Shelburne, Vermont -- October 5, 2006

The Federal Housing Price Index reports that residential real estate in Vermont continues to grow in value faster than the national average. That makes Vermont the only state in New England with a growth rate that strong. Still, the housing market is cooling off. One result is that the inventory of homes for sale has risen. Homes stay on the market longer than they did in recent years. Now, add low interest rates to the equation. 

Liz Matthews and her husband not only found the home they wanted. At a price of more than $400,000, they got much more house than they ever thought they could afford. "The buying power that you get with a six percent rate is amazing.," observed Gene Richards, CEO of Spruce Mortgage. "It gets you a lot more home today."

Richards says Vermont's real estate market remains good for both buyers and sellers, in spite of a slowdown in housing construction, home purchases and prices. The good news for buyers is that 30-year home mortgage interest rates remain historically low. For the last couple weeks they have bounced between the high five percent and low six percent range. For sellers, home prices in Vermont are still rising at almost 10% per year, the highest rate in New England. That's because Vermont is a desirable place to live for home buyers from out of state.

Matthews and her husband were 1999 graduates of the University of Vermont who decided to leave New York City and come back. "That was the draw," she said. "A lot of our friends who went to UVM with us definitely said, 'We're right behind you.'"

Richards added, "It comes down to quality of life. It's what you get, a bigger bang for your buck in some ways. People tend to want to be here."

Vermont still suffers from an overall deficit of housing. Demand exceeds supply. But there is a silver lining and it applies to the entire economy, not just the housing market. Slow but steady growth means that Vermont avoids the abrupt ups and downs that have led to talk of a housing bust in some other parts of the country.

Richards said, "It might be flattening slowly, but anything that doesn't happen quickly is a good thing. You know, we went up slowly. If we settle slowly, I have seen no huge drops, up or down. So that's a good thing for our market. It shows that it's holding its own."

It means that even though prices keep rising, continued low interest rates allowed Liz Matthews to find her ideal home -- in Vermont.

Andy Potter - Channel 3 News