Learn more about the housing market in Vermont

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.

Vermont Housing Market Overview

Known for its vast acres of forest, Vermont is a state in the northeastern United States that shares a border with Canada. Vermont thrives on a variety of different industries, but according to data from IBISWorld, Real Estate, Rental, and Leasing was the sector that contributed the most to the state’s 2023 GDP. A further look into the notable housing market in the state is more than worthwhile.

At the beginning of the year, experts predicted that the housing market in Vermont would continue to see higher house prices, though interest rates across the state would settle and the number of potential buyers would increase. As of April 2024, many of these predictions have proven to be correct, and data from different sources point to trends that are expected to continue throughout the rest of the year.

In fact, historically high interest rates have seen a significant decrease across the country. The national average 30-year fixed mortgage rate in late 2023 approached 8%, but settled in April 2024 to just below 7%. As we will discuss later in this article, a similar trend can be seen in the Vermont housing market, reflecting easing inflation that is bound to benefit a growing demographic of prospective homeowners across the country.

Vermont Market Trends

To understand the Vermont real estate market, it’s important to keep up with trends. Let’s look at some key ones in Vermont:

Note: These statistics are based on Redfin’s monthly housing data from April 2024.

Median Home Price

The median price of a home in Vermont as of April 2024 was $421,400, according to Redfin’s monthly housing market data. This is an increase of 9% from April 2023, accurately reflecting predictions of continually increasing housing prices in the state. In Burlington, the most populous city in the state, the median price is significantly higher at $509,500. This April 2024 statistic actually represents a decrease in median price from April 2023 of 10.4%. This is a demonstration of how statewide aggregate data is pulling from a diversity of housing markets that are experiencing a variety of factors and influences.

Number of Homes Sold in April 2024

568 homes were sold in Vermont in April 2024, which is a slight increase of 0.9% from April 2023. This number can be expected to increase in the summer months. It is important to keep in mind that nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%.

Despite this, number of home sales from the previous two years have failed to reach the same peaks that were recorded in the summers of 2020 and 2021.

Median Days on Market (DOM)

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage.

The median DOM in Vermont in April 2024 was 49 days, which is an increase of 14 from the previous year. This means that, on average, listings spend around a month and a half on the market before being purchased. An increase from the previous year potentially suggests a market that is increasingly favoring buyers.

New Supply Statistics

In 2021, there were about 3.59 new residential construction permits per 1,000 people in Vermont. This statistic, which points to the rate of new construction projects, is just about consistent with the national average. Increased housing supply is predicted to ease housing prices and increase affordability in many markets across the U.S. in 2024.

Property Tax Rate

According to Rocket Mortgage, the average property tax rate in Vermont is 1.83%. This is one of the highest average rates in the country, lower than only three other states. The average annual property tax in the state is around $9,119.74. As previously mentioned, it is important to keep I mind that this statistic reflects the average of a lot of data in a state with geographic and economic diversity. Tax rates are likely to vary depending on the value of a home and its location in the state.

Foreclosure Rate in Q1 of 2024

In the first quarter of 2024, 1 in every 5,985 homes in Vermont experienced a foreclosure filing, according to recent data from ATTOM. This is the third lowest rate in the country, meaning that few homeowners experience foreclosure in the state.

Hottest Local Markets in Vermont 

1. Burlington 

By a very significant margin, Burlington is the city in Vermont with the highest population. Located in the northwest, the city’s housing market is very different from statewide data. As previously mentioned, its median housing price in April 2024 was $509,500, which represented a 10.4% decrease from April 2023. Its median DOM of 8, which has not changed in the past year, suggests an incredibly competitive seller’s market when compared to the statewide median DOM. Some of the most popular neighborhoods in Burlington are New North End, South End, and Old North End.

2. South Burlington

Not to be confused to its neighbor to the northwest, South Burlington is the second most populated city in Vermont behind Burlington. Its median home price in April 2024 was $460,000, relatively close to the statewide median. This number represents a 5.0% increase from April 2023. Its median DOM of 16 is significantly smaller than the statewide median, however, it is an increase from 5 in April 2023. This suggests that while the housing market is relatively competitive, it has grown less competitive over the past year. Some of the most popular neighborhoods in South Burlington are South Burlington South and South Burlington North. 

3. Essex Junction

Also located in the northwest region of Vermont, Essex Junction has a more modest population than Burlington and South Burlington. However, Redfin identifies Essex Junction as the most competitive housing market in the state, perhaps due to its recorded DOM of 5 that has not changed in the past year. However, its median home price in April 2024 was $365,000 represents a notable decrease of 38.1% from April 2023. Some of the most popular neighborhoods in Essex Junction are Hinesburg, Milton, and Colchester. 

Economic Factors Impacting the Vermont Housing Market 

A holistic view of Vermont’s housing market requires a basic understanding of the main economic drivers affecting the market.

It’s important to note that the escalated costs of newly built homes in Vermont have made affordable or market-rate housing increasingly scarce, with the growth of multimillion-dollar properties outpacing other segments. The Vermont Housing Finance Agency (VHFA) has analyzed home prices and sales, highlighting the lack of affordable housing and its impact on the state’s economy.

Mortgage Rates

Mortgage rates are a common cause of concern for would-be homeowners across the U.S. in 2024. As previously mentioned, national averages have dipped from last fall’s record highs, and Vermont is no different. According to Zillow, Vermont is currently seeing its 30-year fixed mortgage rates down to an average of 6.38%, down from almost 7.75% in late 2023. This accurately reflects predictions that interest rates in 2024 would settle but stay above an average of 6%. 

Inflation and Cost of Living

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Vermont. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income.

Population Changes and Demographics

A changing population ca also have implications for the housing market. According to the U.S. Bureau of Labor Statistics, the unemployment rate in Vermont is 2.1%. This rate is one of the lowest in the country, higher than only North Dakota and South Dakota. This low unemployment rate signifies a healthy and thriving economy that is bound to draw more workers and prospective homeowners in the future.

Vermont Housing Market Forecast 2024

As previously mentioned and backed by the VHFA’s 2023 report, experts considered the appreciating housing market Vermont faced in 2023 and predicted that prices would continue to rise throughout the year. This has proven true over the course of the year, though steadying interest rates and a hope for increased supply in the housing market signified by an increase in sales may indicate a slowing growth in prices.

Likelihood of Vermont Housing Market Crash

Though continually rising housing prices in Vermont may seem concerning, experts have maintained that a crash is significantly unlikely. There are many reasons for this, including a healthy economy signified by low unemployment rates and the decline and stabilizing of interest rates. The market seems poised to continue appreciating, but it is unlikely to reach any significant or concerning threshold in the near future.

Forecast for the U.S. Housing Market

Now that we’ve looked at Vermont’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years?  

The United States’ current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9.

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get.

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth.

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.  

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.

Vermont Rental Market

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year.

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.

This short summary leads directly into Vermont’s current rental market. Below are just a few of the current trends for Vermont’s rental market based on data pulled from Zillow: 

Vermont Rental Market Key Trends

• Median rent: $2,125 

• Month-over-month rent change: +$31 

• Year-over-year rent change: +$75 

• Available rentals: 530

Conclusion 

As we have covered throughout this article, any state’s housing market is bound to be made up of diverse influences, factors and variables, and summative data cannot tell the whole story. However, as a whole, the Vermont housing market in 2024 has seen many significant indicators of a stabilizing and healthy housing market that buyers and sellers alike should watch closely. Experts and analysts will continue to monitor this market, as well as nationwide factors like interest rates and new construction.