(Host) Vermont has avoided the most serious problems in the housing and credit markets.
But a new report shows that real estate sales and prices have both declined over the winter.
VPR’s Ross Sneyd has the story.
(Sneyd) Phil Dodd publishes the Vermont Property Owners Report and he regularly looks over state property transfer tax returns.
This winter, he found some trends in those returns that show an important part of Vermont’s economy is slowing.
(Dodd) "Median prices of single-family primary homes are not rising anymore. In fact for this one four-month period we looked at, they had dropped 2.6 compared to the same four-month period a year earlier.”
(Sneyd) That’s not a big decline. But it is a big change. In 2005, prices were rising at about 12 percent.
Median price is the standard measure of housing values across the country. It means half of homes sold for more than that price and half sold for less.
Over the winter, the median price declined to $204,000, from $210,000.
Dodd’s research found more confirmation of another trend, which started about two years ago. There are a lot fewer homes being sold.
(Dodd) "When we look at sales over all of 2007 there was a decline in the number of sales of primary homes of about 12 percent. Vacation homes and vacation condominiums both dropped about 22 or 23 percent.”
(Sneyd) So how does all of this affect the economy?
Experts are quick to point out that Vermont is not facing the same crisis that places like Miami or Cleveland or Phoenix are.
The collapse of the sub-prime mortgage industry was concentrated in certain parts of the country, but not here. And the failure of some financial companies isn’t happening here, either.
But economist Art Woolf says homeowners were taking advantage of the big run-up in the value of their properties. And he says that’s over.
(Woolf) "Over the last four or five, six years, people saw their house as a giant ATM machine. And as it went up in value 6, 7, 8, 10 percent per year, on a $150,000-$200,000 house, you’re talking about significant increases in the value of that house … And people were spending based on their increased wealth.”
(Sneyd) Now, they’re not so wealthy, at least not on paper. So some people won’t be able to borrow against the value of their property as much and that could slow consumer spending.
Woolf also believes it will get worse – and prices will continue to decline into next year.
(Woolf) "I think that it’s going to be quite a long time before housing prices start increasing at any significant rate of growth. And that harkens back to the 1990s. From about 1990 until about 1997, the average price house in Vermont didn’t change at all.”
(Sneyd) The experts say the housing news isn’t all bleak. About a third of Vermonters own their houses free and clear, without a mortgage. And people who want to buy a house, now may be the time.
For VPR News, I’m Ross Sneyd.