A Great Market for Sellers

The 2022 real estate market is off to a great start, although it continues to be limited by the decreased number of listings available. We are encouraged by the increased buying power that comes from historically low interest rates. This is an extraordinary seller’s market, where many properties are seeing multiple offer situations and being sold above the asking price. This is fueled by low inventory: the numbers show that the number of new listings is drastically lower than at this time last year.

Higher Interest Rates on the Horizon

The Fed has confirmed that interest rates will be going up come spring, with three additional increases anticipated throughout the year. It’s important to understand that this is not a housing bubble comparable to the crisis in 2008. Rather, it is an issue of supply and demand. In our state especially, there has not been enough new construction to keep up with the increase in population. This means that even as interest rates rise, the demand for homes is so high that home prices will not decrease.

Who Are These Buyers?

One of the questions that we are frequently asked is, “Who are these buyers?”. We are certainly seeing a heavy influx of out-of-state buyers. Vermont has received a lot of positive exposure throughout the pandemic and is officially the number one state people are moving to in the US. While many out-of-state residents are settling here full-time, we are also seeing a strong second-home and investment market from these buyers.

However, not all of the buyers are new to the state. We are also helping people who are looking for more space as their families grow, or couples looking to downsize because their children are finding different housing. Additionally, we are encouraged by the number of first time home buyers who are entering the market ready to compete!

A Booming Luxury Market

One of the most dramatic areas of change is within the luxury market, which is experiencing exponential growth. The majority of these transactions are taking place in ski towns, with Stowe being the most popular destination. Many of these luxury homes will be used as second homes by the purchasers.

Here’s a snapshot of how the luxury market has changed: Five years ago, there were 86 homes over $1 million sold in the entire state of Vermont, with an average sales price of $1.5 million. Last year, there were 346 homes sold, averaging $1.7 million. And in the first month of 2022, there are already 57 homes over $1 million under contract, indicating that we will continue to see this sector flourish.

To interpret the luxury market trends, we gathered data for all home sales in 2017 and in 2021 that sold for over $1 million. An interesting note is that “luxury real estate” doesn’t have a strict definition: in the past, one would expect a luxury property in Vermont to be a large house, full of amenities, with lakefront access or stunning mountain views. Because of an increase in the average sales price, there are many more million dollar homes on the market that don’t have those “luxury” features, but are situated in desirable neighborhoods. Perhaps market changes will lead to a shift in what “luxury” truly means!