Phil Dodd and Nat Frothingham of The Bridge Interviewed Tim Heney of Heney Realtors.
Nat Frothingham: What is the local housing and real estate marketplace like this spring?
Tim Heney: It’s vibrant.
Frothingham: What do you mean when you say the market is “vibrant.”
Heney: “Vibrant” means active on most fronts — increased buyer activity in a situation where there’s not a big inventory of homes for sale. We are seeing homes come on the market and go under deposit quickly. The home inventory situation could improve. Right now on the Multiple Listing Service there are 34 homes for sale in Montpelier.
Phil Dodd: What would be normal?
Heney: Oh, about 60.
Dodd: Are there more buyers right now due to the early end to winter?
Heney: Yes, the market is somewhat weather-driven. This year, even the back roads are reasonably passable. And that really helps.
Dodd: Are houses in all price ranges selling?
Heney: There are 18 homes presently under contract in Montpelier with prices ranging from $180,000 to $525,000. Of these, 11 are under $300,000.
Dodd: Typically the high end of the market is slower than the rest of the market. Is that the case?
Heney: Yes, that end of the market is often slower.
Frothingham: What’s producing that kind of activity?
Heney: There’s a higher level of consumer confidence — and a higher stock market. People are going for more tangible assets. They’re taking their stock market gains out.
Dodd: What’s the situation for first-time home buyers?
Heney: That first-time homebuyers group — the millennials — seem to be a real force in the market.
Frothingham: That contradicts my impression. I thought the millennials were facing debt and postponing marriage and having families. What’s happening?
Heney: They are a little further along in life now. They have better jobs and savings. But there is a lot of competition among those trying to buy their first home.
Dodd: Is this pushing some buyers out of Montpelier, into places like Barre?
Heney: Barre is so affordable. You might get a house in Barre for $150,000. In Montpelier the same house might be $270,000 or $280,000. Barre City has a larger inventory of affordable homes. But property taxes in Barre City are not lower, which is interesting. Barre Town’s taxes are lower. The towns served by U-32 High School have also remained a very strong part of the overall marketplace.
Dodd: What about “baby boomers” who want to downsize into smaller houses, or houses in town, or condominiums? How is that playing out?
Heney: Across the country, boomers have been among the strongest sectors in the economy. Financially, they’re very competitive. Often boomers who are downsizing can come up with the full price of a house or condominium, as opposed to folks who are buying for the first time. This is happening everywhere.
Dodd: Are boomers able to sell their larger properties?
Heney: If they see the right place and it’s something they want, often they make their next move without having sold the larger property they are leaving.
Dodd: What is going on with housing prices?
Heney: In general, prices are strong. Housing and real estate prices in Montpelier have showed good growth again. In 2015, 85 single-family homes sold at an average house price of $255,000, and 24 condos sold for an average price of $173,000.
(In a recent phone conversation with City of Montpelier Assessor Steve Twombly, he said, “Montpelier is near the high end of the real estate market for Central Vermont. The closer you get to Montpelier the higher the values.”
Turning to the current housing and real estate market, Twombly said, “There’s no question we are in a rising market. Go to the Assessor’s web page,” he advised. “You can see what properties sold for how much. We have a list of all the sales.”)
Frothingham: What about the claim that high property taxes are forcing families with children out of town?
Heney: There are people who appreciate Montpelier’s services, its parks, and the like. The question is where is the breaking point. But making generalizations about forcing people out of town is complicated by the education tax model. A high percentage of the Montpelier community gets property tax relief in the form of a prebate on their property tax bill. It’s a tough one to sort out.
Frothingham: Sometimes people vote with their feet. They just leave town and move on. Sometimes they leave Vermont. Or just leave Montpelier. It varies.
Dodd: What about the rental market?
Heney: We don’t have enough rental units in Montpelier. Our focus has been on affordable housing. I think there’s room at other price points as well. People who are coming into town are frustrated in what they see for choices. We haven’t seen a lot of new rental housing created to meet the needs.
Employers in Montpelier need good housing to attract new employees. We see people coming in at higher salaries, and in some cases the family may stay put where they are. Families may get together on weekends. People in those situations are looking for a nice rental here. We just don’t have housing that caters to their needs.
There are also many people who work in Montpelier and live in another town. Watch the parking lots at the end of the day.
Frothingham: Why is that need for rental housing not being met?
Heney: Take a look at what happened with the proposed apartment project on Sibley Avenue. How often do we have opportunities like that? The environment here is not always welcoming to change. No matter where one builds, it’s going to be in somebody’s backyard. You’ve got that factor. The other factor is the cost of new construction, $185 to $200 per square foot range. And that doesn’t include purchase of the property and site preparation. This is the difficulty of the situation in the short run. I suspect you can make a good case for new construction being a good investment in the long term.
Consider the six new Cedar Street apartments. I believe those units, which have rents in the range of $1,750 per month, have been filled. The perceived ceiling on rents in Montpelier may have to rise in order to carry today’s higher construction costs. The planned One Taylor Street project will include 30 to 40 residential apartments. Redstone has been working through the numbers, and with a steel frame masonry building, they have to be struggling with those numbers. Everyone is trying to get a handle on costs.
Dodd: What about commercial real estate in Montpelier?
Heney: The TD bank building sold. It sold quietly. It was seen as a desirable property. If you look at these downtown buildings, there aren’t that many vacant downtown storefronts. I like combining commercial downstairs with condos and apartments upstairs — maybe second-floor offices, maybe third-floor apartments.
Dodd: How about new home construction. We’ve seen a handful of owner-built, single-family homes constructed in Montpelier recently, correct?
Heney: There is a lot more home construction happening in other towns. In Waterbury, there is a development with 30 lots. In Moretown there is a development with 30 lots and only six are left.
Dodd: There seems to be a lot going on in Waterbury.
Heney: Waterbury is connected to the Chittenden County market. We tend to see more construction closer to Burlington.
Frothingham: What’s going on with Sabin’s Pasture here in Montpelier?
Heney: I haven’t heard a lot.
Frothingham: What’s your view on the new zoning?
Heney: The Montpelier Planning Commission has worked hard on it. But the public hasn’t paid attention or been part of the conversation. I like a lot of the concepts. The proposed regulations create whole new zones. It’s more realistic in that is has higher densities in Montpelier. There are positives for future growth. But the proposed new regulations run to 198 pages (plus another 66 pages if you are located in a flood zone.) It’s too long and too much. The average citizen won’t be able to read and fully understand it. You will have to hire an attorney and a site planner or engineer just to get off the ground. Overall, there’s so much prescriptive detail. The sign piece has been removed from the new code.
I don’t mean to be negative. Our current zoning code is a hodgepodge mess. But the whole flood thing is problematic. At the moment, the requirement is one foot above base flood elevation in order to build in a flood zone. The new code is pushing that to two feet above base flood elevation. How are you going to make this work? I think the requirement of two feet above flood elevation is an extra handicap to new construction, especially in the downtown area. I think it will hinder development of vacant sites in the community.
Dodd: What should we be working toward in Montpelier’s new zoning?
Heney: We should be asking ourselves, “What does the public need to know?” We need to get to the basics of it. It’s so complicated. Zoning and planning regulation ought to be written so that every educated citizen can read it. If you did that you would find that people would understand it and understand what they can do with their property.
A successful zoning code will guide growth to meet clearly stated community objectives. If written properly, those seeking approval will understand the review and approval process and will not be driven away by it. Interested citizens will also be more engaged as informed participants.