by Phil Dodd
The real estate market in Montpelier was an active one in 2017. According to local realtors, there were multiple offers on some properties as a low inventory of homes for sale caused buyers to snap up properties as they came on the market. The average number of days it took to sell a Montpelier single-family home fell to 65 days—half the time it took in 2016.
The strong demand helped push the median price of a single-family home in Montpelier up 15.8 percent to $277,450, according to Vermont Realtors’ data for 2017 through November. Condominium median prices in Montpelier rose 18.7 percent to $193,500.The median is the point at which half the sales are higher and half are lower.
These figures do not mean that that every house or condo in Montpelier increased in value by that much. Median and average prices also reflect other aspects of the market, such as an increase last year in the number of higher-end sales in town (the highest 2017sale was for $630,000). But values are increasing, and it remains a seller’s market.
“Last year was a busy year, and we are busy even now,” broker Tim Heney of Heney Realtors said January 9. On that date, there were only 14 single-family homes and condos on the market in Montpelier. “We should be closer to 80, but inventory has been cruising under 20 for a couple of months,” Heney said. “This is one of the tightest markets we’ve had.” All indicators suggest 2018 will see a continuing strong market. Broker Ray Mikus, owner of Green Light Real Estate, also had a busy 2017. “Spring and summer were very hot, and in some cases there were multiple offers,” he said. “A house would go on the market one week, and we would get four offers over the weekend.” The market leveled off later in the year, but was still active in January, according to Mikus.
Mikus said one trend he noticed last year was that “style is selling.” Buyers are excited by interiors that have been upgraded, he said. “People used to be more tolerant of older kitchens and bathrooms than they are now,” he added.
Montpelier’s median home price of $277,450 exceeded both the Washington County median of $220,000, up 4.4 percent, and the state median of $221,000, up 2.4 percent. But it remains well below some other towns and regions.
Burlington’s 2017 median single-family home price was $312,500, while Stowe clocked in at $545,000. These prices pale in comparison to the national median price leaders of San Jose, California ($1.2 million) and San Francisco ($900,000).
In central Vermont, both Heney and Mikus said they were struck by how much the market varies from town to town. Barre Town was another active town in 2017, with the average home price jumping 27.5 percent to $207,771, though that was after a big price drop in 2016, according to figures calculated by Heney that include private sales.
Barre City, meanwhile, saw its 2017 average home price drop 7.7 percent to $125,137,according to Heney’s figures. “A number of people start looking in other places but end up buying in Barre City,” Heney said. “There are incredible values in nice neighborhoods. A property there might go for half the value of a comparable home in Montpelier. ”Moreover, in November Barre City had five times as many single-family houses for sale as Montpelier.
The average home price in the U-32 towns stayed flat compared to last year at $235,436,according to 2017 statistics calculated by Mikus based on MLS sales. “That surprised me,” he said. “In the past, the U-32 towns and Montpelier moved together.” Properties in these towns took twice as long to sell in 2017, on average, as in Montpelier.
Montpelier’s tight market shows no sign of easing any time soon, although higher mortgage rates, which the National Association of Realtors predicts are coming in 2018,could cool things down, and a stock market crash or recession would change things in a hurry.
Federal tax reform might also have an impact. The new law limits the property tax deduction. Since Montpelier’s property tax bills are among the highest in the state, thenew tax law could crimp demand for homes, particularly at the high end of the market.
Heney said Montpelier’s tight market would be helped by building new houses to meet the demands of young families, downsizers, and those moving here from away. While more than 50 much-needed new apartment units are on the way in Montpelier and condo construction is under discussion, the number of new single-family homes being built here is relatively small.
Heney said one thing that deters developers and individuals interested in constructing new homes from building in Montpelier is the city’s ordinance requiring sprinklers in all new single-family homes, one of only a handful of such ordinances in the state.
Sprinklers can add as much as $10,000 to $20,000 to house construction costs, Mikus said, and Heney said he knows of one Montpelier property where a sprinkler system added $23,000 to the cost. Although there are property tax breaks for sprinklers, Heney noted the systems also require annual maintenance and can go off accidentally.
High building costs, high property taxes and a limited number of places to build are also thought to be holding back construction of new single-family homes in the capital city.
For now, anyone eager to buy a house in Montpelier will have to have deep pockets and be quick on their feet, or be willing to wait for a market downturn or look in other nearby cities and towns, where the inventory of homes for sale is higher and prices are lower, sometimes significantly so.