The frustration for many propective Vermont homebuyers has become readily apparent as elevated interest rates persevere and the housing supply remains low. The Wall Street Journal has recently reported that 2023 home sales are on track for the slowest year since 2011. Given this trend, those who have been holding off on making an offer in fear of a bidding war may see an opening to purchase a home at or below listing price as the housing market enters winter market.
Can You Afford At Least 2 Years of Higher Interest Rates?
Recent releases from the U.S. Federal Reserve have provided little optimism that interest rates will fall anytime soon. In fact, as reported by CNN, most federal officials expect at least one more quarter point rise before rates remain flat for an extended period of time.
With this reality, homebuyers must ask whether they can afford mortgage rates, which remain above 7%, for an extended period of time. Running a budget projection using a Mortgage Calculator is a great way to start this analysis. Using this tool will not only provide you with a monthly mortgage payment based on a certain purchase price, but will also provide an amortization schedule that will show the amount of interest you will be expected to pay over a set period of time.
Do the Cold Winter Months Provide a Buying Opportunity?
According to a 2021 study by Attom, the fall and winter months provide the best buying opportunity. It was reported in the Attom study that October saw a slim 2.9% premium on fair market value, compared to an 11.5% premium in May. This ultimately means that the lack of inventory and interest as fall turns to winter has compelled many homebuyers to accept a lower offer when the cost of maintaining the home begins to rise from the increase in heating fuel and, especially in the northeast region, snow removal.
Is Appreciation in the Vermont Real Estate Market Beating Inflation?
Housing prices in Vermont rose by close to 9% in 2021 and more than 10% in 2022, according to the latest financial report from the state’s Department of Finance and Management. The State has anticipated an additional 8.9% increase in Vermont housing prices in 2023.
With current inflation rates at 3.7% and the Federal Reserves continued efforts to dampen inflation down to the 2% mark, the Vermont housing market appears to be a solid investment based on the anticipated continued rise in housing value.
When Other’s Fly it May be Time to Buy
Finding a real estate deal in Vermont has become increasingly difficult due to the tailwinds that buyers are facing. A combination of inflation, increased interest rates and lack of inventory have limited the opportunities for those looking to jump into the ever-appreciating Vermont housing market. However, there still remain deals to be had if prospectors are willing to take on additional risk.
The preceding content should only be considered general information and shall not constitute as legal advice. Readers interested in purchasing Vermont real estate should contact a Vermont licensed attorney for specific legal advice.