Home sale prices rise in 2020, fueled by strong second half of the year

By: Mia Watson
2/8/2021

Home sale prices in Vermont continued to rise in 2020 amidst the impact of the coronavirus pandemic. The median primary (non-vacation) home sold for $246,000, according to Vermont Property Transfer Tax records.

Home prices rose 6.9% statewide from 2019, with most of the growth in prices occurring during the second half of the year. 2020 had the largest single year increase in median primary home prices since before the last recession, although it only slightly exceeds the 6.5% increase seen from 2018 to 2019.  Statewide in 2020, the median single family non-vacation home sold for $255,000, the median condominium sold for $222,000 and the median mobile home with land sold for $100,000.

The median number of days homes were listed dropped sharply from May to August, a strong indicator of demand. Data from Redfin also indicates that the number of active listings remained unusually low, with roughly 20% fewer active listings than the prior year throughout the summer and fall months.  This constrained supply of homes for sale can fuel an increase in home prices.

Overall, the pandemic depressed the number of primary home sales in the first half of the year when homes could not be easily sold due to COVID restrictions. Home sales increased in the second half of the year to 7,985 total non-vacation home sales throughout 2020. (This is fewer than the 8,239 sales recorded in 2019, although there is typically some lag in reported sales*).

Publicly available property tax data does not indicate whether these homes were sold to households moving into Vermont to escape the pandemic, as many have speculated. However, research from the National Association of Realtors using postal change of address data suggests that migration to and from the state during the pandemic was essentially flat.  

The continued impact of the pandemic on Vermont’s housing market remains unclear. The U.S. economy experienced historic losses in productivity and jobs in 2020, which would usually depress home prices. Housing experts suggest that the unexpected increase in home prices seen in most parts of the country was caused by very low mortgage interest rates combined with fewer homes for sale and greater demand to move among some buyers. Many potential sellers may be continuing to delay home moves to avoid risking infection or delaying downsizing while temporarily housing additional family members during the pandemic. Meanwhile, households are shifting their spending patterns to allocate more towards housing, especially if more space is needed to work from home. There is also anecdotal evidence of increasing second-home purchases by wealthier households. 

These trends may weaken over the next year as the economy begins to open back up and the number of homes on the market normalizes. However, Vermont home prices are very likely to continue to increase regardless of greater economic conditions, as they barely declined in most parts of the state during the last recession.

The increase in prices has made it even more difficult for moderate income, first-time buyers to become homeowners. Vermont Housing Finance Agency’s homeownership programs can help make it easier for homebuyers to purchase by offering low fixed rates, 0% down payment options, down payment and closing cost assistance up to $5,000 and annual federal income tax credit for borrowers when they choose a Mortgage Credit Certificate (MCC).

*VHFA intends to update home sale prices on housingdata.org in April to account for any delays in reported sales through the end of 2020.

For emergency rental assistance, please contact Vermont State Housing Authority. Emergency mortgage assistance information is not yet available, but please check back again soon.