VHFA News

Vermont home prices continued to climb in the first six months of 2019, based on the latest data from Vermont Property Transfer tax records. The median home sold for $219,500, a roughly 2% increase from 2018.

Sale prices increased for every home type in Vermont during the last six months. The median single family home sold for $226,500, the median condominium sold for $209,950, and the median mobile home with land sold for $80,000.

Nationally, home sales have been uneven for the past year and a half. The number of national home sales in every month of 2018 and the first half of 2019 were lower than the previous year. During the same time, prices rose by 4.3%, with the median national home sale price reaching $285,700 in June. Economists blamed the slowdown in sales on the rising prices and an overall lack of inventory, particularly in more affordable homes. However, July saw a higher than predicated number of home sales in the U.S., largely due to a new reduction in mortgage rates resulting from the Fed’s interest rate cuts. It is too soon to say whether this national increase in sales will last, but a prolonged slowdown in new construction is likely to continue to contribute to the general lack of available homes for sale.

Vermont’s housing market has always been different than the rest of the country, with fewer highs and lows in sales and price trends. While home sales slumped nationally, the number of Vermont homes sold increased from 2017 to 2018. Preliminary reports from Multiple Listing Service (MLS) suggest that 2019 sale numbers are similar to 2018 sales, though we won’t know if there will be a boost related to the new mortgage rate cuts until later in the year. However, like the rest of the country, Vermont home prices are continuing to climb, with home prices rising every year since 2014, at an average rate of 2.7%.

This sustained increase in prices continues to be concerning for our state, as incomes for low and middle-income households have grown very slowly and even declined in some years over the past decade. To afford the current median home price of $219,500, a household would need to earn at least $62,810, yet the median household income in Vermont is just $57,808. 

This imbalance between incomes and home prices can make it difficult to save enough to purchase a home, especially for first-time buyers. Fortunately, Vermont Housing Finance Agency’s homeownership programs can help young homebuyers, including down payment and closing cost assistance up to $5,000.

The economic recovery is being felt among many households, with home equity wealth rising and more Millennials becoming homeowners. However, gains in homeownership have not been equally distributed among all Americans. Homeownership among black households has risen at a slower pace any other group, and the rate is currently the lowest it has been since 1970.

While America’s homeownership rate is still well below pre-Recession levels, homeownership has been generally increasing since it hit a multi-decade low point in 2016. From 2016 to the end of 2018, homeownership among white households grew by 1.1 percent, to 73 percent overall, while black homeownership increased by only 0.7 percent, to 42.9 percent overall. All other racial groups saw higher increases in homeownership than black households.

This disparity between black and white homeownership is even more pronounced in Vermont. 71 percent of white Vermonters are homeowners, while only 22 percent of black Vermonters own their own home. Both in Vermont and nationwide, black households trail all other racial groups in homeownership rates.

The slow gains in homeownership among black households is discouraging, particularly since national data shows black households lost much more wealth than white families during the Recession. Prior to the Recession, many lenders disproportionately targeted black borrowers for subprime mortgages nationwide. Black households were more likely to have a greater portion of their wealth invested in their homes, which combined to hit these households harder when the market collapsed. Homes in majority-black neighborhoods lost more value during the housing market collapse, with even high-income black neighborhoods 14 times more likely to have experienced falling home prices than other areas.

The homeownership rate among black households is currently the lowest it has been since at least 1970, when the Census Bureau began to keep reliable records. The Fair Housing Act (FHA), which protects people from discrimination when buying a home or applying for a mortgage, was passed in 1968. All the gains in black homeownership since that time were erased during the Great Recession.

As mortgage interest rates remain low and the employment rate continues to increase, we would expect homeownership rates to rise among all groups. However, Vermont home prices are currently too high for many middle-income households to afford. The next recession could erase even the modest gains in homeownership Vermont has seen so far.

What can be done to improve homeownership rates, especially among black households? More and more states and cities are investing in alternative solutions to homeownership, such as Vermont’s robust shared equity programs available through the Neighborworks Alliance of Vermont. In addition, increased funding for homeownership programs that lend to underserved households can help young, low and moderate-income households afford their first home. VHFA’s ASSIST program offers up to $5,000 in down payment assistance, which can often be one of the most significant obstacles to homeownership, and is funded by state tax credits.