With stunning lake views, easy access to world class ski resorts, a pedestrian-friendly downtown bustling with shops and restaurants, and the vibrancy of a college town, Burlington, Vermont has long been a sought-after destination for homebuyers. As the COVID-19 pandemic has opened the possibilities of working remotely, more and more people are looking to buy a house in Vermont’s largest city, causing a huge swell in demand in an area that was already flush with prospective buyers.
“Burlington has seen an influx of people even prior to COVID,” Claire Kavenaugh, a local eXp Realty agent said. “COVID kind of ramped things up even more. It has been very competitive for two plus years now.”
Buyers from across the country have set their sights on Burlington.
“We have had a big influx of buyers coming from California, Colorado, Florida, New York, New Jersey, really just all over and they are all looking for that kind of quintessential Vermont property,” MaryPat Palmer a local Sotheby’s agent said.
While all of these out of buyers are searching for their ideal Vermont home, their motivations in choosing this metro area are diverse. Some buyers simply picked the area for its New England charm, but local Keller Williams agent Andrew Mannix has noticed a lot of people using the opportunity to work remotely as a way to move closer to home.
For lenders, the past few months have been placed a strong emphasis on purchase originations. In light of this, HousingWire sat down with Saleforce’s Global Head for Mortgage and Lending, Geoff Green, to learn how lenders can better turbocharge mortgage for today’s home buyers.
Presented by: Salesforce
“Vermont historically has failed to provide employment opportunity for folks when they graduate high school or college,” Mannix said. “So, we’re a very older demographic with the 20-somethings and 30 somethings venturing elsewhere for more job opportunities. The work from home revolution has provided the opportunity for a lot of quote unquote out of state buyers that are actually born and raised in Vermont to now have the ability to move back with a salary where they can afford the cost of living here and keep their job.”
Other agents, like Kavenaugh, have found that many of their out of state clients are looking to escape challenging environmental conditions exacerbated by climate change.
“A lot of my buyers are moving from California and for a lot of these folks, fires are a big reason they are coming this way,” Kavenaugh said.
This influx of out of state buyers, regardless of their status as native Vermonters, has of course increased demand, which, in turn has driven up home prices. In September 2021, Burlington’s median home sale price was $425,000, a 14.9% increase from a year ago, according to a Redfin report. In addition, the report found that over half (54.3%) of homes sold above list price, a 17.1% increase from a year ago. These rapidly rising prices have made an already challenging market for local buyers even more frustrating, similar to the situation in another New England metro.
“There’s definitely still a lot of regular home buyers who have been living and working here in Vermont forever and are just being kind of edged out of the market because of people coming from out of state with more cash to spend,” Kavenaugh said.
Few homes for sale
Exacerbating the issue of soaring demand is an incredibly low level of inventory.
“At the moment we have about four weeks of inventory,” Mannix said. “A lot of my potential sellers that have been thinking about selling but aren’t quite ready to. [They] are afraid to enter the market because they have no idea where they will go if they sell their home. Inventory was already pretty low pre-pandemic, but it has just gotten worse and worse.”
The high level of demand and ever waning inventory has caused the median number of a days a home sits on the market to drop quite a bit. According to Redfin, the median number of days a home in Burlington sat on the market for in September was just eight. For a city that typically sees a slowdown at the start of fall, these quick turnarounds marked a 76.1% year-over-year decrease in median number of days on the market.
Despite rising prices and short stays on the market, homes in Burlington are still generating plenty of interest, with many agents reporting multiple instances of homes gaining anywhere from 10 to 20 offers.
“In the past it wasn’t uncommon to see homes at entry level price points generate multiple offers, but what is uncommon about this market is that we are seeing this level of demand across all price points,” Steve Lipkin, a local Coldwell Banker agent, said.
When considering putting an offer on a home in the metro, agents are warning buyers that to even be considered they have to be willing to go well over the asking price and potentially drop a few contingencies. Such challenging market conditions have caused some buyer fatigue and frustration. After losing out on multiple properties, many buyers are turning to new construction.
“People have nowhere to go, so they are just building, building, building, and people are buying them up” Kavenaugh said. “Building has become more expensive, but people are willing to pay the prices because it guarantees them a home. The reservation agreement might be a bit more than a pre-existing home, but they are paying a price similar to what they would end up paying in a bidding war, expect they know they are getting the home.”
Although building has started to speed up due to an improvement on the supply side, Mannix cited an important missed opportunity that would drastically increase the city’s housing inventory.
“City Place is currently a huge hole in the ground,” Mannix said. “It used to be an old mall that they tore down and it was going to be turned into condos and apartments. Originally, something like a 14-story building was proposed, which is very out of character for Burlington and people were up in arms about it and then they just hit the brakes. Nothing has really happened there for a few years.”
Even while dealing with low inventory, many of the agents HousingWire interviewed said that the past few months have been some of their busiest ever. However, RE/MAX’s September housing report found that Burlington had the second largest year-over-year decrease in the number of closed transactions, dropping from 363 in September 2020 to 294 a year later.
While Mannix found this statistic interesting it did not concern him. “Without listing homes you aren’t going to get closings and we don’t have that many listings right now,” he said.
As temperatures begin to plunge as winter approaches, local agents believe that things will slow down further, as they typically do in a market many described as “very seasonal.” However, with such high demand and continued interest from out of state buyers, they feel things will pick up again in the spring.
“As we get to spring I think we are going to see continued strong demand,” Lipkin said. “Burlington is a very desirable place to live. I don’t think we will see a lot of new construction over the winter changing the inventory situation, so as long as interest rates remain low I think things will continue to grow, but maybe at a slightly slower pace.”