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Out of all 50 states, Vermont house prices soared the highest with new data revealing they jumped 12.8 percent in the last year — nearly double the national average.
According to the Federal Housing Finance Agency (FHFA), house prices across the US rose by an average of 6.6 per cent between Q1 of last year and this year, despite stubbornly high national mortgage rates, and continued fallout from the Covid-19 pandemic. Since the start of the year, house prices have increased 1.1 percent.
The highest jumps in housing prices are predominantely all on the east coast — with New Jersey, New York, Delaware all seeing double-digit increases in property appreciation.
Behind Vermont, the four states with the highest annual appreciation were New Jersey, with 11.6 percent; New York, 10.9 percent; Delaware, 10.7 per cent; and Wisconsin, with an increase of 9.9 percent.
Only District of Columbia, which technically isn’t a state, saw a decline, with house prices dropping -1.5 percent on average.
At the opposite end of the scale, southern states including Louisiana and Missouri saw the lowest increases in property value, with 2.2 percent, and 2.7 percent, respectively. Texas and North Dakota both saw low increase, with 3.3 percent each, while West Virginia and Colorado both saw an increase 3.6 percent
Low housing inventory is contributing to the high prices across the US, said FHFA’s Anju Vajja, in a statement.
Out of all 50 states, Vermont has seen the highest increase in home appreciation in the country over the past year – 12.8 percent – according to the FHFA.
Great news perhaps, for those already with property in the Green Mountain State, but realtors say that a lack of new inventory and seller hesitancy are actually harming Vermont’s property market – and prospective homeowners are losing out.
So what is it that is driving up house prices in Vermont?
Vermont consistently ranks among the safest states in the US, taking pole position in 2024 data from World Population Review. The state has the second smallest population in the nation (around 650,000) and is known for its natural beauty.
Historically, certain aspects of the home sale market follow a seasonal cycle in Vermont, according to the Vermont Housing Finance Agency. Most sales take place in the warmer spring and summer months.
Home prices typically increase the most during this period, with harsh winter conditions making it more challenging and less desirable to sell property.
However the median sales price of primary homes sold in Vermont in the first half of 2023 reached a value of $315,000. Even then the VHFA noted that the state was experiencing “strong demand among homebuyers relative to the inventory of homes for sale”.
Dan Titus, real estate broker and co-owner of Flex Realty in Vermont, says that the lack of inventory in the state, restrictions on construction and state property tax, means it is unlikely that a climb down on property price will be happening any time soon.
“It’s a big time seller’s market right now, and it has been for a long time but it’s even worse now for sure,” he told The Independent. “There’s a lack of housing inventory throughout the whole state, which is only driving prices up”.
“Homes just aren’t being built fast enough to keep up with the demand, and a lot of that has to do with Vermont because it’s tough for developers to build in Vermont. There’s a lot of restrictions and red tape you have to get through in order to develop around here.
“Then our property taxes are some of the highest I believe and, and the country as well. It’s not a cheap place to live.”
All this, Mr Titus said, is coupled with a combination of “out-of-staters” and “empty-nesters” buying or keeping property and pricing out young, native Vermonters. Mr Titus said he had noted a significant uptick during the pandemic.
“To an out-of-state $100,000 for a home may not be a lot from where they’re from, but here in Vermont, that’s quite a hefty price tag and it’s making it difficult for folks to compete with those out of state buyers,” he told The Independent.
“There’s certainly some of that going on, not as much as what we were seeing during Covid… in the Covid years there was a huge influx of people scooping up homes from out of state. But it is still happening.”
In addition, the climbing prices discouraged current homeowners, even parents whose children no longer lived at home, from selling their properties.
“It’s great if you bought a home 10 years ago, but at the same time, it’s also created a problem where people who are empty-nesters are in large home, their kids have moved out and they want to downsize, but they’re in a low interest loan or something like that or the cost to buy a smaller home doesn’t make sense versus just staying and staying where they’re at,” he said.
He told The Independent: “It’s good if you already own a home, sure. But obviously there’s really no first-time homes for first-time homebuyers. Those are almost gone.”