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Prices, inventory hurt home buyers in first-time market
by Bruce Edwards
Herald Staff

You could call it a case of good news and not so good news.

The good news is that home sales nationwide and in Vermont remain robust. The not so good news is that it's getting more difficult for a first-time-home buyer to find or afford that first home of their own.

The problem, according to the head of the Vermont Housing Finance Agency, is one of affordability and limited inventory.

"If you don't have the resources or income that's not good news," said VHFA executive director Sarah Carpenter. "Housing supply and housing prices are still a problem."

Carpenter said the median price for a home in Vermont is $160,000 while the median income is $43,000.
She said someone with the median income can only afford a home in the $110,000 range.

"There's not a lot of homes at $110,000 and there's not even a lot of homes at $160,000, so that's our concern," said Carpenter, whose agency promotes and finances affordable housing. "Even if interest rates go up some, we're not going to see prices drop."

According to the VHFA Web site, the median price of a primary residence sold in Rutland County was $124,900 in 2003 while the statewide median price was $145,950. That means half the homes sold for more than the median price while half sold for less. A primary residence includes single-family, condominium and mobile homes.

Carpenter said lack of affordable housing can be blamed in part on the lack of new starter-home construction.

She said the median cost of a new home in the state was $265,000 in 2003.

"We're not building homes in the $150-$160,000 range," she said. "We're not even building them in the $200 (thousand) range."

Carpenter said the cost of development and the opportunities for development, coupled with a hot housing market, make it more attractive for builders to focus on high-end homes where the profit margin is greater.

She said related to that is an increase in vacation and second home construction, which while good for the economy, also puts a pinch on housing for low- and moderate income Vermonters.

Carpenter said she has also noticed a trend of out-of-state buyers purchasing single-family homes as second homes, putting a further squeeze on the housing market.

Although the housing market is tight, especially for first-time buyers, VHFA made $67.4 million in loans that helped finance 723 homes in fiscal 2004 — a jump of 26 percent from the previous year.

Home sales in the United States set a record last year. And while home sales in Vermont mirrored that trend, the number $100,000 or under starter homes are harder to come by.

Realtor Marlene Finger agrees with the Carpenter's assessment that in a hot housing market first-time home buyers are having a more difficult time finding a home they can afford.

"The market is tough for first-time home buyers," said Finger, a Realtor with Re/Max Town and Country and president of the Rutland County Board of Realtors. "What they can afford usually needs a lot of work."

The homes on the market in the $100,000 and under range, go quickly unless they need too much work, Finger said.

She added that even homes in the $125,000 to $150,000 range go quickly and those are in short supply as well.

Finger said that that there are currently 89 properties in Rutland County listed for $150,000 and under. Of that number, there were 38 properties listed at $100,000 or under, 21 properties between $101,000 and $124,900 and 30 properties between $125,000 and $150,000.

She said that the under $100,000 properties are camps, mobile homes and single-family homes. She said many are considered "handyman specials."

As a rule of thumb, she said more affordable homes can be found in rural areas of the county, like Fair Haven, Poultney and Middletown Springs.

" The more rural the area the more house you can buy for the money but that doesn't always hold true," Finger said. The drawback, she said, is that those areas are too remote for some would-be buyers.

Contact Bruce Edwards at bruce.edwards@rutlandherald.com.