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Housing prices continue to climb in Chittenden County, state in 2004
by Leslie Wright
Free Press Staff Writer

Chittenden County housing prices continued on their upward trajectory in 2004, outstripping gains in family income for the year and making houses less affordable, according to a report released Monday.

The same trends in prices and family income are true for the state as a whole, but Chittenden County prices climbed higher and income grew less, according to a report by South Burlington real estate analysts Allen & Brooks.

The median price for a home in Chittenden County was $234,000 in 2004, an 11.4 percent increase over 2003 when the median price was $210,000. Median means half of the homes are priced higher and half are lower.

In comparison, median family income rose just 4.8 percent for the year to $72,000.

Last year's prices contributed to a trend that has seen the average annual house price increase 8.1 percent since 1996.

For the entire state, the median price of homes was $175,000 in 2004 compared to $160,000 the year before, a 9.4 percent increase. Median family income for 2004 was $58,600, a 5.2 percent increase over 2003.

"We were surprised, really, at how high inflation was in 2004. It exceeded our expectations," said Steve Allen, a principal of the firm.

Allen anticipates housing prices will continue to rise in 2005, but the rise will be tempered somewhat by rising interest rates on mortgages. Interest rates stand at about 6 percent for an 30-year fixed rate mortgage.

"I look for 2005 to continue this trend of eroded housing affordability," Allen said.

Sarah Carpenter, executive director of the Vermont Housing Finance Agency, sees a crisis in affordable housing in the state. VHFA helps first-time and low- to moderate-income buyers purchase homes with low-interest mortgages. While those who own a home gain as the value of their property grows, those trying to get into the market have a harder time, Carpenter said.

Rising prices coupled with rising interest rates means the hurdle gets higher for first-time home buyers. On top of that competition for houses below the median price is stiff as more "empty-nesters" sell larger homes as their children move out and buy smaller ones, and people look for second homes costing less than the median price, Carpenter said.

"I wish I had a crystal ball. It's clearly going to plateau out at the upper end," Carpenter said of home prices. "The problem we have is there's still so little stock at the lower end."

Contact Leslie Wright at 660-1841 or lwright@bfp.burlingtonfreepress.com.