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Housing shows signs of stabilizing

RUTLAND—Vermont's booming housing market appears to be stabilizing.

Real estate agents and builders said the market is still going strong after a boom that started in 2001 but is beginning to level off. Houses are staying on the market longer and prices are stabilizing.

"The 10, 11 and 12 percent annual increases in the price of housing wasn't stable," said Maura Collins, policy and planning coordinator for Vermont Housing Finance Agency. "We've been expecting a change for some time."

The changes are caused by the construction of more housing rather than inflated pricing, she said.

"So many people have reported that it's a bubble, but it's not a bubble," Collins said. "What we've seen is that even with an increase in housing stock, demand has stayed high."

Experts said Vermont's housing market remains strong because of a lack of affordable housing.

The number of homes costing $500,000 to $1 million have increased while the properties in the range of $150,000 to $250,000 have stayed the same.

"It's frustrating from my standpoint," said Robert Hill, head of the Vermont Association of Realtors. "We need housing at the other end too, but the cost of developing those units is too high for home builders."

The profit developers make on million dollar homes isn't much different than moderately-priced homes, according to Joe Sinagra of the Home Builders and Remodelers Association of Northern Vermont.

Affordable houses tend to be "easier to build" but rising land prices have made it difficult for builders to construct affordable housing.

"You can't build a $150,000 home if the land it's on costs $90,000 to buy," he said. "In the last nine years, the price of land in the state has increased 225 percent."

The average cost to build a house has risen from $80 per square foot in 2001 to $145.

Most of the increase is caused by rising land prices, Sinagra said.