Manchester Vermont Real Estate Blog

I’ve been a real estate agent in Manchester, Vermont since 2003. I’ve had the opportunity to work with many buyers and sellers. I think it is safe to say that all of the great people I’ve had a chance to work with share the love and admiration I feel for this wonderful area.

The Manchester Vermont Real Estate Blog is an opportunity for me to share what I know about our area in general and real estate in particular. The main focus will be insights and statistical analysis of our local real estate market. From time to time the focus will shift to other aspects of our local community, after all real estate does not exist in a vacuum.

If you are reading this, you most likely already know something about our area. However, for those that don’t I will provide a brief overview. Manchester is a small town of approximately 4,000 residents. The larger town of Bennington sits approximately 20 miles south of us and Rutland is approximately 30 miles to the north. For the towns immediately surrounding Manchester, Manchester plays the role of commercial and cultural center.

We have many dining and lodging options, retail/outlet businesses, and an exceedingly large and varied offering of cultural activities considering our size. We are close to both the Bromley and Stratton ski areas. In addition to skiing we offer many opportunities for outdoor recreation including cross country skiing, snow shoeing, and snow mobiling in the winter, and golf, fishing, and hiking in the summer. And of course we are renowned for our amazing fall foliage.

Our local schools are excellent. Burr and Burton Academy, a private high school, is the area’s defacto public high school. It offers a uniquely excellent educational opportunity for our local students and is a drawing card for many families relocating to our area.

Getting back to real estate, we service approximately a dozen towns including Manchester. This will be the area that is predominately covered in this blog. The market is a mix of primary and second homes, and it is not uncommon for a house that was a second home to become a primary home and vice versa. The second home owner may be a family looking for a ski house or a retired couple who want to get away from the hot Florida summers. Most people interested in vacation homes want privacy and views, and we have plenty of both. But there are also those who like the convenience that a condominium offers and we’ve got them covered as well.

What we don’t have is cookie cutter subdivisions. Our housing stock is varied and unique with farmhouses, log homes, chalets, contemporaries, Victorians, colonials and capes as well as a few that defy categorization. It makes the job of the real estate agent more difficult but also that much more interesting. So whatever it is that floats your boat, chances are we’ve got what you are looking for.

Well I know my readers are busy, as am I. So that is it for now. In my next installment I will be offering the year in review for 2009. So please check back in a couple of days, and feel free to share your comments and questions with me and the other readers that I hope are out there.

Buyers and sellers are usually concerned about what their expenses will be at closing. In Vermont both parties will have their own legal representation at closing. Each attorney will advise their respective client(s) regarding closing costs. One of the areas that will surely be part of the discussion is taxes.

As in most states, Vermont has its own set of potential tax liabilities that are specific to our state. Some of these tax liabilities will be the responsibility of the buyer and some the seller. Not all of them will apply in every real estate transaction. Here is a brief description of the taxes most commonly associated with Vermont real estate transactions.

The Vermont Property Transfer Tax is often jokingly referred to as the welcome to Vermont tax. It is a tax that is imposed on the buyer. It is collected at closing and is paid when the deed is recorded with the town clerk. The tax rate is 1.25% of the sale price although it may be lower on the purchase of a primary home or on property that is enrolled in the current use program. There are also several exemptions to the transfer tax. For more detailed information on this tax, click here or call the Vermont Tax Department at 802-828-2542.

The Vermont Land Gains Tax was created to deter land speculation in our state. It only applies to the sale of land or in the case of a house or building to the portion of the sale price attributable to the land’s value. The amount of the tax is variable depending on the amount of time the seller has owned the property and the size of their capital gain. The tax rate ranges from as high as 80% down to as low as 5% and phases out completely on property held longer than 6 years. There are also exemptions if the property is a primary residence or is going to be used as a primary residence within a designated period of time. The tax is the responsibility of the seller unless otherwise agreed to by both parties. For more detailed information on this tax, click here or call the Vermont Tax Department at 802-828-2542.

The Vermont Real Estate Withholding Tax applies when the seller is a non-resident of Vermont. In that situation 2.5% of the sale price is withheld from the seller’s proceeds at closing and forwarded to the state as a partial payment of the potential income tax the seller will owe on the presumed capital gain. The seller can avoid or reduce this withholding if they are able to demonstrate prior to closing that they will not owe any taxes or will owe a lesser amount. The seller’s attorney will be able to help them obtain the necessary certificate from the state in these instances. For more detailed information on this tax, click here or call the Vermont Tax Department at 802-828-2542.

There will also be a proration of prepaid property taxes at the closing with the buyer reimbursing the seller. However a detailed discussion of Vermont’s state wide property tax will have to be left for a future post.

For the week ending February 21, 2010 the following activity took place:

New Listings – 12 new listings came on the market last week, 11 houses and 1 condo, ranging in price from $169,000 to $849,900.

Price Reductions – 2 houses were reduced in price, by 9.7% and 10.5% respectively.

Under Contract – 6 houses went under contract last week ranging in price from $135,000 to $599,000.

Sold – 1 house sold last week, selling for 74% of asking price.

The trend over the past two weeks has been more properties coming on the market than the market can absorb. For the past 2 weeks 28 new properties have come on the market while 11 have gone under contract. When supply and demand continue to be out of equilibrium like this it usually will result in further downward pressure on prices as sellers compete for the buyers who are out there.

I am committing to my readers that each Monday I will provide a recap of the previous week’s real estate market activity. I have put it on my calendar as a recurring appointment, now I just have to follow through. Please hold me to it, if you look for it and it’s not there.

For the week ending February 14, 2010 the following activity took place:

New Listings – 16 new listings came on the market last week, 12 houses and 4 condos, ranging in price from $116,000 to $2.6 million.

Price Reductions – 4 houses were reduced in price. The reductions ranged from 0.4% to 7.4%.

Under Contract – 4 houses and 1 condo went under contract last week. There is good distribution in the listing prices of these 5 properties with 1 in the $200,000 - $300,000 range, 2 in the $300,000 - $400,000 range, 1 in the $600,000 - $700,000 range and 1 over $1 million.

Sold – 2 houses and 1 condo sold last week. All three properties were in the $200,000 - $300,000 price range. On average the three properties sold at 94% of asking price.

It was good to see 3 closings and 5 contracts being written last week, but unfortunately the rate of new properties coming on the market is still outpacing the rate at which they are being absorbed.

For families who are thinking of relocating to our area on a permanent basis, one of the great selling points for kids in the winter time is JISP. JISP stands for Junior Instructional Snowsports Program. The program is run by the wonderful people at the Bromley Outing Club (BOC). It was started back in 1951 to give local school children an inexpensive way to learn to ski and snowboard.

One day each week (the day varies depending on school district) from early January to late March, students are dismissed from school around noon so that they can go up to Bromley for an afternoon of skiing or riding. The students receive 2 hours of group instruction from local volunteer instructors.

JISP is open to students in grades 3 – 12. For the kids who are too young for JISP Bromley offers KAP, which is similar to JISP except that the kids are taught by Bromley’s professional instructors.

In addition to a weekday afternoon, the kids who participate in the program can use their passes at Bromley on most Sunday afternoons and on two designated Sundays at Stratton. The program is very reasonably priced. There are also opportunities for equipment rental or purchase, also very reasonably priced.

This winter for the first time I have had the opportunity to volunteer as a JISP ski instructor. Every Tuesday afternoon I am on the mountain with my daughter and a group of 8 other students. The mountain is mostly empty besides the students and instructors and we get a lot of runs in. It has been a very rewarding experience and I will definitely do it again next year.

Over the years our area has produced some world class skiers and snowboarders. When you are watching the Winter Olympics over the next two weeks imagine that some of these amazing athletes may have gotten their start in JISP.

By all measures 2009 was a difficult year for the local real estate market. Market conditions were characterized by a substantial oversupply of inventory compared to demand. This resulted in a large drop in average and median home prices in the area, compared to 2008. The number of transactions was level with a year ago, but off substantially from where it had been earlier in the decade.

In assessing the local market conditions I have looked at all the house and condominium transactions that have been reported through the Vermont mls (VREIN) for the towns of Manchester and Dorset, Arlington and Sunderland to the south, Danby, Rupert and Pawlet to the north, and Winhall, Londonderry and Peru to the east for the years 2002 to 2009.

In these 10 towns the average home price for 2009 was $326,120, which was down 27% from the average price of $444,879 in 2008. Similarly the median home price in the area was down 29%, from $325,000 in 2008 to $231,250 in 2009. The last time that we saw the average and median prices in our area this low was back in 2003/2004.

The total number of transactions in these 10 towns last year was 190 which was off slightly from the year before (199 in 2008) but is down substantially from the peak years of 2002 to 2005 when sales volume ranged between 360 to 380 transactions per year.

For comparison sake, the current number of active listings in these 10 towns as of today is 523. That equates to a 2.75 year supply of available housing based on last year’s sales volume.

The spread between buyers and sellers was wider last year than at any time in recent history. Initial offers from buyers often came in at 70% (or less) of asking price. Because the opening spread between buyers and sellers was so large, even when both sides were willing to negotiate it was often difficult to reach a sale price that was acceptable to both parties. This was particularly true in the first half of 2009 before sellers began to realize the extent to which the market had declined. In the second half of the year, those sellers who were motivated enough began to accept offers substantially below their asking price.

For the year the ratio between selling price and asking price was 87%. This confirms the growing spread between buyers and sellers. In comparison the ratio between selling and asking price was at 95% from 2002 to 2004, 94% from 2005 to 2007, and 92% in 2008

What conclusions can be drawn from this information? There is a large oversupply of real estate currently on the market. It is a buyer’s market and buyers are determining the current value of real estate. Sellers (and their agents) for the most part are still pricing their properties too high given current realities. Sales prices have returned to where they were back in 2003 and 2004 and most if not all of the excesses that resulted from the irresponsible easy money policies of the early and mid decade have worked their way out of the market. Hopefully this will pave the way for a return to a more normal, rational real estate market which in turn will give more buyers the confidence to return to the market. Only time will tell.

If you are into statistics and would like to see more information on the market over the past eight years, please give us a call or send us an e-mail.