Manchester Vermont Real Estate Blog

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.