Dig into what makes the market tick.
Market Update for you! Post Election Lull
Trying to get a grasp on what this market is doing is tough, but I know this much remains true here in Vermont:
-
Demand remains high - We cannot build property in Vermont quick enough to stave the demand
-
Interest Rates continue to stay level, despite news reports indicating that the Fed continuously cuts rates
-
Unfortunately the Fed doesn't have a direct correlation with Mortgage-Backed Securities, so it's important to keep tabs on what the rates are actually doing versus what is being reported.
-
-
We're in for another hectic year ahead - Sellers will likely remain in control, regardless of the rates, but this doesn't mean you can't buy a property. In fact, if you're currently looking to buy, the pool of people currently shopping diminishes exponentially this time of year, opening up bargaining power for buyers. Sellers that do not have a choice but to release their assets will continue to enter the market. If you had a pre-approval in the past, I recommend getting this updated (even if nothing has changed), given these expire after just 90 days,
The election always causes a strange lull in economic activity, and oddly enough, it's been very quiet. Curious to see what happens with the economy once we get a couple weeks past New Years Day.
Market Update - Things are Moving, but Certainly Cooled Off
In typical seasonal fashion, we're seeing a rise in inventory, but buyer activity is still out there! It's common to see this in this area between now and around mid-February, where we anticipate what I refer to as "the thaw".
Interest rates briefly dropped down but have since spiked back up. Election years always have strange effects on economic performance.
It's still safe to sell right now, don't get me wrong, but strategic pricing is pivotal in this market. It's best to analyze competition to see how to price your home to ensure you become a target for prospective buyers. Buyers, you may have an easier time adding in contingencies, negotiating Seller credits to cut down on your out of pocket closings costs, or perhaps process a thought to pair up with your offer. If you've been struggling in this market to purchase a home, this is the time to take advantage. Based on statistical evidence, we'll be entering another Seller's market. If the interest rates drop, there will be more Buyers and an increase in competition. Remember, you can always refinance. Marry the home but date your rate!
Market Update - Things Slow Way Down.
Very interesting end to Q4 for sure. September was arguably my busiest month, and characteristically, that's not usually the case. I received feedback from several other agents that are full time agents that expressed the same observation.
​
A few things happened that might explain this. For starters, the election always plays a strangely volatile role in the real estate market. Why that is, I don't think anyone truly knows. Secondly, interest rates began to dip, which typically happens in the cooler months. Lastly, we saw a big surge in inventory.
​
Right now, we're seeing things slow way down as Listing and Purchase activity do their seasonal thing.
​
Overall, if you're looking to purchase a property right now, you're up against a much thinner pool of buyers, and can call more shots in the purchase process, in some cases. Chittenden County remains a hot zone, but that's usually the case regardless. We are seeing homes spending more time on the market.
​
If you plan to list, this is a great time to analyze competition to stay ahead of others, observe Active Under Contract and Pending statuses to see where similar properties priced themselves and how long they stayed on the market.
This is a crucial consideration that most miss. Lastly, strategically price your property based on your competition, and market value, of course, so you can get both the best price tag as well as the least number of contingencies to get your home under contract the fastest. Marketing obviously plays a big role in this as well.
Current Market Conditions 7/30/24
Current Market Conditions - I've been watching the Big Picture economy closely, and we're starting to see the scales tip. Homes are sitting on the market for a little bit longer, buyers are able to be a bit pickier with their choices, and Contingencies are making a comeback. Does this apply in Vermont? It can certainly come into play, as there are currently 88 properties active in the market along the I-89 Corridor from Burlington to Highgate, and including the Islands. Though this isn't nearly enough, it is certainly more than it has been in years past.
Rentals - This may not apply to you, but putting a plug in for two rentals that I have if you know anyone trying to transition into Vermont.
-
423 East Alburgh Road, Alburgh Vermont - click here.​
-
This is a 4-bedroom home, but the current owner wants to use the upstairs for personal storage. Perhaps would consider more tenants if storage can be solved. $2,500/mo as a one bedroom, one bath. Lake front. $2,500 security deposit. No pets. Comes furnished​
2. 202 Abani Drive, Hinesburg Vermont - click here.
-
This is a 3-bedroom, 3-bathroom home, also furnished, beautiful sweeping views of the Adirondacks. No pets again but comes fully furnished. $3,900/month, $3,900 security deposit.
Mortgage Rates - No sign of the rates going up or going down, though now that we are seeing the market start to cool off, perhaps this will come down the pike. No market indicators lead me to believe that the rates will be coming down significantly any time soon. Nationally, we're seeing some cooling off, so if that happens significantly across the country, we should see the rates taper off a bit to encourage a healthier market for both Buyers and Sellers. If this happens, Vermont will have a different situation, given we're still in a Seller's Market. This will lead to a faster-pace market, similar to COVID, while everyone re-arranges their current mortgage debt loads, or perhaps utilizes equity to springboard into their next upsize or downsize.
Aaron's Thoughts on Interest Rates
We're all waiting for the shoe to drop, for the rates to come back down, and to get a sense of inventory back into the marketplace. I was taking a shower a couple days ago and had a thought:
How do these mortgage lenders make their money?
I'm not sure if you knew this, but I used to be a Mortgage Loan Processor with NorthCountry Federal Credit Union. This career was ultimately what led me into Real Estate to begin with. The answer to the above question is simple. One-time fees when you take out a mortgage, and interest paid. Take a look at this graph from an Amortization Calculator I found online:
​
​
​
The light green line represents the interest paid during the loan term. You see how it shoots straight up right in the beginning of the loan term, and the principal paid takes up until about 2044 to really start getting paid down? That's how they make their money.
My prediction? Once we put a few more years under our belts (3-5), the interest rate will drop to incentivize both one-time fees as well restarting this amortization schedule so that interest collected up front restarts and banks can shock their revenues once again!
Aaron's Take on Income
I share this article due to the nature of it, showing exactly how much has changed in the past few years and how drastic it has become!
​
Have wages followed suit? Of course not. There are creative programs out there. Being a Full-Time agent out in the field, I have many resources available to me to help anyone navigating this new economy, and am here to help. This isn't just a business for me, it's a way to guide people going through what I went through with my family as well. Having 5 kids and navigating this new world hasn't been easy for us either. I'm here to make it easier for you.
​
Here's How Much You Have to Make to Afford a Starter Home in the U.S.
What you need to know as a Buyer or Seller (Influenced by the NAR situation)
This whole situation has been a publicity nightmare, and I'd like to think that the biggest impact that has caused such confusion (and false information) were news outlets and people who are not actively involved in this industry creating news articles regarding concepts that they know nothing about. I'm going to lay out what practices were targeted, why, the pros, and the cons. Overall, two MAJOR things were happening in the field (not by me or by anyone in the firm that I run):​
-
Buyers were being "represented" by agents without written agreements hiring an agent to represent them. Legally speaking, this is a big no-no. In order to protect a buyers' best interests, they must hire an agent to represent them. In that agreement, compensation to that agent is outlined. In many cases, compensation was being offered by Sellers of property as a way to open up the Seller's Buyer Pool to include all buyers currently searching for property, taking an additional expense off of a Buyer's plate to allow for more competition (and thusly, more offers, and a higher sale price for the Seller.) In the State of Vermont, if an Agent does not represent the Buyer, they cannot negotiate on that buyers behalf, give the Buyer an opinion regarding the price of the home, and cannot disclose ANY information about the home that isn't a Material Fact that would otherwise harm the Seller's negotiating position (Material Fact: A fact that would influence whether or not someone would buy the home). An example of this would be if the "Buyer's Agent" in this case knew that the Seller was under a court order to sell and needed to move it quickly.
-
Listing Agents were not explaining why Sellers were offering Buyer's Agent compensation correctly. It's not that a Listing Agency charges X or Y, and then splits X or Y in half to compensate the Buyer's Agent. The Listing Agency charges their own amount (which has always been negotiable), and then the Seller can CHOOSE to compensate a Buyer's Agent in order to achieve what I explained in point number 1. If the Seller does not want to offer Buyer's Agency Compensation, the Buyer and their Agent will need to work out how that Agent is compensated in order to make an offer on your home! They can always ask if the Seller would be willing to (if it's not publicly advertised that they will).
About the NAR Lawsuit - What Exactly Happened?
Here's the scoop on this subject before the headlines paint a skewed picture of exactly what happened.
"Realtor's Settlement Could Dramatically Change Cost of Housing Sales - Washington Post"
​
The short story is, there were some agents/agencies (not us) doing a terrible job of explaining how home sales work. And in turn were failing to explain your rights as the consumer when it came to listing property. The easiest way I can explain this is as follows:
​
-
Agent was listing a home, and instead of explaining to the Seller of a home how the commission works, they were asking for a flat percentage, and the saying that they would be splitting their commission with the buyer agency.
​
-
The reality is, the home seller is able to offer what commission to pay out for a buyers agent, the listing agency does not set this price.
​
You might be scratching your head. "Why in the world would the Seller of a home pay for a buyer's agent?"
The reality of it is, an average buyer has many costs associated with purchasing a home. Down Payment, Closing Costs, and without the help of a seller, Realtor Fees. About 80% of buyers can barely afford just the first two items. Sprinkle some Realtor fees into the mix, and the Buyer pool that a Seller has access to is now dramatically smaller, thereby making the pool of potential candidates smaller, and lessening demand.
We expect to see some changes here in Vermont as far as how compensation is provided towards Buyers Agents, and this could mean that Buyers Agents will now need to present their clients offers with the compensation they would like to request from Sellers, if applicable.
Will this cause prices to come down and solve the problem? No way. But this will make it MUCH more competitive for Buyers out there. There will likely be no change to the rate of inflation, home costs, or the like. This can result in less costs out of pocket for a seller, but will depend on the compensation agreement between that buyer and their agent/agency.
Always happy to discuss this further, but based on how I've practiced in my business, I don't anticipate any changes on my end. Who you work with matters. There are good and bad in any profession (mechanics, doctors, accountants, lawyers, etc.).
If you have any other questions, fill out the form located here:
​
About Assumable Mortgage
See what Aaron Scowcroft has to say about what we can expect regarding mortgage rates coming into 2024.
Something to consider if you ever plan to buy a home or list your home is the current loan program on the home you are buying (or listing) and how this might impact marketability for that property, or what your options are as a buyer!
Banks don't want you to know this, but having a background in Mortgage Lending, I still know a few tricks. The least known trick is what's called the Assumable Mortgage.
For the easiest reference, I'm going to provide the link to my clients Cheryl & Bob's house on Zillow, located here:
322 Bonanza Park, Colchester, VT, 05446
For easy math, these two currently have a mortgage on this home for roughly $250,000.00, at a rate of 3.50%. This is an FHA loan. ANY Government backed loan can be assumed (VA, RD, USDA, FHA, VHFA). Their list price is $460k for all intents and purposes.
ANY person can apply with my clients lender to assume the $250k loan above at that same rate, and continue with the current place in that loan. In order to do this, that buyer would then have to come up with the difference in cash ($460,000 - $250,000 = $210,000 needed to close) plus closing costs. It's a lot of money, of course, but if you can snag a mortgage for $250k at 3.50%, you're WAY ahead of your competition.
Perhaps this applies to you? Perhaps it doesn't today. Either way, hope you learned something!
About Mortgage Rates
See what Aaron Scowcroft has to say about what we can expect regarding mortgage rates coming into 2024.
A true testament to the volatility of real estate over the last few years. Interest rates seem to have a mind of their own these days, according to Business Insider:
Despite all this, activity remains high, and competition is still fierce if you're looking to buy. As it seems to be each year, that 3rd week in February is that magic milestone where everyone starts to thaw out and get out into the market. Given the average mortgage takes about 45 days to close, purchasing a home now puts you into that home in Mid-April. A bit more manageable of a time to move, in my opinion.
So what's the game plan? If you're buying, renew that pre-approval (they expire after 90 days), and talk with your Realtor about your gameplan to make sure you've got the pieces in play needed to put your best foot forward. If you're selling? A clean house, fresh coat of paint, and packing extra belongings that don't add value to the presentation of the home is a good first step. Store these items in a garage or basement to open up the living space.
Everyone’s situation is unique, so don’t take the above with a grain of salt if it doesn’t apply. Reach out to someone on our team to get a better sense of your position as it relates to the current real estate market.
​
If you have any other questions, fill out the form located here:
​
Mortgage Rates falling?
See what Aaron Scowcroft has to say about what we can expect regarding mortgage rates coming into 2024.
As we see the mortgage rates continue to drop, we are seeing a surge of activity from buyers and sellers alike as it becomes more affordable to make moves. Check out this article from FreddieMac:
https://www.freddiemac.com/pmms?fbclid=IwAR3ACVajWU-UiHagWqcOGseXh-dWVSelKZi9bdDOGqnqREzT9suvCikvdTo
As we prepare for the Spring, here are a few things to consider:
As a buyer, there is less competition in the market this time of year due to the weather. If you're able to swing it, and can get into housing.
As a seller, the ratio of buyers to inventory is about the same. There is no inventory, therefore, the likelihood of selling is still high, and the chances of landing a serious buyer are much higher, given who trudges through the snow for fun?
Each situation is unique, so to be sure we have the right strategy deployed, let's circle back and have a conversation to make sure we're on the same page.
​
If you have any other questions, fill out the form located here:
​