Posted by: Clayton-Paul Cormier, Jr. | December 24, 2009

2009 Year in Review

stands as a beacon of hope and recovery after one of the most challenging years in contemporary Vermont real estate history.  Following the sub-prime mortgage driven precipitous market collapse in the autumn of 2008, 2009 has been a challenging year for all of Vermont, from real estate property holders to the halls of government. Median real estate prices, while formerly lamented only for their slowing levels of appreciation, this year fell.

Record unemployment and foreclosure levels in Vermont which traditionally boasts one of the lowest foreclosure rates in the nation sent jitters throughout real estate markets and boosted inventory and shadow inventory,  the properties that would otherwise already be on the market but whose sellers are holding off given lamentable market conditions. Unemployment, between 4 percent and 6 percent for most of this decade, surged to almost 7.5% percent in May and approached 10 per cent in other states.

According to the Northern New England Real Estate Network mls data, December 2009 new listings in Vermont numbered  254 with 128 sold @ just under 24 and a half million in traded volume and an average of 211 days on the market. December of 2008 by contrast included 336 new listings with 141 sold @ almost 26 million in volume and an average 189 days on the market. State wide median sale prices on residential property this year lies at $169,000, a marked drop from the 2008 median sale price of $182,000.

The Vermont Real Estate Network reports an average 2009 sale price @  $229,431, down from $250,769 in 2008.

There is change in the air.

Today Stock prices rose around the world on news of economic recovery and 30 year mortgage rates rose to 5.25% for the first time since late October as illustrated by this bankrate.com graph.

The successful extension and expansion of the home buyer’s tax credit, at an estimated cost to taxpayers of $10.8 billion and known as the Worker, Home Ownership and Business Assistance Act of 2009 was  signed into law November 6th by President Obama and has spurred sales and help boost the number of residential transactions across the state.

While many prospective purchasers and realtors were rushing against the clock to compete with the November 30th deadline,  the extension covers contracts signed by April 30th of 2010 and related closings by July 1st. With up to an $8,000 non-refundable credit available well into the New Year, prospective purchasers are eyeing the market much more carefully and looking for opportunities to cash in on this substantial potential windfall. With 30 year note interest rates still hovering around 5%, this combination of favorable buyer side conditions is fueling buyer demand in the primary residence market even during one the most enduring and acute of broad economic recessions.

For a detailed summary of the credit which is now available to some existing home owners who’ve been in their homes for five consecutive of the last eight years,  click here to read the related Maple Sweet Real Estate Light Amber blog entry.

Consumer purchasing rose in November along the biggest income gain in six months and an increase in spending as consumers slowly gained confidence in their purchasing comfort although  new home construction hit a nine month low according to bloomberg.com with national sales dropping 11 percent to an annual pace of 355,000.

September home prices rose in 20 US homes rose in September for the fourth consecutive month.

Inman.com: housing is expected to make gains in 2010,  just not explosive ones. The Mortgage Bankers Association (MBA) projects that new-home sales, which declined from 485,000 in 2008 to a projected 391,000 in 2009 — which would be a record low in Census data dating back to 1963 — will climb back to 483,000 in 2010 and 609,000 in 2011. Sales of existing homes, which bottomed at 4.9 million in 2008 and are projected to barely break the 5 million mark in 2009, could be on track to climb to 5.55 million in 2010 and 6 million in 2011, the MBA said.

Not soon to be forgotten was the mortgage landscape this year. Month after month saw record lows, with November boasting the lowest rates on 30 year notes seen in 38 years. Scores of lucky borrowers and refinancers will remember 2009 as they year they scored historically low-interest rates, while many others will try to forget the year in which they were turned down for financing given much more stringent loan qualification requirements and underwriting standards on the coat tails of the sub prime fiasco of 2008.

Federal Housing Administration backed loan demand increased sixfold during the downturn leading to a reduced capitol reserve ration and potentially higher 2010 mortgage insurance premiums. Other tightening could include an increase the amount of upfront cash home buyers must bring to the table, raising minimum FICO scores for new borrowers, and reducing maximum seller concessions from 6 to 3 percent. The credit box, or pool of eligible borrowers, is shrinking.

The work of appraisers in a sliding economy has been made more challenging, with some trades being negatively affected or even lost due to unduly low appraisals derailing sales.

Short sales were up over 125% nationally as compared to a year ago with many Vermont homeowners walking away from the closing table with damaged credit scores and either without any equity or an obligation to repay shortfalls in coming years, capping many months of frustration in finally closing.  Worse even other sellers ended up with foreclosed property after lethargic mishandling of the proposed short sale by the bank that left prospective purchasers in no position but to cancel their contracts.

2009 also witnessed the rise of social media, evidenced by www.maplesweet.com Who in 2008 had ever heard of Twitter? For millions across the land, its a staple of communication and aptly reflective of our national gypsy psychology. That’s right, it’s time to establish a presence; remember, it’s recorded for posterity.

Q4 offers the first real hope of a sustained recovery after months of expectation and false predictions. At last it seems, as we break into 2010, the bottom of the market has been reached and passed. While 2010 will pose its own challenges, the Vermont real estate market is bound for better days.

To take advantage of the extraordinary opportunities this nexus offers for both buyers and sellers, connect to www.maplesweet.com, e-mail info@maplesweet.com or call toll-free 1-800-525-7965 to list your property, arrange for showings, or look into the market in other ways.

Happy New Year!

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