Real estate market rebounds, but concerns remain
Comments during a recent series of interviews also made apparent that Vermont has at least a perception problem among wealthy home owners and buyers — like those who fueled a sustained second-home boom a few decades ago. The impression is that a golden era of growth in sales and rising property values may be gone forever — especially relative to second homes in vacation spots like the Northshire.
As 2016 drew to a close, the residential market in Manchester and Dorset was "still a buyer's market," according to Annie Bessette, the principal broker with TPW Real Estate, but the statistics for the year reflect at least a modest rebound over 2015 and a surging level of interest in local properties.
"What we are seeing is a pretty good level of activity over last year," Bessette said.
The number of residential sales was higher through early December than at the same point in 2015, she said, and there were 23 home sales under contract.
While the local market is exhibiting hopeful signs, Bessette said home values, which have trended down for several years, are not yet rising significantly. For that to happen, she believes the area must create a more robust economy with more employment opportunities.
And like others interviewed, she's convinced proposed new rules for private schools would have a negative impact on the home market and the economy.
State Board of Education members deny the proposed rules would be detrimental to private schools that receive public tuition dollars, but opponents contend school choice options would narrow and private schools would be forced to hire only state-licensed teachers and have to change their management structures.
Choice concerning where to send their children to school is a major inducement for young families considering a move to the Northshire, Bessette said, and a factor in making "this a wonderful place to live."
Overall, she said, "I believe in the value of our real estate. The quality of life is hard to beat. Keeping educational opportunity should be a priority."
Real estate professionals were unanimous in saying they constantly field questions from potential homebuyers about school choice and other options available through private schools like Burr and Burton Academy and other private institutions in the Northshire.
"We are having increases in sales and in the sale prices," said Carol O'Connor, regional supervisory broker at Four Seasons Sotheby's International Realty.
She said that for 2016 through early December, the number of home sales in the two towns was up over the same period in 2015, and the average price per sale was up from $326,000 to $370,000.
In addition, O'Connor said there were 167 homes on the market in early December, but that figure "had been hovering over 200 for the past couple of years."
"There is a lot of interest in the lower range, $300,000 and under," she added, and high-end home prices (more than $1 million) "have come down drastically," encouraging potential buyers.
Bessette said the market for homes under $200,000 has been especially warm in the two towns, with 14 such sales in the year ending in mid-December 2015 and 27 through the next year, ending in December 2016.
A shrinking inventory of homes for sale also tells a story, those interviewed said.
"We have an inventory that is not overly excessive compared to our market historically," Bessette said. "We have been keeping pretty busy since last winter and spring," she said. "We started getting busy, and it really hasn't let up."
Another sector that is hot, O'Connor said, involves smaller, more efficient homes, as opposed to some of the larger estate properties popular a decade or more earlier.
"There is a lot of interest all over in green buildings," she said. "It is not necessarily that bigger is better. Sometimes smaller is preferred."
Overall, she said, the local market "is extremely busy and prices have stopped going down, down, and have leveled off. The inventory is down, and that always puts prices up."
Laura Beckwith, principal broker/owner of Josiah Allen Real Estate, said, "We currently are showing more contracts for this [winter] season than in past years. We haven't seen this level of activity at this time of year in a decade."
The home market has "been pretty steady for the last couple of years," she said, although "last year  was definitely an off year."
That was reflected in part, Beckwith said, in overall sales and in high-end transactions for homes selling for more than $1 million. There was only one sale at a million-plus, she said, and that came in December 2015 and involved a "considerable discount."
Total real estate sales also were down in 2015 but have rebounded in 2016 and should top 2014 sales figures.
For the region, it has been several years of stagnant or slipping sale prices, Beckwith said, and that had improved recently but hadn't stabilized. "It did not get to the bottom," she said, "but I believe we are there at the present moment. That may be why there is such interest in our area."
Most buyers who are looking in the Northshire, she added, "are demanding buyers who have been watching the market," who constantly check local values through online services and are "very, very astute and will not generally overpay for something."
That factor, Beckwith said, also helps keep sale prices from rising as they did in the past.
There is "more action" in the under $500,000 price range, she said, while "it is sluggish in our middle, which is $600,000 to a million."
Above $1 million "we are getting a whole lot more interest in some cases this year ," she said, including more than one bid on a property in a couple of instances just after the fall foliage season.
Some sellers, for varying reasons, are now willing to sell for a lower price, she said, possibly related to their retirement plans or for tax-related reasons. Owners of properties in that price range — especially when it involves a second home, as is often the case — are not in the same position as someone who must sell a home or wants to hold to a certain price threshold, she said.
"It is a different set of players when it comes to that market," Beckwith said, adding that most have their primary residences in other states with lower overall tax burdens.
In the $300,000 to $500,000 range, she said, "what I am seeing is some local families are having a harder time finding a home. It may be that they have taken a little too long and maybe studied too long and the selection is getting thinner."
NINE YEARS ON THE MARKET
For some high-end home owners, however, the market remains a harsh one. One seller, who has had his property in East Dorset on the market since 2007, said he has reduced the price seven times and it is now for sale for about a third of what it cost to create the estate on nearly 50 acres in the mid-1990s.
The owner, who asked that his name not be used in this article, said he understands that the 9,000-square-foot home, with guest cottage, four-car garage, large barn and a pool, "offered for well over $1 million," is unique and not a residence every homebuyer would or could consider.
But he thinks it's a troubling sign for the market and discouraging for him personally that he has received only two firm offers in nine years, both lower than he wanted to go. He said he finally accepted the second offer, only to have it rescinded the next day.
"I am very frustrated and dismayed," he said, "and I will certainly leave Vermont if I can."
The property owner added that "at least 25 of my friends have gotten out of the state" in recent years, a trend he blamed on what he sees as ineffective state governance and high taxes, particularly for education and health care.
Asked for his perspective on the regional home market, Josiah "Joe" Miles, owner of rk Miles, said, "My impression is that the market has been really stagnant with a lot of homes on the market for sale."
That has been the case since the depths of the recession in about 2008, Miles said, after "tremendous growth, with a few ups and downs, especially in second homes, from about the late 1970s or early '80s."
The era also included a building boom throughout the period to meet the needs of an exploding second-home market.
The bulk of the company's recent business, Miles said, has been in supplying materials for renovations, additions and repair work, with "only a handful of new home building starts for the past several years."
Dorset Town Manager Rob Gaiotti said his impression of the current market is that there has indeed been a recent surge of interest in Northshire properties and sales are picking up. But he also was among those who cautioned that changes in regulation for private schools could make potential buyers skittish, resulting in a market slowdown.
Asked about the grand list figures over the past decade, Gaiotti agreed that, while not a precise gauge, grand list totals for the two towns seem to loosely follow the rise and fall of home sales and market values.
In Manchester, the total assessed property valuation stood at $1,128,855,777 in 2006; $1,305,757,000 in 2011, and $1,207,963,120 in 2016.
In Dorset, the total grand list stood at $704,509,400 in 2006; $726,035,500 in 2011; and $711,707,700 in 2016.
With a residential market that is heating up, Beckwith said, "it would be devastating to our area as a whole" if the proposed State Board of Education rule changes for private schools are implemented.
Opponents of those changes contend they would threaten the attractive private school choice options now available to areas like the Northshire, force private schools to make operational changes to be more like public school districts and restrict the hiring of non-licensed but otherwise qualified faculty members.
BOE members contend that those fears are based on misunderstandings and they hope to clarify the language in the proposed rule changes to allay those fears. They say the major focus has been to ensure all Vermont schools that receive public tuition funding meet similar regulatory guidelines.
No one interviewed for this article believed the rule changes would prove benign, however, or even neutral in their effect on the Northshire.
Groundless fears or not, officials from private schools in this area have staunchly opposed the changes, and local lawmakers — including Bennington County Sens. Dick Sears and Brian Campion — have threatened to file legislation to restrict the BOE's authority to institute such rules without legislative review.
Rep. Oliver Olsen, I-Londonderry, contends the rules would lead to plummeting property values by destroying a strong educational incentive for young families to move to the Northshire, and that would result in a weaker local economy overall.
Loudly emphasizing all those concerns, about 800 people packed the Burr and Burton Academy gym in Manchester on Dec. 12 for a Board of Education hearing on the rules, almost all of the scores of speakers opposing the plan.
Staige Davis, CEO, of Four Seasons Sotheby's International, which has 20 offices in Vermont and New Hampshire, said local markets around the region have varied depending on local conditions, with some more robust than others.
"I'm optimistic about the market," Davis said. "Vermont doesn't have booms but also doesn't have busts. I think there is a lot of uncertainty, but I think 2017 will be a lot like 2016."
The past year showed increases in the number of sales statewide, he said, and in prices through early December. "There is clearly more activity," he said, including both completed sales and sales now under contract.
As a comparison, there were 708 sales in the state in November, compared to 577 in November 2015 and 550 in the same month in 2014.
There were 6,780 homes listed for sale in November 2016, down from 7,941 the prior November. Sale prices averaged $255,000 statewide in November, up from $236,000 in November 2015.
The listing price average was $370,000 in November 2016 and $353,000 in November 2015.
Asked about the higher-end real estate market for homes selling for more than $1 million, Davis said there were 10 sold in November statewide, compared to five in November 2015, and there were 12 pending sales in November, up from 4 in November 2015.
The number of high-end homes on the market was 344 in November 2015 but was down to 319 this past November, and the average price for $1 million-plus homes was $1,399,000 in November, down from $1,670,000 in the previous November.
Davis said that when interest rates edged past 4 percent, many potential buyers seemed suddenly to "decide they don't want to wait any longer," even though rates have not risen rapidly and remain stable today.
One of the major factors holding real estate markets in check in Vermont, he said, is that the state was ranked by Kiplinger's magazine and other observers as "one of the worst areas to retire," because of taxes, state regulation and other factors.
Many wealthy people strictly limit their stays at homes in Vermont to less than half the year, he said, in order to maintain their primary residence in another state.
"I think that was one of the reasons Phil Scott got elected," Davis said. "People are looking for a little balance."
By living in Florida or other states, people "save tons" on taxes, he said, adding that Vermont has unfortunately scored "in the top five in all things" related to cost of living. Those include having a low state birth rate, being among the oldest states in average age of residents, having among the highest cost per capita for kindergarten through high school costs, and other factors, he said.
"And I consider myself a Democrat," Davis said. "The Republicans certainly don't have all the answers, and Phil [Scott] would be considered a liberal in Virginia."
In the November election, "one of things voters were saying was, 'let's slow down and figure things out," he said. "We need more young people here and more jobs."
Jim Therrien writes for the Bennington Banner and VtDigger.org. He can be reached at 802-447-7567, ext. 114.
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