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County real estate weathering storm

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10/29/07

By ANDY KIRKALDY

ADDISON COUNTY — Local real estate professionals channeled Mark Twain when asked about Addison County’s real estate market: All said rumors of its demise were greatly exaggerated.

Available numbers for the most part backed them, although the figures also uncovered a few soft spots. And the experts acknowledged some uncertainty going forward given the steady drumbeat of bad national news.

Waltham real estate appraiser Bill Benton, also Middlebury’s town assessor, summed things up.

“The national news is doom and gloom, but Addison County and Vermont were spared the worst part of it,” Benton said. “I wouldn’t be too concerned about doom and gloom right here.”

Tom Walsh, owner of Coldwell Banker Bill Beck Real Estate, which has offices in Middlebury and Vergennes, pointed to 2007 Addison Country Board of Realtors Multiple Listing Service (MLS) statistics. He said they have tracked below 2006, but not far below.

For example, he said, the median sales price of a home sold through the county MLS so far this year (half the homes sold are for more than the median price, and half are sold for less) is roughly $220,000, while in 2006 the median sales price stood at about $226,000.

That drop of 2.6 percent can be explained by the softness in the county’s high-end market, Walsh said. As of mid-October, nine MLS homes had sold in Addison County this year for more than $500,000. In the same time span in 2006, 17 homes had sold for more than $500,000.

“That certainly knocks the heck out of your average numbers,” Walsh said.

Experts, including Ferrisburgh appraiser Charlene Stavenow, said the high end appears to be the soft spot in the county market. Stavenow noted that if the sub-prime mortgage mess and the resulting tightening of credit on a national basis affected any local segment, it is the market for expensive second homes.

Out-of-state buyers are often the purchasers for the area’s priciest properties, she said, and their ability or confidence to purchase may have been affected. 

“The high-end buyer is not as evident. They’re the ones that are in trouble in New York and other states,” Stavenow said.

Even the national news may not be as bad as reported. The median sales price dropped by just 4.2 percent from September of 2006 to September of 2007, according to last week’s regular monthly National Association of Realtors sales analysis. The report attributes that to “fewer transactions at the upper end of the market,” not to an overall decline. Overall, the report said existing home sales fell about 8 percent on a nationwide basis from September a year ago.

SALES NUMBERS

Still, the county sales are off at least slightly this year. Annual residential MLS sales from 2000 to 2006 shows a range from a low of 256 in 2002 to highs of 325 in 2005 and 326 in 2000.

The 2006 total stood at 279. Through Friday, according to Benton, 198 residential MLS sales had closed in 2007, and another 30 or 40 homes were under contract. Because November and December are typically slower months, Benton said it was “probably a good guess” that 2006 home sales will fall short of the totals for recent years.

But within those numbers he sees a strong market for homes priced in the lower and moderate price ranges, especially, Benton said, for doublewide modular homes under $200,000. 

“It still seems to be active under $250,000 to $300,000. We still seem to have lots of sales recently,” Benton said. “$300,000 to $500,000 is pretty dead.”

And homes in moderate price ranges have retained their value, appraisers said.

“Most the sales have been the lower-range houses moving,” Stavenow said. “They have still been within 3 or 4 percent of their asking prices.”

Broker Bonnie Gridley of RE/MAX Champlain Valley Properties said the market is tilted more toward buyers than sellers, however, at this point. Because of an MLS inventory that has crept closer to 300 than the 229 of July 2006 and 151 of July 2005, buyers can be fussier.

“The people whose properties have signs rusting in the ground have unrealistic prices,” Gridley said. “For the people who are realistic about their prices, properties are selling.”

As for other market segments, Stavenow said high and still-rising prices for building materials might have suppressed land sales, but that condos have sold quickly because they are in the affordable end of the market. Walsh, Benton and Stavenow all said that lakefront sales have been slower than typical, which they attribute to the same factors behind the general high-end slump.

On prices overall, Benton and Stavenow both noted that the only re-sales — sales of the same homes for a second time — that have shown a drop in price have been those in which sellers have been highly motivated because of an impending move out of state.

“I would say for the most part (prices) are stable. I’ve had a couple re-sales where there’s a 5 percent reduction … but that’s only 2 sales out of 10,” Benton said. “The reductions were both motivated sellers.”

LOOKING AHEAD

One specific market the experts are eying with curiosity is Middlebury, where several projects are offering dozens of building lots and home packages and roughly 70 properties are available through the MLS.

Walsh said he asks himself whether the shire town market can handle all that inventory.

“Things are selling, but there’s still a big supply out there … It’s going to take time to absorb that stuff, no question about it,” he said.

Benton said those homes would not be all built overnight.

“I’m curious to see what happens,” Benton said. “I might do 15 new houses a year as an assessor. You’re looking at a 15-year absorption rate, and that’s if things stay as they have been.”

Overall, experts are optimistic the local and even the national markets can remain sound if media sensationalism and the sub-prime mortgage mess, which has forced many foreclosures and threatened the health of some banks and mortgage companies, doesn’t undermine them. 

Benton expects that the Federal Reserve Board and its chairman, Ben Bernanke, will act to moderate interest rates and support the markets and companies that are threatened by the lending scandal and its fallout.

“I think that Ben Bernanke has got to keep the big banks and the market speculation situation under control, and he’s got to do that by keeping the mortgage rates low,” Benton said.

Stavenow believes Addison County has held its own, but that the winter months will be crucial. 

“January will be the telling factor,” she said, “especially if national broadcasters continue their doom and gloom factor.”

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