Update To ‘Will The Bubble Pop’

-1/15/08-

 

          The preceding article, first published in 2005 and put on our website in November of that year, has held up very well under the real estate correction and subprime meltdown that seems to be hurting (or helping if you’re a buyer) some parts of the country.

          Lies, damn lies and statistics might have us believing that market conditions for sellers in Vermont are atrocious right now.  Our own local paper just reported a 70% increase in foreclosures in some recent month.  When I dug into that statistic it turned out that Vermont has the lowest foreclosure rate in the country and that the total for June ’07 was 8.  November ’07 actually saw a 33% decrease, again equally statistically unimportant, with a total of 6 for the entire state and only 1 in Windham County. Someone in the office heard that regarding existing home sales, Vermont actually had a 1% increase but again, statistics are often misleading.

          We believe that selling prices have corrected between 10 to 30% depending on price sector.  High end properties seem to have taken the biggest hit and inventories have swollen considerably since 2005.  There’s much more on the market from which to choose especially in the higher price range. 

          However, it doesn’t feel at all like the total meltdown that occurred at the end of the 1980’s so maybe many of the premises in our Will The Bubble Pop? article are true.  Tax law change in ‘97, demographics, Vermont’s political and economic climate, the lack of go-go speculation because of conservative lending practices, key state legislation and strong local involvement all may be why we’re not feeling like some parts of the country.  Time will tell.

          Perhaps this is all delusional thinking or self promotion but we’re very busy and think it’s a good time to buy because of at least 3 factors: more inventories of properties, sellers’ willingness to negotiate and low interest rates.

          One caveat, though, since 2005 the IRS and tax laws have evolved to close some of the more sketchy primary residence exemptions and that pattern will likely continue.  As always discuss your intentions prior to a sale of either your primary residence or your vacation home with your accountant, lawyer, financial planner and broker, especially if you are considering a 1031 Exchange.

          Here’s to owning, living and vacationing in Vermont. It is truly a wonderful and unique place.