Declining home prices-yet Vermonters aren't buying

BRANDON-In spite of the softening real estate market, Vermonters earning the median income still cannot afford the median-priced home, according to a new report released June 21.

The report, "Between a Rock and a Hard Place: Housing and Wages in Vermont", is the latest in a series that tracks housing costs in relation to Vermonters' incomes.

For the last several years, Vermont's tight housing markets have driven up prices while wages, particularly those employing the most Vermonters, have not kept pace.

During the Great 2009-10 Recession, even as home prices dropped, opportunities for buyers were limited due to high fees and higher interest rates for buyers with moderate credit scores.

"The real estate market was helped this year by low interest rates and a generous federal tax credit," said Sarah Carpenter of the Vermont Housing Finance Agency. "The problem was those low rates weren't available to many buyers and the tax credit wasn't available at closing to help pay for the higher down payments and fees lenders now require. Few first time buyers can save up the down payment and closing costs needed to buy a home even if the median price dropped."

The median purchase price of a home in Vermont dropped by 5 percent to $190,000, the first substantial fall on record. A Vermont household would need an annual income of $57,000, and an estimated $15,000 for down payment, fees and closing costs, to afford that home.

Federal stimulus programs did nothing for average Vermonters-the number of people who are homeless in Vermont increased 22 percent since the recession began in earnest in 2009.

"Vermonters continue to need affordable housing and the state's economy needs housing construction in order to help it emerge from this recession," said Rob Naylor of Naylor & Breen Builders in Brandon. "Our company has seen firsthand the effects of the real estate market, but because of the programs designed to fund the construction and renovation of housing for lower-income residents, we were able to keep a crew working to build the units this report clearly shows are needed. These projects have created permanently affordable housing, while also keeping my guys employed."

One family's story illustrates the difficulty accessing both the rental and homeownership market.

Janet Green, her husband and son lived in an apartment in Richmond, but were commuting to work in Burlington.

"The commuting had become a lot for us and we wanted to raise our son in Burlington so we started looking for a place to rent. But it was so expensive," Green said.

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