By New England Landmark Realty LTD

If you're watching Central Vermont's housing market with a mix of intrigue and disbelief, you're not alone. Mortgage rates have climbed, and anyone holding out for a steep drop in home prices has been met with disappointment. So, what's the story here? Predictions of a housing crash have been around for over a decade, but prices keep climbing—or, at the very least, they're holding steady.

Let's be blunt: the Central Vermont housing market isn't crashing because the fundamentals don't support it. We're not in 2008, folks, and today's situation is a whole different ballgame.

Why Predicted Crashes Have Missed the Mark Since 2012

From "shadow inventory" in 2012 to the so-called "silver tsunami" of 2024, each year brought a new prediction of doom in the housing market. Some claimed rising rates, others pointed to various economic factors, but none panned out. In truth, since 1942, home prices have generally trended up, with only a few minor blips. The outlier? The 2007-2011 period, when a flood of distressed sellers drove an actual crash. Central Vermont, along with much of the U.S., simply isn't facing those conditions today.

Central Vermont's Inventory Challenge

The data tells us that the national housing market inventory is lower than historical norms, hovering around 1.39 million active listings compared to the 2–2.5 million average since the early '80s. Central Vermont mirrors this tight supply. This isn't the spike to 4 million we saw in 2007; instead, we're witnessing a calm, steady inventory increase, far from the flood needed to drive prices down.

But why is inventory tight? Fewer new listings. In 2023 and 2024, new listings have remained at their lowest levels in five years, between 30,000 to 90,000 weekly across the country, compared to the 250,000–400,000 during the last crash. Many homeowners, who have been secure in their mortgage rates since before the recent hikes, have chosen to stay put, limiting the homes available for sale in Central Vermont and across the country.

Foreclosures Are a Non-Issue

To replicate the crash conditions of 2008, you'd need a wave of distressed sellers. Today, foreclosure levels are historically low, with fewer homeowners underwater. Only about 1.7% of American homeowners owe more than their homes are worth, and over 40% of homes have no mortgage at all. This healthy equity position means that despite rising rates, there's no pressure for mass sell-offs, a key reason Central Vermont's prices remain resilient.

The Role of Equity: A Protective Cushion

In Central Vermont, as with much of the nation, the amount of equity homeowners have is a stabilizing force. Financially secure homeowners with significant equity in their homes simply aren't selling at a discount. Many prefer to wait out the high-rate environment rather than accept a lower offer, which keeps prices from dipping.

Central Vermont Demand Meets Limited Supply

Central Vermont's charm—its natural beauty, small-town appeal, and close-knit communities—continues to drive demand. While demand has softened slightly with higher rates, it hasn't fallen off a cliff. Many people are still drawn to Vermont's lifestyle, creating a floor under prices.

The current situation reflects a market in balance, not one heading for a nosedive. Sure, Central Vermont's home prices have cooled compared to the frenetic pace of 2021 and 2022, but cooling isn't crashing.

Why the Crash Advocates Have Been Wrong

The reality is that a national housing crash requires a perfect storm of factors: a massive economic downturn, high levels of forced selling, and little to no government support. Like the rest of the country, Central Vermont doesn't meet these criteria. High rates alone won't do it, especially not in an area with steady demand, limited supply, and low foreclosure rates.

The Bottom Line: Stability Is the New Normal

Unless Vermont's housing market sees a drastic and unlikely surge in distressed sellers, Central Vermont's home prices will remain stable, even as mortgage rates challenge affordability.

This isn't the housing market crash many predicted, and in Central Vermont, it's unlikely to ever be. Prospective buyers must consider today's rates and inventory because waiting for a crash may just mean getting priced out. For sellers, it underscores the value of patience as Central Vermont's appeal and limited inventory continue holding up prices.

Whether buying or selling, understanding Central Vermont's unique market conditions is essential, and that's where Tony Walton and his team can help. With a deep understanding of Vermont's real estate landscape, Tony offers unmatched expertise and personalized service. For guidance tailored to your real estate goals, visit VTMove.com or call Tony at 802-253-4711.

About The Author

Meet Tony Walton, owner and principal broker at New England Landmark Realty, your expert guide to Vermont's real estate scene. Discover personalized market reports, connect with our superior team of local Agents and Brokers, and access valuable resources for buyers and sellers. Delve into Tony's bio and kickstart your real estate journey today with New England Landmark Realty. Find his team at VTMove.com or call 802-253-4711 for personalized service and expert guidance.