By Kara Herlihy
Potential homeowners in The Valley face a dilemma of affordability that closely mirrors county and statewide trends. Annual average wages aren't nearly sufficient to purchase a home at the current average sale price.
Washington County has the fourth highest number of low-income homeowners in the state; Vermont Housing Data projects a necessity for 1,925 affordable homes by 2010 to meet the demand. Low income is defined as less than 80 percent of the annual median income, 80 percent of $64,200 is $51,440. That is for a family of four. The numbers look different for individual wage earners in local towns.
"Affordability is determined by two factors: the cost of housing and the ability of people to pay that cost. With home prices and rents rising at a rate faster than the increase in Vermonters' wages, housing becomes less affordable for more people," according to <MI>Between a Rock and a Hard Place: Housing and Wages in Vermont<D> (2009).
Housing Vermont projects that families should spend no more that 30 percent of their income on housing costs.
In Waitsfield in 2008, the average annual wage was $37,273; the average home sale price was $241,018. In Warren, the average home sale price in 2008 was $340,778; the average annual wage was $22,051.
Moretown's average home sale price in 2008 was $206,800. The average annual wage was $45,035. Fayston's annual average wage was $37,871; the average sale price of home was $272,650.
According to a countywide Housing Needs Assessment, the gap between an "affordable" home and the median home price is increasing. In addition, the gap between the income needed and the median income is widening.
"As another indication of how dramatically the market has shifted, the number of million-dollar homes in Vermont jumped from 478 in the year 2000 to 1,774 in 2007."
The median price for single-family primary residence sold in Fayston in 2008 was $315,000. The median vacation home sale price in 2008 was $279,500.The median price of primary residences sold in 2008 in Waitsfield was $219,375. The median price of vacation homes sold in 2008 was $303,000.
The median sale price of a primary residence sold in Warren in 2008 was $379,000. The median price of a vacation home sold in 2008 was $245,000. Moretown's median sale price of a primary residence in 2008 was $215,000; the median sale price of a vacation home in 2008 was $378,050.
<MI>Between a Rock and a Hard Place: Housing and Wages in Vermont<D> makes reference to a dramatic shift in the Vermont housing market that illustrates the increasing problem of affordability seen, Valley, county, and statewide.
On the state level, the median purchase price of a primary home in 2008 remained steady at $200,000, less than the median prices of local real estate.
"To afford the median-priced $200,000 home a Vermont household would need an annual income of about $63,000 and $14,000 in cash for closing and down payment costs. Sixty-one percent of Vermont's households have annual incomes below $63,000."
The average annual income of The Valley in 2007 was $35,557.
"Since 1996, there has been a major shift in Vermont's homeownership market. That year, two-thirds of the homes sold carried a purchase price of $150,000 or less. In 2008, only 26 percent of sales were houses priced above $150,000."
Another factor is the ability to afford the process of buying a home, i.e., the cash flow necessary to cover down payments and closing costs. Mortgage qualifying criteria has become increasingly stringent, and the homeownership market is equally tight. Vermont has the lowest home vacancy rate in the nation, 1.6 percent.