Local real estate market slows

ADDISON COUNTY — The nationwide slowdown in real estate sales has hit Addison County, according to local Multiple Listing Service statistics and real estate professionals, but its impact has not been as deeply felt as in some other areas.
Still, it appears that in most segments of the market the advantage enjoyed by sellers in recent years is slipping away.
“I think we’re going to continue to see things taper off,” said Tom Walsh, owner of Coldwell Banker Bill Beck Real Estate. “We’re going to see things becoming a little more balanced.”
Vergennes real estate appraiser William Benton, also Middlebury’s town assessor, has a similar take. He sees the market remaining strong for homes that sell for less than $200,000, often to first-time buyers, but he expects values in other property categories to level off or even decline somewhat. 
“In some segments with a lot of over-supply … you’ll see some corrections, but not big ones,” Benton said.
A year ago, local real estate experts were already predicting that a more balanced market was on the way, and they are not surprised to see the latest developments.
“For the past four or five years … it was almost like the Internet boom,” Benton said. “It was too good to be true.”
But the local market is not changing as drastically as it has in Massachusetts, for example, where after months of slow sales the Boston Globe reported on Tuesday that National Association of Realtors (NAR) statistics show a 6.1 percent price drop in the median home price. The median sales price is the midpoint that divides sales; half of the sales are higher than the median, and half are lower. 
Meanwhile, NAR statistics released on Sept. 25 showed a 1.7 drop in the national median sale price from $229,000 in August of 2005 to $225,000 in August of 2006, the first such year-to-year drop since 1995.
Statistics from the MLS service run by the Addison and Northwestern Vermont Realtors’ associations show at least the beginning of a local sales slowdown. While sales held their ground for the first six months of 2006, they have lagged since.
Between January and June of 2006, 133 homes were sold through the local MLS, as compared to 136 for the first six months of 2005.
But in July and August of 2005, 74 homes were sold through the MLS, and only 53 multiple-listed homes were sold in this past July and August.
“The first six months were pretty much even with last year, but the last two or three months have dropped off,” Walsh said. “The third quarter is going to see a drop in the number of units (sold).”
Walsh and Benton do not expect a market catastrophe. Walsh said unlike a Midwestern town “where the big Ford plant closes,” Addison County is not reliant on a single major employer, and Benton noted that many of the biggest local employers are non-profit entities not likely to close their doors, including local schools, Middlebury College and Porter Hospital.
But Benton said he does see increasing signs of buyer caution. For example, several potential buyers have hired him to appraise homes before they will strike a deal with a seller.
“It seems like people are really careful,” he said. “They want to have the appraisal in before they even make an offer. They want to make sure they’re not over-paying.”
Walsh said he sees the same trend.
“People that don’t have to buy anything are sitting on the sidelines waiting to see what happens,” he said.
Many buyers have that luxury because the local MLS inventory is as high as it has been in years. Walsh said there are now 229 homes in the MLS, compared to 151 in July 2005.
Those numbers translate to a 52-percent increase in available homes in Addison County.
“It’s been a long time since I’ve seen over 200 properties for sale,” Walsh said.
The slower sales and larger inventory locally have not yet translated to a drop in prices, however. The average sales price in an MLS home so far this year has been $276,120, compared to $260,588 in all of 2005. That translates to a 6-percent increase.
Even with favorable interest rates — less than 7 percent for a 30-year mortgage without points — the experts said they don’t believe prices can keep going up.
“I have a degree in economics,” Benton said, “and supply and demand doesn’t work that way.”
Benton has stopped forecasting appreciation in more expensive homes, although he believes starter-home prices could still tick upward because of the limited supply in that segment.
Pockets of strength exist elsewhere in the market, although the experts said sales have slowed at least a little even in northern Addison County. Walsh said homes priced right in downtown Middlebury and in “any good neighborhood in Cornwall” are still being snapped up.
 Looming over the market are the many new homes planned for Middlebury. More than 200 homes and condos have been approved in Middlebury in recent months, and work has begun on several projects.
Both Walsh and Benton said they could not predict the impact. The homes, admittedly, will be built in one of the county’s tightest markets, and Benton noted that not all the homes will come on line at once.
Still, Benton said he will be monitoring how those projects will effect the county’s larger real estate market.
“It’s got to have an impact,” he said. “It depends how they phase it in.”

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