Attn Second Home Owners in Vermont

[deadheadskier]

$2,200 is a good deal in the Boston Area and suburbs.

Sure.

At a location that is typically two hours from Boston and in a town that has minimal going for it? $2200 is bananas. And something similar would have gone for half that just ten years ago.

 

[snoseek]

$2,200 is a good deal in the Boston Area and suburbs.

Yeah I actually like rochester because it's got a great location but it's the place you go to live on a budget. 2200 is not right or sustainable for that area. Somethings gotta give at some point

 

[BodeMiller1]

Well, it doesn't help when every college educated Vermonter instantly flees the state before their diploma's even in a frame.

I've been here a while, and it is a problem. On a statistical level this means some of the best-looking women have left the state. Hopefully there will be an end, and a hotter group will take up residency. There are pockets of them as there are pockets of frost.

Canadian women are getting ready to come down and this lends us hope.

 

[mister moose]

ZIRP leading to the lowest mortgage rates in history, combined with "economic stimulus" (i.e. free money), combined with the largest second home buying frenzy in history (COVID escape), combined with the Biden Administration preventing home foreclosures, combined with the favorable demographics of the largest American generation entering its prime home-buying age.

It was a lot of things all at once leading to record-low home inventory & record-high home prices.

But I expect it to end soon, and with it, home prices being pressured probably starting sometime 2H25. Most people dont realize it, but we're finally back to pre-COVID19 inventory levels after > 5 years of record low-inventory, which is what was primarily the cause of propping up US Home prices.
View attachment 66285

That cost of housing graph you posted has less meaning until you know what the cost is derived from.

One factor (shouldn't be a surprise) is the increased costs, independent of inflation.

Insurance for building goes up with every large loss payout, just like every other high risk industry
Regulatory expense
Diesel fuel - affects the cost of nearly everything due to trucking, heavy equipment fuel, concrete and asphalt plant fuel, vinyl siding, etc

The 5 year old house I was born in had 2x4 walls, 1 1/2 bathrooms, single pane windows, 250 gal metal septic tank, one car garage with open studs, 50 amp service in 1700 sq ft.
Now the average new house in surrounding towns has
2,600-3,000 sq ft
2 1/2 to 3 bathrooms
2x6 walls
2-3 car garage, insulated, sheetrocked and attached with electric door openers
1,500 gal septic concrete tank
Porch
Much bigger windows (mandated for egress fire code)
Double pane low E windows
200 Amp service
AC
And on and on.

It isn't the same house as 10 years ago or 20 years ago. The codes change, the consumer demands more.

Then the land development costs. New roads are wider, with far more storm drainage, environmental impact, wetlands and road base criteria. Underground utilities are common.

Everyone hates development... until you want to buy a house. So regulations run abundant and unrestrained. Permits are needed for everything, which requires engineers, specialized fields, lawyers. Neighbors object and lengthen the process. Vermont Act 250 is legion for restricting building in VT. Streamlining it was recently proposed, but all that got done was for a few select development zones near the larger cities, the rest of the state suffers on under the crush of it. There is the upside - Vermont has preserved land otherwise used for housing. But you don't get it both ways.

New 1 br Apts in Rochester going at 2200 a month. It's fucking insane.

It's what the public asked for, they just never considered the price.

Regulated housing construction is expensive.

 

[1dog]

That cost of housing graph you posted has less meaning until you know what the cost is derived from.

One factor (shouldn't be a surprise) is the increased costs, independent of inflation.

Insurance for building goes up with every large loss payout, just like every other high risk industry
Regulatory expense
Diesel fuel - affects the cost of nearly everything due to trucking, heavy equipment fuel, concrete and asphalt plant fuel, vinyl siding, etc

The 5 year old house I was born in had 2x4 walls, 1 1/2 bathrooms, single pane windows, 250 gal metal septic tank, one car garage with open studs, 50 amp service in 1700 sq ft.
Now the average new house in surrounding towns has
2,600-3,000 sq ft
2 1/2 to 3 bathrooms
2x6 walls
2-3 car garage, insulated, sheetrocked and attached with electric door openers
1,500 gal septic concrete tank
Porch
Much bigger windows (mandated for egress fire code)
Double pane low E windows
200 Amp service
AC
And on and on.

It isn't the same house as 10 years ago or 20 years ago. The codes change, the consumer demands more.

Then the land development costs. New roads are wider, with far more storm drainage, environmental impact, wetlands and road base criteria. Underground utilities are common.

Everyone hates development... until you want to buy a house. So regulations run abundant and unrestrained. Permits are needed for everything, which requires engineers, specialized fields, lawyers. Neighbors object and lengthen the process. Vermont Act 250 is legion for restricting building in VT. Streamlining it was recently proposed, but all that got done was for a few select development zones near the larger cities, the rest of the state suffers on under the crush of it. There is the upside - Vermont has preserved land otherwise used for housing. But you don't get it both ways.


It's what the public asked for, they just never considered the price.

Regulated housing construction is expensive.

MM correct. All those items listed have consequences. Now, new construction has a cost in NE of $400-$500 p/s/f. As one builder told me literally 40 years ago, you purchase land and you have a choice for Boomers- land cost the same whether you build a 1600 s/f cape for $160K. or a 3000 s/f Mc Mansion $300K at a cost of 15-20% more. Easy answer.

Now as hard as it is to believe, a $550K starter home ( if you can find it in metro Boston) is a far cheaper entry point to the housing market than a new build. Regulation, materials, labor, and in some cases, land - northing even at a 1/3 acre under $225K, then cost of build.

As some on here say, something has gotta give. A bright spot for some mils and GenZ folks is the largest wealth transfer in world history is about to take place. Even if the parents didn't save a dime, the $50K house they bought in the 50's-60's is worth $800K, Boomers are downsizing, taking large mostly tax-free profits from amazing housing market growth, and moving away.

Inflation sucks unless your benefitting by owning RE prior to 2011-2015. Even then, you sell, and if you want to stick around NE, you give a lot of it right back.

 

[raisingarizona]

As some on here say, something has gotta give. A bright spot for some mils and GenZ folks is the largest wealth transfer in world history is about to take place. Even if the parents didn't save a dime, the $50K house they bought in the 50's-60's is worth $800K, Boomers are downsizing, taking large mostly tax-free profits from amazing housing market growth, and moving

Wouldn’t that just flood the market and devalue homes?

 

[Former Sunday Rivah Rat]

The good news is that we are in a Fed rate cutting cycle. History has shown that when the Fed starts cutting they cut more than most Economists forecast. Over the last 3 rate cutting cycles on average the Fed has cut rates 4.25% peak to trough. They have only cut 1% so far. Houses should get a lot more affordable then.

 

[bigbob]

The good news is that we are in a Fed rate cutting cycle. History has shown that when the Fed starts cutting they cut more than most Economists forecast. Over the last 3 rate cutting cycles on average the Fed has cut rates 4.25% peak to trough. They have only cut 1% so far. Houses should get a lot more affordable then.

Butt this will increase demand which will strain an already tight inventory. This could put pressure on prices to start to climb again. I am looking to downsize and move north within the next year. My problem is I have lived in the same house for 35 years and will have to pay capital gains tax when I sell.

 

[mister moose]

My problem is I have lived in the same house for 35 years and will have to pay capital gains tax when I sell.

This is a real burn when you think about it. You pay tax on the increased selling price, much of which is caused by inflation, caused by inflationary spending. Tax on your decreasing dollar's worth. On the plus side, you can deduct 250k of gain when selling a primary residence if you lived there long enough.

 

[slatham]

This is a real burn when you think about it. You pay tax on the increased selling price, much of which is caused by inflation, caused by inflationary spending. Tax on your decreasing dollar's worth. On the plus side, you can deduct 250k of gain when selling a primary residence if you lived there long enough.

First $250k (single) or $500k (married) is excluded from cap gains tax. Plus you can add any capital improvements to your cost basis, which if you’ve lived in the house for any length of time are probably substantial.

Housing has become the most unaffordable in history due to the monthly cost of a mortgage on the average house vs average income. Obviously surging house prices during COVID is a key to this, but so to is the increase in mortgage rates over the past couple of years.

What happens to the housing market when the fed cuts rates is an interesting analysis. If they cut due to a severe economic downturn then housing demand - and perhaps prices - might decrease due to lower earnings and high unemployment. Or does the drop in rates and resulting improvement in affordability overwhelm any economic slowdown?

And of course, the Fed doesn’t control the 10 year treasury rate, which is the driver of mortgage rates. Mortgages rates don’t have to drop when the fed cuts.

 

[BenedictGomez]

That cost of housing graph you posted has less meaning until you know what the cost is derived from.

Not really. You're correct that the cost to build a house has greatly increased if we're comparing over the decades, but that does not explain how we literally just lived through by far the largest increase in home prices in American history with > 100 years worth of data, and that "price increase" occurring in a very short window of time.

Homes didn't increase > 50% in just 4 years, because of increases in the cost of cabinet hinges & Canadian lumber, they increased due mostly to the things I listed.

And some experts think US home prices are due for a major price correction lower in the next 2 to 4 years (I agree with them).

 

[Former Sunday Rivah Rat]

And some experts think US home prices are due for a major price correction lower in the next 2 to 4 years (I agree with them).

For your sake, I hope your not paying rent while you wait for prices to come down. They added 47% to the money supply between 2020 and 2022. Prices are not going back to 2020 levels.
What makes you think they won't print even more $ in the next recession?

 

[BenedictGomez]

For your sake, I hope your not paying rent while you wait for prices to come down. They added 47% to the money supply between 2020 and 2022. Prices are not going back to 2020 levels.

Prices are already coming down.

Back to 2020 is not likely, that was 5 years ago and we should expect ~3% appreciation per year. I think 2022 is more likely, at least on an inflation-adjusted basis, especially given how dramatically inventory is currently rising, at roughly 2% per week during this 2025 selling season, sales being lackluster, and price drops currently higher than any April since the housing crash.

That said, there are some investors who do think we retreat all the way back to 2020 levels.

https://x.com/VladTheInflator/status/1919083881820508596

 

[BenedictGomez]

As for renting, my rent is roughly 50% the cost (mortgage, interest, HOA, property tax, insurance, 1% upkeep, garbage & water) of what it would cost to buy the house we live in assuming 20% down. Assuming 50% down, we're saving about 33% per month, but of course that doesn't include the lost opportunity cost of that money in a ~5% risk-free rate environment (which I'm netting given my current equity trepidation).

TL/DR: When people say "renting is throwing out money", (depending on the time period & geography) they often really don't understand finance well. This is like one of those things Boomers say because they've heard it since they were 5 years old, and home prices have risen most of their adult lifetime, but they havent done the math in 2025 versus the first time they heard this in 1972.

 

[Hawk]

Obviously housing prices are completely different for every locational market. I have a considerable amount of friends and coleagues in that business, commercial and residential. People in the Mad River area are saying the next 10 years we may see a slow down or flattening to the increase but nothing is going down. Everything that goes on the market gets snapped up instantly. It the Boston Area it is still insane also. The ranch next to me, 1400sf sold for $750,000. It was in need of a total remake, like the 80's were calling and they wanted thier linoleum and p-lam cabinets back.

Now if there is a Major correction in the market and a total recession where a sell off occurs, then things might get interesteing. It depends on what the interest does. Other than that the high prices are here to stay. Obviously that is locational information for Boston and the MRV based on what the people/friends selling the realestate are saying.

 

[1dog]

Way back in 2008 UC Berkley or Stanford did a study stating only 67% of Americans should own a home. 33% should rent ( various and sundry reasons but lack of financial acumen was one of the main drivers). Of course, the social engineering by our elected officials ( always the voter fault in the end. . on both sides) decided people who have none of those skills should own a home. Fannie and Freddie mandated low income loans with 1% or 0% down (. this actually started late 80's but enlarged during the early 2000's)

Then 15 years of ultra low ( or even free when factoring in inflation/ interest deduction/taxes) rates inflated hard assets and punished the Boomer and what was left of the Greatest Generation of savers. I had bankers complain to me how they all knew 60% of those loans were destined to fail - but damn - 'loan that money or you're punished/fined/etc.;.


Then in 2010-'11 Blackrock, Vanguard , etc. swoop in, buy every 3B/2B home in the 50% price-depressed areas ( Phoenix, Vegas, FL, etc,) with no intention of flipping- just buy for $50K-$150K pour in $10K-$25K) and get a constant 15%-25% ROI on that average $125K investment. They are the largest individual RE holders in the US.

All those properties have doubled or more in value on top of that.


And the taxpayerTreasury is borrowing money to pay the $1.2B interest on the debt.

But I'm sure it will work. out. . .always has right?

 

[AdironRider]

Way back in 2008 UC Berkley or Stanford did a study stating only 67% of Americans should own a home. 33% should rent ( various and sundry reasons but lack of financial acumen was one of the main drivers). Of course, the social engineering by our elected officials ( always the voter fault in the end. . on both sides) decided people who have none of those skills should own a home. Fannie and Freddie mandated low income loans with 1% or 0% down (. this actually started late 80's but enlarged during the early 2000's)

Then 15 years of ultra low ( or even free when factoring in inflation/ interest deduction/taxes) rates inflated hard assets and punished the Boomer and what was left of the Greatest Generation of savers. I had bankers complain to me how they all knew 60% of those loans were destined to fail - but damn - 'loan that money or you're punished/fined/etc.;.


Then in 2010-'11 Blackrock, Vanguard , etc. swoop in, buy every 3B/2B home in the 50% price-depressed areas ( Phoenix, Vegas, FL, etc,) with no intention of flipping- just buy for $50K-$150K pour in $10K-$25K) and get a constant 15%-25% ROI on that average $125K investment. They are the largest individual RE holders in the US.

All those properties have doubled or more in value on top of that.


And the taxpayerTreasury is borrowing money to pay the $1.2B interest on the debt.

But I'm sure it will work. out. . .always has right?

Blackrock and Vanguard did not buy every home. Even today, corporate owned rentals amount for a grand total of 3.8% of housing stock per the Urban Institute. Even then, the vast majority are like you aunt and uncle who own a couple rentals vs. a large corporate behemoth like Blackrock.

Understanding corporate landlords: Decoding a recent housing phenomenon - Charlotte Urban Institute

By Eric Moore, Ph.D. The term “corporate landlord” has gained significant attention across the United States in the last few years. Yet, despite all the news stories and legislation focusing on these entities, you may find yourself puzzled by the hype around them or how they relate to your...

ui.charlotte.edu

At the end of the day, home ownership is time intensive and does not scale. Each house requires virtually the same amount of work, and that model sucks for large corporations to manage.

 

[cdskier]

Obviously housing prices are completely different for every locational market. I have a considerable amount of friends and coleagues in that business, commercial and residential. People in the Mad River area are saying the next 10 years we may see a slow down or flattening to the increase but nothing is going down. Everything that goes on the market gets snapped up instantly. It the Boston Area it is still insane also. The ranch next to me, 1400sf sold for $750,000. It was in need of a total remake, like the 80's were calling and they wanted thier linoleum and p-lam cabinets back.

Now if there is a Major correction in the market and a total recession where a sell off occurs, then things might get interesteing. It depends on what the interest does. Other than that the high prices are here to stay. Obviously that is locational information for Boston and the MRV based on what the people/friends selling the realestate are saying.

Sounds like the market in NJ as well (at least in any of the major suburbs)...crazy here as well.

 

[AdironRider]

As for renting, my rent is roughly 50% the cost (mortgage, interest, HOA, property tax, insurance, 1% upkeep, garbage & water) of what it would cost to buy the house we live in assuming 20% down. Assuming 50% down, we're saving about 33% per month, but of course that doesn't include the lost opportunity cost of that money in a ~5% risk-free rate environment (which I'm netting given my current equity trepidation).

TL/DR: When people say "renting is throwing out money", (depending on the time period & geography) they often really don't understand finance well. This is like one of those things Boomers say because they've heard it since they were 5 years old, and home prices have risen most of their adult lifetime, but they havent done the math in 2025 versus the first time they heard this in 1972.

You are using an exception that proves the rule as if it was the rule here, and even then, only on a short term basis. Homeownership over the medium to long term continues to be the best play.

Very few markets have the delta of rent vs. own on a monthly cashflow basis of a Park City, Aspen or Jackson Hole. Even then, the appreciation is bananas and makes ownership (if you can afford it) the better play. They aren't making another Jackson or Park City, and that drives appreciation the average homeowner in the burbs could only dream of.

For example, the median list price for a home in Jackson increased from 795,000 in Feb 2020 (aka pre covid) to 2,795,0000 in Feb 2025 and median days on market has decreased, even in 2025. That blows away the carrying costs of home ownership by a county mile and more than offsets any reinvestment of "savings" by renting. It is just absurdly hard to get a toe hold in one of those markets. You could put 5-10% down on a house in Jackson five years ago and still come out a million plus ahead of renting.

Also, for a guy that claims to understand finance, you lumping in monthly costs like HOA fees and garbage, which are costs a renter is going to pay as well regardless (whether as part of the rent or on their own) is just poor form. No landlord on earth is covering that for you out of the goodness of their own heart.

Finally, you are basically advocating to try and time the market, which is a fools errand. Buy and hold always wins, especially in resource scarce environments which the housing market invariably is.

 

[Hawk]

It's kind of sad but I think the Gen-X ers are the last generation to actually have a fighting chance at the true american dream. From my perspective it was a perfect situation. State college in MA at my time (80's) was $2,500 - $4,000 a semester. LOL
Bought my first house $250K interest at 7.5%ish. Worked my ass off and went up the ladder. Interest went down so refinanced 3 times and also bought and rolled my condo at sugarbush into it. Paid it off quickly. I think my last note was a 10 year note for like 2%.

I have no idea how any generalton after 2000 can afford anthing. It is just insane. I feel really bad for you guys with kids going through it now.