I sent the following press release to Vermont's media outlets last week (click on the graphic to enlarge):
Westford, VT -- Housing was more affordable in Vermont in 2009 than at any time since 2003, according to The Vermont Economy Newsletter's annual housing affordability analysis.
"The share of median family income needed to finance the payments on a median priced home in Vermont fell to 15.0% in 2009, the lowest percent of income needed to service a mortgage since 2003," said Art Woolf, author of the study. "In the 22 years we have been tracking housing affordability, there have been only six years when housing has been more affordable than in 2009," he continued. "This is one reason that the U.S. Census Bureau reports that Vermont's rate of homeownership is 74.3%, ninth highest in the country."
Woolf explained why housing affordability improved: "It was due to two factors," he noted. "First, the median price of a house sold in Vermont fell 6.7% in 2009, to $187,000. Second, mortgage rates fell to the lowest rates in decades. The interest rate on a conventional fixed rate mortgage averaged 5.04% in 2009, down a full percentage point from 2008. A factor making housing less affordable was an estimated 3% decline in family income, to $64,450 in 2009."
Woolf noted the changing pattern of housing affordability in Vermont: "In the late 1990s, a median income family spent 14% of its income to service the mortgage on a median priced home. Affordability worsened in the early part of this decade, and by 2006 it took 19% of a median family's income to pay for the mortgage on a median priced home. Since then the cost has dropped to 15% of median income."
"Affordability in 2010 will remain at 2009 levels," predicted Woolf. "Mortgage rates are currently 5% and we expect them to rise slightly by the end of 2010 as the economic recovery takes hold. We expect income to grow, but only barely ahead of inflation. Housing prices will remain essentially flat. The combination of these factors will leave affordability unchanged," he said. "This is good news for households with good credit and who have saved up for a down payment."
Housing prices used in this analysis is the median price of all 5,100 residential houses sold in Vermont in 2009, with data obtained from the Vermont Tax Department. It does not include vacation homes. Half of the homes sold cost more than the median and half cost less. Mortgage rates used in the analysis are 30 year fixed rate mortgages with a 20% down payment. Income is the median income of married taxpayers filing joint returns.
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