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Residential Department: Spotlight: Vermont: October 2018

 

Spotlight: Vermont

The Green Mountain State needs some economic elevation.

The state motto for Vermont is “Freedom and Unity,” and The Green Mountain State’s history displays plenty of both. Vermont declared its independence apart from the original 13 colonies and was finally admitted to the union as the 14th state after 14 years as an independent republic.

The state today has the smallest economy of the 50 states. It also has among the lowest unemployment rates, at 2.8 percent as of this past May, tied for fifth lowest in the nation.

Vermont’s economy, however, is best described as lackluster. The state’s compound annual growth rate between 2007 and 2017 was 0.8 percent, compared to the national mark of 1.2 percent over the same period. Last year, Vermont’s real gross domestic product grew by 1.1 percent, compared to a 2.1 percent growth rate for the national economy, according to the U.S. Bureau of Economic Analysis.

Vermont has a reputation as a state with high property taxes and business costs, and its population is aging faster than the nation as a whole, according to U.S. Census Bureau data. As of last year, some 18 percent of Vermonters were over the age of 65. That number is expected to jump to 21 percent by 2020 and 28 percent — or one in four state residents — by 2030.

In an effort to address the problem of its aging workforce and declining population, Vermont recently enacted legislation that will pay individuals who move to the state to work remotely for an employer out of state up to $10,000 over two years — to cover expenses for relocating as well as other costs.

Although Vermont’s economy is flat in terms of growth, it is diversified, with manufacturing, finance/insurance, tourism and the tech sectors all contributing to the state’s economic landscape. Vermont ranks among the top three domiciles worldwide for captive insurance companies, which are self-funded insurance affiliates of companies not in the insurance business. In fact, according to the Vermont Department of Economic Development, about half of all the companies on the Fortune 100 and Dow 30 operate captive insurance subsidiaries domiciled in Vermont.

Manufacturing accounts for 11.1 percent of the state’s GDP and employs some 36,000 people, according to the Vermont Department of Labor Economic & Labor Market Information. Vermont’s tech sector employs more than 77,000 people and accounts for a third of the state’s private-sector employment, according to a report by the Vermont Technology Alliance.

Tourism is another economic engine for the state, which is a major skiing destination and popular location for second homes. The industry employs some 31,000 people and represents about 8 percent of the state’ GDP, according to the Vermont Department of Tourism and Marketing.

skip to 3 Cities to Watch>>  

Home sales and prices

r_2018-10_Spotlight_chart-1Vermont’s housing market is bucking the trend of rapidly appreciating home prices that defines many other parts of the country. The median-priced home in the state last year sold for $190,000, according to Vermont Tax Department data, which is about the same as 2016, when the median price of a home in the state was $189,000.

Data from Vermont Realtors shows that home sales in the state in 2017 outstripped home sales in 2016 between June and December, but the pattern was reversed in all but one month between January and May. Meanwhile, the median sales price for a home in Vermont from January 2016 through May 2018 has bounced around in a narrow range of between $186,000 and $229,000, with the high mark registered in July 2017. The median home-sales price as of this past May was $218,000.

Unemployment

During the height of the job losses sparked by the Great Recession, Vermont’s unemployment rate never rose above 6.9 percent, compared with the national high mark of 10 percent unemployment. As of this past July, Vermont’s unemployment rate, 2.8 percent, was more than a full percentage point below the national rate of 3.9 percent.

Vermont’s extremely low unemployment rate, however, has to be set against the state’s aging, and declining, population. Between 2010 and 2017, Vermont posted the third largest decline nationwide in the actual number of people living in the state, recording a net loss of 2,325 people. On the bright side, according to a mid-year 2017 estimate by the U.S. Census Bureau, last year was the first year since 2013 that Vermont recorded an uptick in population, slight as it was — a net gain of 303 people year over year.

Delinquencies and foreclosures

r_2018-10_Spotlight_chart-2The percentage of all mortgages in Vermont that were 30 days or more past due stood at 3.3 percent as of this past April, down from 4.1 percent a year earlier and nearly a percentage point below the 4.2 percent rate nationally, CoreLogic reports. The housing foreclosure rate for the state as of this past April stood at 0.7 percent, compared to the national mark of 0.6 percent.

Foreclosure actions in Vermont, defined as property auctions and real estate owned, surged in second-quarter 2015, to 175 actions, up from 106 the prior quarter, according to data from Attom Data Solutions. They declined gradually over the next four quarters, until surging once again in third-quarter 2016, reaching 173 foreclosure actions. Foreclosure actions then dropped off, but continued to bump up and down, ranging from a high of 134 actions in first-quarter 2017 to a low of 105 actions in second-quarter 2017. In first-quarter 2018, there were a total of 129 foreclosure actions.

Sources: Attom Data Solutions, Burlington Free Press, City of Montpelier, Forbes, History.com, Los Angeles Times, New England Today, Rutland Winter Fest, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, U.S. Census Bureau, CoreLogic, Vermont Department of Economic Development, Vermont Department of Tourism and Marketing, Vermont.com, Vermont Realtors, Vermont State Fair, Vermont Technology Alliance


3 Cities to Watch

Burlington

Although it has a population of only 42,000 people, Burlington is the largest city in Vermont, and the first city in the country to be powered completely by renewable energy. Burlington, which is located on the eastern shore of Lake Champlain, also is a college town and is home to the University of Vermont, Champlain College and the University of Vermont Medical Center. Major private-sector employers in the city include Fletcher Allen Health Care, ice cream maker Ben & Jerry’s, Burton Snowboards, restaurant operator Bruegger’s and Lake Champlain Chocolates.

Montpelier

r_2018-10_Spotlight_cityThis city of some 8,000 residents is Vermont’s capital, a small town with the amenities of a large urban market, including a strong arts and music scene as well as top-notch restaurants. It is home to the Vermont College of Fine Arts and the New England Culinary Institute. Montpelier holds claim to being the only state capital without a McDonald’s, and it also is the smallest state capital in the nation based on population.

Rutland

A community of some 17,000 people located in the Green Mountains, Rutland offers visitors and residents alike plenty of outdoor recreational opportunities, including skiing at the nearby Killington Resort as well as the annual Winter Fest and Rutland Halloween Parade. Rutland also hosts the Vermont State Fair, which is managed by the Rutland County Agricultural Society and dates back to 1846, making it one of the oldest state fairs in the country.

What the locals say

“I work in a resort market in the southern part of the state. We’ve seen a very stagnant-to-lowering home-price trend here for the past nine years. The prices are staying low because we just have a lot of inventory. The [much larger] Burlington market, however, has a much lower home inventory than markets like mine, so you’re going to see an increasing-price trend up there. … One of the challenges for us in Vermont is that property taxes are very high. More people than I can count on one hand who I’ve shown homes to ended up saying ‘You know, we’re going to buy in New Hampshire.’”

Alison Cummings 
2018 President, Vermont Realtors


 

Bill Conroy is editor in chief of Scotsman Guide Media. Reach him at (800) 297-6061 or billc@scotsmanguide.com.

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