Economic gurus and Wall Street Analysts are starting to forecast an economic and real estate market slow down for 2016. The 3rd Qtr GDP growth come in at half the 2nd Qtr GDP growth rate, a shock to some and a reason for people to lift their collective heads and assess what is going on. According to Investopedia (they have great market perspective) there are six indicators pointing to a slow down. They are:
i) European economy is getting worse,
ii) China's growth has stalled (once you look past the Chinese Governments funny numbers),
iii) unemployment isn't so rosy (yes, we are creating jobs, but we still have the lowest labor participation rate in 38 years.)
iv) We have a bigger than anticipated problem in student debt.
v) The Fed can't cut rates any lower without risking creating a recession themselves.
vi) The economic data now is VERY similar to the time period leading up to the last recession (retail sales, down - US Factory orders, down - Real GDP, down - US Exports are weakening and corporate profits are dropping).
Bottom line, for those who do live here, be thankful you are in Stowe and Vermont! This isn't just because Vermont is a great place to live, which it is. This is because if anything has proven true about the Vermont real estate market it's that it never grows or recedes as fast as the national average. As the mantra goes, our peaks and valleys are in the landscape, not real estate markets. Why? Because when the luster of the city wears off and people don't make money there, where do they go. You guessed it. People are more inclined to move out of the concrete canyons and pursue the things in life they have been sacrificing. They become lifestyle buyers. When the allure of financial gain goes away people embark on other pursuits.
Look at the couple years after the last recession. Vermont outpaced the national average by 14% in one demographic, people between the age of 35 and 44. In the last few years, as the economy has got better that segment's growth has slowed down. If there is a recession that starts next year look for that trend to ramp back up. If this recessions has anywhere near the vigor and sting of the prior one look for the lifestyle movers who held in here last time to say "NO, NO, NO, I'm not doing this again!!"
What does mean for Stowe, VT. Given that Stowe is the preeminent lifestyle town in Vermont we should see a disproportionate share of new faces. In short, it doesn't look like the demand side will fall all that much. Stowe has the luxury of two major buyer groups - one, primary owners as the town becomes more of a bedroom community for Burlington, and, two, people who want their second/retirement homes here.
With that understanding of the demand side, let's look at the supply side. Some Real Estate agents in the market here noticed a number of recent price drops on homes in the market and have concluded its time to cut bait and run, the market is already tanking. Is that accurate? The year 2014 was a record breaking sales year - yes, we benefit most from economic growth like everywhere else. The market forces do reign supreme. Then 2015 had all the ear marks of another record breaker (click here for the Stowevt.com 2015 Real Estate Outlook), but that didn't play out like we thought. A brutally cold winter (yeah, awesome skiing!!) slowed winter sales. However, the real issue was buyers were faced with a paucity of decent supply in 2015. So sales pulled back regardless of the indication of ever increasing demand. Supply was not there. Where did that demand go? It's still there! The majority of buyers are underwhelmed with the product on the market. Current owners saw houses flying off the shelf in 2014 and ratcheted their prices up in 2015 for less than desirable product. Anything that was clean, presentable, functional sold and sold fast. Further adding credence to this assessment is builders have some of the biggest backlogs of construction projects they have had in years. People still want to be in Stowe and if they can't find quality they're going to build it. See projects like Stowe Highlands (click here or details).
We are not saying an economic pull back will not affect the Stowe, VT real estate outlook, it will. However, it shouldn't effect it like other places. Just be glad you live here and that our peaks and valleys are really in the landscape and not in our housing market! Stay tuned for the 2016 Real Estate Market Outlook coming soon.
If you would like to discuss the Stowe and Northern, VT real estate outlook, please feel free to call 802.585.1131 or email email@example.com. Look for our 2016 Stowe Real Estate Market Outlook soon.