The Vermont Economy Newsletter released its annual housing affordability analysis yesterday.
Art Woolf, the report's author, states
Vermont's housing affordability improved in 2010 for the fourth consecutive year, making last year the 5th most affordable year in the 24 years he's published the report.
Woolf cites decline in mortgage rates, combined with slightly higher incomes, as the primary driver. But, he writes, higher home prices reduced affordability.
However, Woolf's analysis used interest rates for 30-year fixed rate loans, assuming 20 percent downpayments. It also only considers people interested in owning a home and not the tremendous rise in rents over the past several years. Between 2010 and 2011 rental prices increased 7 percent.
"For many Vermonters, a 20 percent downpayment just isn't an option," according to VHFA Executive Director Sarah Carpenter. "At best it'd indicate the buyer probably already owns a home, which leaves first-time buyers out in the cold."
VHFA works with many buyers who are able to put down only 3 to 10 percent, and, therefore, need to purchase increasingly scarce mortgage insurance, yet another monthly expense.
So while affordability continues to be debated, what doesn't seem in question is that buying that first home is more difficult than ever before.
Woolf predicts affordability will worsen slightly in 2011, as interest rates rise.