‘Be prepared to pay 20% over the asking price’

Real estate market remains competitive in Killington through fall 

By Curt Peterson 

The real estate market is full of vagaries — prices, climbing mortgage loan rates, bidding wars, and the effects of climate change, to name a few.

Each town has its own characteristics. The area served by the Mountain Times and where our readers live or play, or both are no different. Three recognized experts discussed the market and its future.

Kyle Kerschner, owner/broker of Killington Pico Realty, Rick Higgerson, of the Higgerson Group/Williamson Group/Sotheby’s in Woodstock, and John Bassette, owner/broker of Bassette Real Estate Group in Hartland, all agree the number of available properties is less than the number of buyers, creating a high demand for a limited supply.

Kerschner cited National Association of Realtors statistics: “There are 1.5 million Realtors in the U.S., and only 1.48 homes available to buy. And I don’t see any dramatic changes in this situation in the near future.”

Fewer divorces are predicted in ’23/’24 – and a lack of affordable options for divorcing spouses as buyers.

“People stay together not because they love their spouse, but because they love their 3.5% mortgage interest rate more,” he said.

Inventory isn’t as much of a problem in Killington’s second-home market. People are using their second homes less, and don’t have to replace them at higher costs if they sell. 

“Covid refugees increased the market exponentially in our area,” Kerschner said. “But it’s stabilizing now. Buyers are asking for contingencies with their offers again.”

Stabilization comes to higher-end homes.

“We listed a property for $3.25 million, and a bidding war ensued – the final sale price was $3.475 million,” he said. “That was the highest-priced property we sold this year.”

The Killington market is still hot, Kerschner said. A buyer came within 45 days to complete a “1031 transaction” — replacing a sold property with another to avoid tax implications. 

“Desperate for a Killington condo, he made bids over asking price on five properties, lost all,” Kerschner said. “If you’re a buyer in Killington, you have to be all in — be prepared to pay 20% over the asking price.”

Higgerson noted property prices have increased 40% over the past two years. For higher-priced properties, he is scheduling “delayed showings”, grouping viewings into a short time period for efficiency. He cited a recent sale in Hanover.

“Sixteen people came, and five made offers. The final agreement was $1.3 million over the asking price. And the four unsuccessful bidders are anxiously waiting for the next opportunity to bid,” he said.

Escalation clauses, stating an offer with a maximum increase if there is a bidding situation, are common, he said. He doesn’t predict any change in the market in the near future. 

“A 2% increase in loan rates in the past year hasn’t slowed demand,” he said. 

Several sellers in his area are older residents who are downsizing or going into an assisted living or retirement situation.

“They don’t have to care about replacing their home at a higher price or interest rate,” he explained. “They’ve cashed out.”

Like Higgerson, John Bassette’s area includes Vermont and New Hampshire. And his sales have a huge range – from $150,000 to $4.7 million. 

He says prices are driven by demand, interest rates and inventory, but, while prices have stabilized post-pandemic, loan interest rates continue to climb, and inventory, while growing slightly, continues to be short of demand.

“And higher interest rates only hurt the ‘little people,’” he said.

Bassette has seen bidding on properties in the $400-500,000 range during the pandemic, and cash buyers had an advantage. Over 50% of his sales last year were cash transactions.

“Some young buyers could borrow from their parents,” he said. “Then, later, they could apply to refinance without pressure.”

Taxes are also an issue, according to the Hartland Realtor.

“Houses are less expensive in Vermont than in New Hampshire,” he said, “but real estate taxes are generally higher there, and lower on this side of the river.”