As 2024 draws to a close, Vermont’s real estate market has undergone notable changes, reflecting the state’s evolving housing and economic landscape. Multifamily properties continue to play a critical role, highlighting both the persistent housing shortages and opportunities presented by Vermont’s unique market conditions. With 2025 on the horizon, this is a perfect moment to assess this year’s trends and anticipate the developments shaping Vermont’s housing market and economy.
Whether you’re a property owner, investor, or someone simply curious about Vermont’s real estate market, understanding these dynamics will be essential for planning ahead.
2024 Vermont Real Estate Market Recap
1. Changes to Act 250 Permitting
Recent updates to Vermont’s Act 250 were enacted in 2024, which aim to streamline the permitting process for certain types of development, including housing (Act 250 Updates). By reducing barriers to development, these changes are beginning to encourage the creation of more housing units and support infrastructure development.
Check out this interactive map to review active Interim Act 250 Exemptions. Local developers and investors should familiarize themselves with these changes, if they haven’t already, to take advantage of expedited permitting processes wherever we can.
2. Steady Demand for Multifamily Housing
The need for rental housing in Vermont remained strong in 2024, driven by a mix of in-state population shifts and out-of-state migration. Cities like Burlington and Montpelier saw consistent demand for rentals, particularly as professionals and young families moved to Vermont for its quality of life (Age Strong Roadmap 2024-2034). Rental vacancy rates have continued to stay consistently low, reinforcing the value of multifamily investments.
3. High Interest Rates Shape the Market
Persistent rate hikes by the Federal Reserve impacted Vermont’s real estate transactions this year (Federal Reserve). Many buyers found traditional financing less appealing due to higher borrowing costs, which slowed down some property sales but opened doors for creative financing solutions. Property owners with low-interest mortgages found themselves holding onto assets longer, while alternative funding methods, like seller financing, gained traction.
4. Statewide Focus on Housing Affordability
Housing affordability continued to dominate Vermont’s policy discussions in 2024. With initiatives like the Vermont Housing Finance Agency (VHFA) incentivizing the creation and preservation of affordable housing, developers and investors found new opportunities to align their goals with community demand (VHFA).
5. The Rise of Energy Efficiency Retrofits
Vermont’s commitment to green initiatives encouraged property owners to pursue energy-efficient renovations in 2024. From upgrading HVAC systems to adding insulation and solar panels, these efforts not only lowered utility costs but also attracted tenants seeking eco-friendly living options (2030 District Burlington). Programs offering financial support for energy-efficient upgrades gained popularity, helping property owners reduce costs while contributing to Vermont’s sustainability goals.
What Can We Look Forward to in 2025?
1. Steady Interest Rates & Broader Economic Trends
The Federal Reserve’s rate cut on December 18 offers some optimism, but it also signals cautious times ahead. With just two additional rate reductions projected for 2025, borrowing costs are expected to remain a challenge for many (NBC News). For Vermont investors, understanding how these trends will affect you and your local lenders will be key.
2. Impacts of Act 250 Updates
The recent modifications to Act 250 could further influence Vermont’s housing landscape in 2025. By simplifying certain permitting processes, these changes may spur new development projects, particularly in areas that have struggled with housing shortages (Act 250 Updates).
3. Continued Housing Shortages Driving Multifamily Demand
With Vermont’s population projected to grow slightly in key regions, demand for multifamily housing is expected to remain robust (Age Strong Roadmap 2024-2034). Housing shortages in cities like Rutland, Barre, and South Burlington will keep rents steady or rising.
4. Expansion of Housing Affordability Programs
The state’s efforts to address affordability will likely intensify in 2025. New funding mechanisms and tax credits could incentivize the development of mixed-income housing, benefiting both communities and investors willing to engage with these programs (VHFA).
5. Green Housing Growth
The push for energy efficiency will only grow stronger. More property owners are expected to take advantage of state programs like Efficiency Vermont, which offer financial incentives and guidance for implementing sustainable building practices (Efficiency Vermont; 2030 District Burlington).
Vermont’s Economic and Housing Market Forecast for 2025
Population Growth and Migration
Vermont’s population is forecasted to grow modestly, supported by people moving from urban areas for a better quality of life (Age Strong Roadmap 2024-2034). Remote work flexibility continues to draw professionals to Vermont’s scenic towns, increasing demand for rental housing.
Economic Stability
The state’s unemployment rate remains one of the lowest in the country, and Vermont’s economy is expected to continue its steady performance. Key industries like tourism, agriculture, and technology are projected to remain resilient, indirectly supporting demand for rental properties (Vermont Economic Development Authority).
Focus on Sustainable Development
Vermont is likely to maintain its leadership in green development practices, with sustainability and energy efficiency at the forefront of building projects (2030 District Burlington). The emphasis on eco-friendly initiatives aligns with broader economic and social trends in the state.
How Property Owners Can Prepare for 2025
- Evaluate Your Current Portfolio: Take stock of your properties and consider whether now is the time to make upgrades, refinance, or reposition your holdings to align with Vermont’s growing demand for energy efficiency.
- Explore Creative Solutions: If you’re considering selling or expanding your portfolio, think about alternative financing methods like seller financing or partnerships that can make deals more accessible in a high-interest-rate environment.
- Stay Informed on Incentives: Programs like those offered by VHFA and Efficiency Vermont can significantly offset the costs of renovations and upgrades. These opportunities not only help your bottom line but also align your investments with state initiatives.
- Prepare for Market Shifts: While Vermont’s real estate market has shown resilience, staying flexible and ready to adapt will be key as economic conditions evolve.
A Note for Multifamily Property Sellers
If you’re a multifamily property owner in Vermont, 2025 offers an opportunity to make strategic decisions about your holdings. With housing demand high and programs supporting sustainable development, this may be the perfect time to optimize your property or explore creative ways to attract buyers or investors.
For more insights into Vermont’s multifamily market, reach out to us at Lean Capital anytime.
Sources:
- Federal Reserve’s Interest Rate Hikes
- NBC News: Federal Reserve Rate Cut
- Vermont Housing Finance Agency (VHFA)
- Efficiency Vermont
- 2030 Districts Burlington
- Recent Updates to Act 250
- Vermont Economic Development Authority (VEDA)
- Age Strong Roadmap 2024-2034