Evaluating the Vermont Land Market

The Vermont land market has been experiencing significant changes in recent years, reflecting broader trends in rural real estate and agricultural land values. According to the USDA's Land Values 2023 Summary, Vermont's farm real estate value, including land and buildings, averaged $3,800 per acre in 2023, up 5.6% from the previous year. This increase outpaced the national average growth rate of 4.4% for farm real estate values. Notably, Vermont's cropland values saw an even more substantial rise, increasing by 7.0% to reach $4,600 per acre. These figures underscore the growing value of land in the Green Mountain State, driven by factors such as limited supply, increasing demand for rural properties, and the state's commitment to preserving its agricultural heritage.

Understanding Vermont’s Real Estate Market Dynamics

Assessing any real estate market requires understanding location-specific supply and demand drivers along with economic factors at play. When examining Vermont’s land market in particular, some key attributes stand out:

Land Availability and Affordability Relative to Neighboring States

Vermont remains a more reasonably priced option than other New England states like Massachusetts or Connecticut where property near urban areas can be largely unaffordable. The population density is also far lower than neighboring regions, creating substantially more available land for purchase. With its scenic small towns and vibrant local culture, Vermont offers tremendous bang for your buck in terms of land value.

Growing Interest from Out-of-State Buyers

Fueled by urbanites seeking refuge, retirees looking for tranquility, remote workers unpacking their laptops, and nature enthusiasts prioritizing space - Vermont has seen swelling interest from out-of-state buyers in recent years. This external demand is heating up competition, especially near popular ski resorts.

Tight Inventory in More Developed Areas

While Vermont has rural ruggedness aplenty, land options near its quainter developed towns have tightened. Regions near Burlington, Manchester, Stowe, and other most coveted community centers boast thriving local economies but far fewer purchase opportunities.

Variable Market Activity Across Counties

On a granular county-level, market activity fluctuates substantially based on accessibility, proximity to amenities, weather patterns and trends in neighboring external markets like Boston or Upstate New York. Isolated Northeast Kingdom counties see far less turnover than connected picturesque havens like Addison County capturing attention from tourists and second homeowners.

Land Value Going Beyond Homebuilding Potential

In hotter Vermont towns, land value has transcended purely purchasing space to construct residential homes. With exceptional school districts, vibrant cultural scenes, ease of commutes or Income Tax incentives attracting remote talent - the intrinsic value of surrounding community determines benchmark pricing.

Weather and Natural Factors Impacting Sale ability

Due to its colder climate, mountainous terrain and remote country sides - factors like road accessibility, cellular service, solar viability, flooding risks or snow removal costs also weigh heavily on property desirability and sale timelines.

Key Metrics Driving Land Plot Valuations

Whether preparing to sell your land or evaluating a purchase, identifying core pricing factors is essential:

Location

Proximity to key amenities naturally drives demand. Being minutes outside bustling retail corridors or nestled near sought-after Vermont ski resorts brings tremendous premiums. Even distance from highway access ramps or airports adds convenience value.

Developability

Fields, pastures or wooded acreage with minimal erosion, ledge or wetlands allow for easier construction feasibility. Ideal for homebuilding fetches higher bids. Land limitations that restrict septic installation/drilling, depth to bedrock or need excessive clearing/foundational work deter buyers lacking ability or appetite for major site improvements.

Lot Shape and Dimensions

Wide rectangular lots with easy road frontage provide flexibility over odd shaped plots lacking road access that may not subdivide or develop easily into separate parcels. Square footage and total acreage are common pricing denominators.

Permitted Use

Zoning laws, conservation restrictions, right-of-way encumbrances or other easements can limit land utilization to just single family residential or agricultural use. Lands allowing mixed development, multi-family dwellings or light commercial use offer versatility for changing future needs or investment strategies.

Site Improvements & Utilities

Lands brought to market with existing access driveways, partial clearing/grading, installed power lines, drilled wells or preliminary septic feasibility studies can boost attractiveness for buyers lacking appetite to orchestrate large scale site development projects.

Surrounding Parcel Dynamics

Private undeveloped acreage neighboring protected greenbelt spaces, conserved state forests or low density residential plots allow for more peacefulness. Nearby commercial density, industrial activity, apartment complexes or livestock agriculture can detract from idyllic Vermont living.

Historic Comps

Sales data on neighboring comparable parcels provides crucial context in accurately evaluating FMV (Fair Market Value) metrics to list or bid appropriately and competitively within micro-market landscapes.

Best Process to Determine Optimal Listing Price

For sellers navigating Vermont’s up-and-down land market, settling on the magic listing number is a strategic balancing act requiring both art and science.

The best practice process looks like:

1. Identify Highest & Best Use

In collaboration with local zoning officials and a civil engineer, determine property’s feasible near term and long range utilizations based on topological and municipal constraints to estimate full market value potential.

2. Get Multiple Appraisals

Commission detailed appraisals from at least 2-3 accredited professionals based on different development scenarios - raw vacant land value, single family construction value and multi-family/mixed use potential.

3. Study Recent Nearby Sales

Lean on your RE agent to pull and examine relevant public record comps within a 3 mile radius over the past 3 years- noting unique traits, similarities, sale terms and anomalies between data points. This establishes realistic baseline pricing expectations.

4. Inspect On-Site Land Dynamics

Visit the actual property with your RE agent, assessor and civil engineer to quantify ease or difficulty of future building plans based on vegetation, gradients, wetlands and ledge presence. Pending approvals also impact bids.

5. Consider Carrying Costs

Model out your monthly tax payments, upkeep fees and lost interest revenue from tying up liquid capital while anticipating sales timelines before settling at final ask price. Price too high and sale delays erode ROI.

6. Layer in Motivational Factors

Are you facing external pressures from life changes or business needs that can incentivize listing at lower than FMV to ensure quicker sale turnover? Model cash flow trade-offs between listing price and days on market.

7. Set Competitive Listing Rate

Using the above market research and carrying cost analysis, pick an attractive listing price that is below recent regional comparables. Consider building room for price reductions if needed. Then patiently field offers and negotiate!

Smart Strategies for Faster Sale Turnover

Even when accurately priced, Vermont’s fluctuating land sales process rarely happens overnight requiring strategic proactivity.

Price Attractively From Outset

Shaving 5-10% off recent comparable sales builds entry level excitement, incremental bidding and negotiating buffer to full potential. Pricing above FMV risks overvaluing land just because you own it!

Offer Owner Financing Options

Carrying mortgages for credible buyers seeking low down payments or extended repayment terms broadens prospective demand beyond just cash heavy investors.

Parcel Out in Phases

Consider partitioning land into multiple listings - selling undeveloped sections first and keeping approved building envelopes for last. Cast wider bidder nets by catering to varying needs in phases!

Bundle Site Improvement Allowances

Offering medium level site rough grading/drainage, gravel drive installation or preliminary perk testing sweetens deal appeal to motivate quicker sales activity even at discount.

Incentivize Local RE Agents

Bolstering selling agent commissions above minimum co-op split thresholds entices added regional realtor effort for more exposure channels like broker tours, open houses events and external referral networks.

Be Flexible on Sale Terms

Entertaining creative offers like baking in multi-year seller finance periods on chunks of principal payments or allowing land subdivisions to child relatives of buyers lends added negotiating latitude that catalyzes deals.

Market Aggressively Online

Beyond just MLS listings, leverage expanded social media and specialized land sale marketplaces to target buyers outside Vermont. Provide video tours and drone photography to showcase natural scope and future build visions.

In Vermont’s regionalized land markets, tailoring clearance strategies based on localized demand trends, property traits and owner motivations ensure selling success. Before stepping blindly into its uneven terrain, arm yourself with objective market perspectives, patience and creative problem solving!

Final Thoughts

Navigating the nuances of Vermont’s localized land markets certainly poses unique challenges compared to more urbanized regions. With its rugged terrain, remote country sides, fluctuating micro-economies and uneven buyer demand, sellers require tempered expectations on sale timelines and pricing strategies. Yet for all its quirks, Vermont rewards those who approach its real estate landscape with patience, flexibility and data-driven decision making. Whether buying or selling, resist relying on gut instincts alone. Lean on objective appraisals, localized data points and creative negotiation tactics as your guiding compass for successful deals. For beneath the state’s famous tranquility lies a savvy playground ready to reward thoughtful opportunists on both supply and demand sides of the equation. Just mind your bearings using the evaluative approaches above - and Vermont’s vast terrain transforms into a negotiable venue primed for prosperity.

Frequently Asked Questions (FAQs)

What are current price per acre rates for undeveloped land in popular Vermont counties?

Pricing varies drastically based on location even within counties. Broad benchmarks per May 2022 data: Chittenden County ($15K-$30K per acre), Rutland County ($5K-$15K per acre), Addison County ($10K-$60K per acre), Bennington County ($5K-$20K per acre).

If zoning permits allow mixed development, does the value increase substantially over simple residential approval?

Yes, flexible usage permitting retail, hospitality, healthcare or light industrial uses in addition to residential density dramatically boosts valuation - sometimes by 200-300% over lands limiting single family homes alone due to future income potential.

How much do improved parcels with existing gravel driveways and assessed septic viability fetch over unmanaged raw land?

Depending on site readiness enhancement extent, improved land parcels garner roughly 10-30% premiums reflecting saved construction timelines/costs for buyers. Partially cleared lots with assayed wells/perc tests and basic electric/water stub connections fare even better.

Which data points hold higher priority when evaluating property value - recent neighborhood sales or municipal tax assessment history?

Both perspectives offer clues but actual public record sales of comparable nearby parcels in last 2-3 years reveal most accurate FMV pricing metrics based on tract similarities and demonstrated buyer willingness metrics in micro-market.

How much land value price reduction is customary when offering owner financing terms over mandatory cash deals?

Seller financing deals averaging 5-10% APRs over 5-7 year periods often price 5-15% below cash equivalent rates to offset carrying cost risks borne by the property owner over time. Terms allowing bigger repayment chunks later in term offer middle grounds.

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