“We’ve seen mortgage rates hit historic lows,” said Selma Hepp, deputy chief economist at California-based CoreLogic. “As a result, we’ve seen a lot more activity from investors.”

Hepp said investors were also drawn to the fact that rents rose 12% nationwide in 2021. She pointed out that while Vermont had the most dramatic increase in the percentage of investors in the market, investors were buying properties across the country.

Before the pandemic, she said, investors made up 15% of homebuyers nationwide. That number jumped to 26% earlier this year, she said.

CoreLogic defines investors as buyers who have owned three or more homes simultaneously over the past 10 years. These can be single-family homes, townhouses or condominiums. The numbers do not distinguish between those who use these properties to generate rental income and those who own multiple homes for personal use.

For years, investors had a small presence in Vermont’s residential market — in fact, the lowest of any state — accounting for just 2% of homebuyers until 2016.

In 2017, that number rose to 3%, then to 5% in 2018 and 7% in 2019 and 2020. But in 2021, the number rose to 17% of the 13,999 homes sold, the largest relative increase of any States.

Granted, investors still accounted for a smaller percentage of home purchases in Vermont compared to other states. Investors accounted for 30% of Nevada home purchases in 2021, for example.

Hepp said Vermont investors are more attracted to expensive homes, homes that sell for more than 125% of the median price. She said they bought 25% of Vermont homes in that price range in 2021.

“Investors tend to go to areas that are already in demand, areas that are already experiencing a higher house price growth rate or higher rent growth,” Hepp said.

She said Bennington County has seen the biggest increase in investor activity in Vermont. Investors accounted for 25% of home purchases in the county in the first quarter, she said.

Lilli West, a real estate agent in Bennington, said many investors were attracted by the low interest rates.

“At 3%, it was a no-brainer for a lot of investors to buy a second home,” West said. “Bennington in recent years has been booming.”

The revitalization of downtown Bennington, the ability to work from home and upgrades to broadband service attracted general homebuyers and investors followed, she said.

She cites a former Bennington College student who retired, returned to the area and bought the Blue Benn Diner.

“So it’s interesting to see the types of investors that are coming in,” West said. She says she knows several young investors who work full-time jobs and buy multi-unit buildings.

She said the past two years have seen so much investment from cash buyers and buyers able to make large down payments that people who rely on the Federal Housing Administration, the Veterans Administration or other government guaranteed loans to buy a primary residence have not been able to compete. .

“If you have four or five deals in your hand, you’re going to go for the high deposit because it’s low risk,” West said.

That leaves people with job offers unable to buy homes, she said.

“I know several people who had job offers that would have moved here but they couldn’t find the right home,” West said. “They put offers on 10 properties and outbid each time.”

Another draw for investors, West said, is that there is “huge demand” for rentals.

This includes short term rentals. West said the Manchester and Dorset areas have a “huge amount” of second homes used for short-term rentals. AirDNA data shows 185 active short-term rentals in Manchester Center, 56 in Dorset and 25 in East Dorset.

West herself is an investor. On Friday, the day she spoke to VTDigger, she was closing the purchase of Maple Leaf Realty, the 14-agent real estate agency where she works, as well as the building and the building behind it, which she will praise.

In the Burlington area, real estate agent David Parsons is also seeing what he calls “hybrid investors.”

“Some of these people are buying what would be considered second homes at some point, but also using them as investment properties primarily through short-term rental platforms,” ​​Parsons said. “So they’re buying these properties for their own use in a way, but I don’t think they would be making these purchases if they didn’t have the income-generating potential that these short-term rental outlets provide. “

Parsons said these were people whose main jobs were in major metropolitan areas and who could sometimes work remotely.

Things changed drastically in the second quarter of this year as interest rates rose, both in Vermont and nationally. Hepp said Vermont investors now account for 7% of homes purchased — the same percentage as before the pandemic.

“Whether it’s the higher cost of borrowing or the perception that we’re now entering a recession and house prices could slow significantly or decline, investors have really pulled out of the market at this point,” Hepp said.

But in Bennington, West didn’t experience a downturn.

“Last month I put up three houses for sale for first time buyers, nice little houses under 2000 square feet on a small lot, between 225 and 250 (one thousand dollars), and I got four bids on one, five bids on one and six bids on the other,” West said. “All sold more than asked.”

At that price, she said, taking into account the cost of labor and building materials, existing homes are still cheaper than the $400,000 it would cost to buy land and build a basic ranch house.

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