Vermont’s Pre-Foreclosure Decline Masks Hidden Struggles for Homeowners

In the quiet towns dotting Vermont’s rolling landscape, the threat of foreclosure looms like a storm on the horizon, even as the latest data suggests an overall decline. June 2024 saw three homes enter pre-foreclosure, marking a 25% drop from the previous month and the same percentage decrease from June 2023. On paper, Vermont homeowners appear to be weathering the housing crisis better than those in other parts of the country. But the human stories behind these numbers tell a different, more complicated reality—one of economic hardship, rising costs of living, and a fragile sense of security that could vanish with a single missed payment.

A Downward Trend in Pre-Foreclosure, but an Uncertain Future

At first glance, the data suggests good news. Only three homeowners in Vermont received a pre-foreclosure notice last month, a sharp contrast to the peak years of 2013 when pre-foreclosures in the state reached an eye-watering 112 cases. Compared to those years when the fallout from the Great Recession pushed homeowners to the edge, today’s numbers seem almost negligible.

But step beyond the statistics, and the reality is sobering. A homeowner doesn’t need to live in a state flooded with foreclosures to feel the weight of financial distress. The decreasing numbers don’t erase the stories of families making impossible choices—between the mortgage and medical bills, between groceries and keeping the electricity on.

For many, the decline in pre-foreclosures is not a sign of financial stability, but rather an indication that homeowners are postponing a reckoning, often relying on temporary measures like forbearance programs, state assistance, or exhausting their savings in a last-ditch effort to stay afloat.

Meet Angela Carter: The Invisible Crisis of Vermont’s Homeowners

Angela Carter, a single mother from central Vermont, never imagined she’d be one mortgage payment away from losing her home. She works full-time as a home health aide, a job that barely covers the increasing cost of living in Vermont. During the pandemic, relief programs helped her stay current with her bills, but those programs are now gone, and the workdays feel heavier than ever.

“I’ve never missed a payment before this year,” Carter says, standing in her kitchen where an eviction notice sits tucked beneath a stack of unpaid medical bills. “But food is more expensive, gas is more expensive, and my wages aren’t keeping up.”

Carter is not alone. While Vermont’s overall foreclosure rates show improvement, it doesn’t change the fact that many families are living on the edge, burdened by inflation, stagnating wages, and debts that piled up during years of economic uncertainty.

What’s Driving Vermont’s Housing Instability?

To understand Vermont’s pre-foreclosure trends, we need to look beyond the housing market and examine the broader economic landscape.

• Inflation and Rising Costs: Even with overall inflation cooling, the cost of everyday goods remains high. Families who once had a small financial cushion now find themselves burning through savings just to afford basic necessities.
• Wage Stagnation: While Vermont has made strides in raising the minimum wage, incomes for middle-class and lower-income earners still fail to keep pace with inflation. A mortgage that was once manageable is now an unbearable weight for many households.
• High Housing Prices: Despite Vermont’s smaller population, housing affordability remains a challenge. An influx of remote workers and out-of-state buyers during the pandemic drove up home values, pricing some longtime residents out of their own communities and making it difficult for struggling homeowners to refinance or sell.
• Pandemic Aftershocks and Loan Modifications: Many Vermont homeowners benefited from pandemic-era mortgage relief programs, but those programs have ended. Homeowners entering pre-foreclosure now may be facing the delayed effects of financial hardships that began years ago.

Historic Perspective: Is Vermont Truly Recovering?

The recent decline in pre-foreclosures mirrors national trends showing that foreclosure rates remain below the catastrophic highs of the 2008 financial crisis. But context matters.

Historically, Vermont has rarely experienced the same housing distress as states like Florida or Nevada. Yet even in this relatively stable market, 2024 has already seen 54 pre-foreclosures so far, following 66 in 2023. While this is a far cry from 2013’s peak, it still signals that, for many, homeownership is no longer a guarantee of financial security.

One comparison brings the issue into sharp focus. In 2011, Vermont recorded just three pre-foreclosures for the entire year—matching last month’s total. But the fact that Vermont’s foreclosure rate is now climbing again, even if slowly, should not be ignored.

What Comes Next?

For homeowners like Angela, foreclosure doesn’t happen overnight—it’s a slow unraveling. For Vermont, the real question is what happens when more and more homeowners find themselves on the brink.

Recent policy discussions suggest that Vermont could benefit from expanded foreclosure prevention programs, legal assistance for homeowners in distress, or targeted financial aid for those slipping into delinquency due to sudden economic hardship. But until those measures materialize, individuals are left to navigate the storm on their own.

Angela, for her part, doesn’t know what the future holds. She’s working extra shifts, looking into state assistance programs, and hoping for a break before foreclosure becomes inevitable.

“I just want to keep my home,” she says. “But some days, it feels like the system’s working against me.”

The numbers may show a decrease, but for homeowners like Angela, Vermont’s foreclosure crisis isn’t just a statistic—it’s a life-altering reality.