As one of the colder climates in the country, residents of Maine know all too much about being frozen out. For the longest time they were nearly frozen when it came to the real estate crash, and then things slowly changed sending home prices lower. Maine isn’t likely to sustain the loss in home values that other states in the country are suffering, but it is in the early stages of thawing out from the freeze.
Sales in Portland slumped after the federal home buyer tax credit expired and haven’t been the same since. Historically low mortgage rates coupled with lower prices will eventually get more buyers off the fence, but employment needs to improve before that can happen in Maine, which has suffered a long history of high joblessness. As the largest urban center in the state, Portland is ripe for a rebound in time along with neighboring South Portland.
Companies will start hiring more workers when the economy begins to turn around in the region, producing an upturn in home sales. Joblessness is lower as a result in Portland, which was the state financial hub before the real estate crash. A tough economy led many of those who worked in the financial industry to leave the area, but the region was not riddled by foreclosures like many other financial centers in the U.S.
The foreclosure crisis has been limited in Maine, despite mortgage brokers offering the same type of risky ALT-A loans that rocked much of the nation’s housing market. They just sold fewer of them to conservative “Maine-iacs” who are anything but crazy. Average home prices are forecast to climb a modest 2.3% in Portland this year.
In Bangor the market is less secure and has seen more ups and downs in terms of home prices. The economic outlook for the region is improving, but will still have to see fewer businesses going bust and more growth before the housing market turns. That could come as early as next year, but not before home level off. Bangor home prices are forecast to decline 4.7% in 2011.
Home sales have been hard hit in Lewiston as home values erode. The housing market benefits from warmer days during the summer time in Maine usually, but a tough economy and rigid mortgage lending standards that prohibit many wannabe home buyers from purchasing have slowed the market. Better sales should result in the next few quarters as mortgage rates remain low. But as the second largest city in Maine it will take the market a while to stabilize in Lewiston, which is forecast to sustain average house price deflation of 6.1% in 2011.
In the northern reaches of Maine, there couldn’t be a community that is any different than the rest of the state than Bar Harbor, once a coastal fishing community turned posh tourist resort and second home market. The economy has been tough on second home and vacation markets, sending millions of second homeowners to foreclosure. Bar Harbor is no different and is projected to sustain average housing deflation of 8.1% by years end.