2013 Maine Housing Market

During its recent annual convention in Portland, Maine, the Maine Real Estate and Development Association announced that sales and prices of the state´s single family homes rose almost 12 percent in December of 2012 with more than 800 homes sold in total.

The median price rose 6.25 percent to $170,000, and brokers said the numbers are an accurate reflection of what’s going on in the state.

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“By leaving interest rates as low as they are, it’s helping people, almost forcing people to take a look at buying real estate and it’s really helped our industry a lot,” said MEREDA President Drew Sigfridson.

During the MREDA conference, a speaker asked how many of the 650 brokers, bankers, and developers were hopeful about the 2013 real estate market. Most of those in the venue raised their hands without hesitation.

John Herrigel, a Realtor serving the greater Portland and Southern Maine regions, recent wrote the following on Realty Times’ website: “the Portland Maine residential real estate market is seeing strong growth in all market segments as of late with healthy buyer demand from many demographics as low rates have helped to spur first time home buyer purchases whilst many baby boomer looking to relocate to the greater Portland area is also serving to provide a boost to the housing market.”

Despite the enthusiasm among real estate professionals, Kiplinger, a national forecasting organization, ranked the Portland metro area 12th out of cities whose real estate prices have plummeted the most.

On the other hand, many Portland properties are spending fewer than 30 days on the market, while multiple offers on specific properties is becoming more common, according to a number of Maine Realtors.

The Associated Press recently reported that Maine real estate agents blame severe weather for the fact that single-family home sales fell 5 percent in February. The same agents pointed out that these homes increased in price.

The Maine Association of Realtors says real estate agents sold 593 homes in February, down from 624 a year ago at the same time.

For the three-month period from December through February, the association says home sales rose 9 percent, with the median price increasing by 5 percent.

Cumberland County had the highest-priced homes, at $214,000. On the opposite end of the scale, Piscataquis County homes had a median sales price of $58,000.

In September of 2012, Terry Sortwell of LandVest, a New England luxury real estate firm, reported that the state’s high-end, coastal real estate market is on the rebound. “In the last six weeks we have had an unexpected surge in the number of productive showings in midcoast Maine. Despite market conditions, the buyers that we have spoken to lately do not appear to be concerned with making a real estate investment. On the contrary, they feel they are getting a good deal and feel a sense of urgency: if they don’t buy, someone else will.”

“Several of our recent sales have had more than one person on the waiting list, an occurance that we have not seen happen in quite some time,” added Ruth Kennedy Sudduth, director of the LandVest Residential Brokerage Division.

John Saint-Amour from LandVest’s Portland office reports similar increased activity in southern coastal Maine and into the western lakes region. With buyers looking for value, sellers are working with realistic offers and properties are selling, he said. Since January of 2011, there have been 15 sales of $2 million and above properties in Maine, he added.

William Davisson, also of the LandVest Portland office, reports dramatic increased activity from buyers having interest in properties in Southern Maine. Oceanfront positions, proximity to amenities, accessibility to transportation, and relative turn-key quality define search parameters for these buyers. The recent financial market turmoil has not deterred prospect property visits with most buyers, he said.

John Scribner, also from the LandVest Portland office, said there seems to be a sense that the bottom has been realized and that the market is beginning to turn, and the barriers to entry where high-end properties are concerned seem to be lifting.

Edward Riekstins, senior vice president at Boston-based Northmarq Capital, a commercial real estate capital solutions firm, recently said he expects an abundance of capital for residential and commercial real estate in 2013. “Most lenders have larger allocations of capital than last year which will create a very competitive financing environment for 2013,” he said.

“Life insurance companies have much larger allocations than last year and continue to offer very strong 10, 15 and even 20-year fixed rates,” continued Riekstins. “Over the last several years, most life companies have retreated to primary markets like Boston, but there is a renewed interest in lending at the airport hubs in northern New England including Portland, Manchester and Burlington. I do anticipate that as the competition for lending grows, life companies will expand back into the secondary and tertiary markets.”

Chris Lynch, president of Legacy Properties Sotheby’s International, of Brunswick, Maine, believes the uptick in real estate activity in his state is the beginning of a trend. In a February post on his company’s blog, he wrote, “going back a few years ago, we would relish bits of anecdotal evidence that a recovery in Maine was starting to bloom.  At first, it looked like a scatter plot of uncorrelated lightning strikes where homes, albeit very few, were selling for seemingly stronger prices. It was also largely limited to the highest value locations in Maine.  As the anecdotes grew to more than a handful, the coincidence was becoming statistically significant.”

However, Lynch said single-family home sales have not declined in number in Maine since June of 2011. There have been “18 uninterrupted monthly gains in terms of unit volume,” he wrote. “In fact, eight of the 12 months reported (so far) in 2012 demonstrated unit volume gains in excess of 10 percent, with five of them in excess of 20 percent gains. All told, the year 2012 had unit volume gains of more than 17 percent compared with 2011.”

Lynch said his team believes unit volume gains will continue to improve in Maine, although possibly not at last year’s same robust pace. “Prices are directly tied to supply,” he wrote. “If we can keep our inventory moving at a healthy turnover rate, prices will rise accordingly.  All told, it should be a satisfying year for Maine real estate participants.”

Click here for 2012 Predictions