Thursday, April 24, 2014
Median home prices in Maine are likely to fall an additional 5 percent to 10 percent this year before stabilizing, a Realtor predicted Thursday at the annual Maine Real Estate & Development Association conference in Portland.
The ongoing crisis in banking and credit markets makes accurate predictions impossible, said Anne Weigel of Coldwell Banker Residential Brokerage in Portland, because of how the uncertainty may influence buyer and seller behavior. But the federal government's economic stimulus efforts offer encouragement that the market could start to recover after this year.
''It depends on the recession and how many people lose their jobs and homes,'' Weigel said. ''Foreclosures and short sales are depressing prices.''
Weigel's comments came as the real estate industry struggles to navigate one of the rockiest economic downturns in decades. No real estate sector is immune, although some speakers stressed that the Portland area appears poised to weather the storm better than many cities.
In the Portland office market, for instance, the overall vacancy rate hit 8.6 percent last year, compared with 13.5 percent nationally. But no significant construction is expected in 2009, and vacancies are likely to grow by another percent or two, said Jim Harnden of Ram Harnden Commercial Real Estate.
Layoffs and plant closings have created an oversupply of industrial space in southern Maine, said Tom Dunham and Greg Hastings of NAI/The Dunham Group. With demand low, it's a tenants' market. Landlords should expect to make concessions, they said.
The retail sector can look for another tough year, said Matthew Cardente of Cardente Real Estate. Retail development along the Interstate 95 and Interstate 295 corridors is saturated. More national chains, such as Circuit City, will go away, leaving more vacancies. At least 10 storefronts have become empty in Portland's Old Port over the past year, Cardente said, as tenants close or move.
Maine's crucial hospitality industry will see openings of new hotels fall by more than half, from nine last year to four each in 2009 and 2010, said Sean Riley, chief executive officer of Maine Course Hospitality Group. These midscale projects, in the $7 million to $10 million range, will be able to find financing, he said.
Apartment owners face flat rents and worries that tenants who lose jobs will fall behind on payments. Multi-family housing in Portland should retain its value, however, according to Brit Vitalius of Sullivan Multi-Family Realty. But prices will continue to fall this year in Westbrook, Biddeford-Saco and Lewiston-Auburn, where buyers are scarce.
Real estate forecasting is a tough act in good times. Peering up from the depths of a recession is even trickier, especially for the housing market.
At the 2008 conference, Weigel predicted prices would bottom out by last summer. That hasn't happened.
The median sales price for homes in Maine fell by roughly 7 percent last year, from $194,000 in 2007 to $180,000, according to figures released this week by the Maine Real Estate Information System. Sales volume was off nearly 21 percent for the period.
Weigel was on target in 2008, though, when he warned sellers to be realistic about pricing their homes in a buyer's market.
In September -- just as the banking and stock market crisis was unfolding -- Portland-area real estate agents heard an optimistic outlook from Lawrence Yun, chief economist of the National Association of Realtors. Yun called for a housing recovery in 2009. Portland appeared to be in better shape than many cities, he said, because prices didn't shoot up during the boom, and employment was more stable.
But a housing bottom has yet to come into view. Yun's group reported this week that prices fell 13 percent last year. They slid a record 15.3 percent in December, compared with a year earlier, driven in part by a large number of foreclosures and other distress sales.
In Maine, figures collected by Weigel for the conference support the familiar maxim that real estate values depend on location. Median prices rose last year in Bethel, by 8.8 percent, and Freeport, by 3.5 percent, thanks to high-value sales. Big declines took place in Augusta, 19.7 percent; Kittery, 15.1 percent; and Yarmouth, 13.4 percent.
Referring to last year's 7 percent statewide price decline, though, Weigel alluded to the drop in average stock values to offer some perspective for real estate developers.
''The good news is it's less than the drop in the Dow,'' she said.
Staff Writer Tux Turkel can be contacted at 791-6462 or at: