Demand has outstripped the supply of homes for sale in the Portland area in recent months, say real estate agents, sparking bidding wars and making it difficult for families to find homes they want.
The increased demand is driving up prices in Cumberland County, where the median sale price for an existing, single-family home jumped more than 6.2 percent in the three months from February through April over the same period a year ago, from $215,500 to $228,950, according to data released Wednesday by the Maine Association of Realtors.
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Countywide home sales are reported in rolling, three-month segments. The median is the price at which an equal number of homes sold for less and for more. It is considered a better indicator than the average home price, because an average can be skewed by a handful of extremely high-priced or low-priced sales.
Matthew Kennedy and Lori Tarham, who moved from Tallahassee, Fla., to Portland in January 2012, took a year to find their current home on Munjoy Hill, Kennedy said.
They rented a home when they arrived in Portland, and finally closed on the purchase of their house in January of this year, after previous offers on the property fell through, he said.
“I have a strange feeling that we might have come in just at the right time,” said Kennedy, 49, managing director of the Tallahassee-based consulting firm ERS Group.
Factors in the imbalance between supply and demand include growing consumer confidence and a significant decrease in “distress sales,” including foreclosures and short sales, agents said. In a short sale, the seller’s mortgage lender agrees to forgive part of the debt because the balance exceeds the home’s market value.
The supply of homes on the market, measured by the time it would take to sell them at the current rate of sales, has been cut in half since January, from six months to three, said Bart Stevens, president of the Maine Association of Realtors.
A six-month supply is a sign of a balanced market, in which there is no great advantage for buyers or sellers, said Stevens, who owns Century 21 Nason Realty in Winslow. With just three months’ supply in the Portland area, he said, the market now favors sellers.
“It’s a very big change in the Portland market,” Stevens said.
As of March 11, there were 1,486 single-family homes listed for sale in Cumberland County, down about 12 percent from 1,688 listings on March 8, 2012, said Suzanne Guild, CEO of the Maine Association of Realtors. The data released by the association does not indicate the average time that homes stayed on the market before being sold.
Real estate agents said they weren’t surprised to see the boost in median home price, given the market’s relative lack of supply.
Rita Yarnold of Bay Realty Associates in Portland said she has been telling clients who plan to finance their home purchases to get credit approval before bidding.
“(They) have to be qualified in advance, because each of the properties they’re looking at have multiple offers,” Yarnold said.
As home prices increase, she said, the number of sales will likely begin to slow because of the reduced inventory.
That hasn’t happened yet.
From February through April, home sales in Cumberland County increased nearly 11.5 percent from the same period a year earlier, from 558 sales to 622, according to the Maine Association of Realtors report.
Statewide, home sales increased by an even greater amount, 13.7 percent, from 824 sales in April 2012 to 937 sales in April 2013. The association reported statewide home sales for April only.
April’s statewide median price was $167,000, up nearly 4.4 percent from $160,000 in April 2012.
Another factor driving down supply in the Portland area is a flow of baby boomers from rural and suburban areas to urban centers, Yarnold said.
“Portland is having a great resurgence because of the baby boomers,” she said.
Portland Board of Realtors President Ed Gardner said the housing market has heated up especially in the past two to three months. Because of the shrinking supply, prospective buyers who were unsure have felt a sense of urgency to buy before prices go up even more.
“It’s created a frenzy with multiple offers on properties that had been sitting on the market for a while,” said Gardner, of Ocean Gate Realty in Portland.
As an example of how supply has diminished, Gardner said, just 94 condominiums are listed for sale in Portland now, compared with the typical number of 250 to 270.
Kevin Robert, manager of Coldwell Banker Residential Brokerage in Saco, said much of the inventory from foreclosures and short sales has been sold off, with far fewer new distress sales to replenish the supply.
He said buyers’ competition for homes is likely to increase statewide, but not to the extent seen from 2003 to 2005, when the housing market was booming.
Robert said home prices still haven’t increased as much as one might expect with such a short supply. That means homes perceived to be overpriced still aren’t selling.
“There’s inventory out there,” he said, “but what’s disappearing is quality inventory that’s priced correctly.”
J. Craig Anderson can be contacted at 791-6390 or at:
canderson@pressherald.com
Twitter: @jcraiganderson
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