With a significant price increase in April, Maine’s housing market may be heating back up

Maine’s home-sales market has been cooling off in recent months, but real estate experts now say it’s warmed up a few degrees.

The state’s lack of inventory, coupled with high demand, is pushing prices up. Buyers are competing against multiple offers and once again pulling out all the stops – offering more than the asking price, waiving inspections and appraisal contingencies, and writing letters.

One real estate agent said a house in Brunswick listed at $425,000 received 17 offers, all for more than that sum. Another agent said a multiunit in Portland sold for $300,000 over asking.

Fewer than 800 homes changed hands in April, representing a decline of more than 30% from the total in April 2022, according to data from the Maine Association of Realtors.

However, the statewide median sales price for homes sold last month was $367,500, a 6.21% increase over the price in April 2022, and an 8.9% increase from March 2023.

The median is the price at which half the homes sold for more money and half sold for less.

Maine houses were on the market for an average of nine days last month, down from 16 days in March. In Cumberland and York counties, homes were on the market for less than a week.

LOW INVENTORY, HIGH DEMAND

The spring housing market loosened some of the inventory squeezes of the last few months; the number of homes for sale in April increased 10% from March. But the additional supply wasn’t enough to keep up with demand.

Last month there were just under 2,300 homes on the market. In April 2019, there were 7,100.

Maine is still seeing significant numbers of out-of-state buyers who are offering cash, said Tom Landry, broker/owner at Benchmark Real Estate in Portland.

More people are looking for homes and many existing homeowners, who refinanced when the interest rates plummeted, are choosing to stay put. Those factors, coupled with the continued in-migration, is “a recipe for an affordability crisis,” Landry said.

In Cumberland and York counties, the median home price in April was $525,000, 41% higher than the statewide median. “That’s mind-blowing,” Landry said.

“Buyers are actively searching, and many are not finding homes that are suitable for their needs and within their budgets,” said Carmen McPhail, president of the Maine Association of Realtors.

McPhail, who is also a broker with United Country Lifestyle Properties of Maine, said last month’s numbers reinforce the need for more available inventory and more new home construction.

Landry said the conversations are happening, but not fast enough.

“We can’t have incremental changes in a crisis,” he said.

Holly Mitchell, a broker with Keller Williams in Portland, said she’s noticed a “decoupling” from the national trends. In other states, there’s enough inventory that some homes are able to sit on the market for longer. But in Maine, there just isn’t enough housing stock.

As of Thursday, there were no newly constructed single-family homes for sale under $400,000 in York or Sagadahoc counties. There were four in Cumberland County and two in Androscoggin County.

Nationally, sales fell 22.4% from April 2022, and prices fell by 2.1% to a median of $393,300, according to the National Association of Realtors. April was the third straight month of declining year-over-year prices.

In New England, home sales fell 24% last month from the year before, but prices rose 2.8% to $422,700.

Lawrence Yun, chief economist for the National Association of Realtors, said that multiple-offer situations have returned, following a winter lull.

“Home sales are bouncing back and forth but remain above recent cyclical lows,” he said. “The combination of job gains, limited inventory, and fluctuating mortgage rates over the last several months have created an environment of push-pull housing demand.”

According to mortgage buyer Freddie Mac, the 30-year fixed-rate mortgage averaged 6.35% as of May 11, up from 6.27% a month ago.

Properties across the country remained on the market for much longer in April than those in Maine – 22 days, although that period is down from 29 days in March.

‘A GLIMMER OF HOPE’

The situation isn’t hopeless for prospective buyers.

Prices may be rising on average, but there has been some downward movement. Six Maine counties saw prices decrease in the three months ending April 30, compared to the same period last year. Prices in York County were nearly flat, with just a 0.01% increase.

The Maine Association of Realtors also looks at three-month data in county-by-county comparisons to get a larger sample size of sale transactions, though those numbers will likely rise in the coming months as data from the spring and summer markets are reflected.

Landry and Mitchell said buyers who are willing to put in a little “sweat equity” and buy a fixer-upper tend to have better luck, and they’ve both seen interest spreading farther outside the Portland area as people are being priced out of more southern and coastal parts of the state.

“Lisbon is the new Westbrook,” Mitchell said.

Prices are often a little softer and there are generally fewer bidding wars in rural areas.

May and June are two of the “best” months to list a house, so Landry said there may be a “glimmer of hope” in the next few months for people who are willing to look inland and wait out the summer.