The beginning of the end of Maine’s booming real estate market may have taken root not in Augusta or Portland, but in Washington, D.C.
Last week, the Federal Reserve raised interest rates to their highest level in 40 years in a bid to fight inflation. President Jerome Powell said Wednesday that Americans should expect further increases.
Referring to the situation so far during the pandemic as an “extreme seller’s market,” Dava Davin, owner of Falmouth-based Portside Real Estate Group, one of the state’s largest real estate companies, said that there were signs that he was changing because of the Fed. movement, high inflation, stock market decline and other factors.
“People’s purchasing power has changed, and that’s also maybe stopping them a bit,” Davin said. “That sense of urgency is not there.”
Here are the key market themes that Davin covered in a conversation with the Bangor Daily News.
A drop in offers
Davin said she sees homes continuing to sell very quickly, but now they have fewer offers. While a home in Portland reportedly had 20 offers a few months ago, she recently saw one that only received two. It still sold for $60,000 above its asking price.
“We see the signs of this slow change,” she said.
Houses are still going fast. A single-family unit on Washington Avenue in Portland that sold for $510,000 this week was listed Monday and sold Tuesday to a medical assistant at Maine Medical Center. Redfin recorded 107 Monday-Thursday single-family home sales in Maine on Thursday afternoon. The median price was $345,000.
The most expensive was a $2.52 million four-bedroom home on Sprucehead Island in Thomaston, which sold 25 days after listing. Cheapest: A three-bedroom in Guilford for $50,000 after being on the market for over 250 days.
What goes up must come down. Like other markets, the real estate market has a natural progression to some degree. Many in Maine have already purchased homes they were looking to buy, Davin noted. Others seem to be backing down.
“We just have fewer buyers,” Davin said. “But still enough to have a strong market.”
Why Maine is so desirable
There are many well-documented factors as to why Maine has become so desirable, such as the shift to remote working since the onset of the COVID-19 pandemic as well as the growing popularity of rural living since then.
When asked why Americans who could choose to live in any rural state in the country would choose Maine, Davin noted that many seek proximity to water. There is wide access to this in Maine, whether on the ocean or on the lakes.
The Portland metro area has also begun to receive national recognition, she noted. Saying she was from there got little response at real estate conferences. People tell him now that they are planning a trip.
“Portland is cool, and everyone knows it,” Davin said.
She also spoke to people who wanted to come to Maine to escape the damaging effects of climate change in other states, including California, where some schools had to cancel after-school sports due to poor air quality. .
“If you attend every day and have the ability to relocate, that’s part of that consideration,” Davin said.
Davin pointed out that the market remains strong, with strong demand and high prices despite recent declines in the latter. Some declines come quickly, including just a week after an announcement is posted.
“It’s a signal that there’s a cap to what people will pay,” Davin said. “They are becoming more and more price sensitive.”
Out of State Application
The demand seen in the Maine real estate market is compounded by the high level of out-of-state interest in Maine homes. That number had risen from 26% of buyers in 2020 to 33% in 2022, according to data collected by Portside on homes sold. This number was 37% in 2021.
Davin said Portside twice sold a home in Brunswick in February for $605,000 and then in May for $680,000 to out-of-state buyers. Both times the buyers did not move in. It’s currently on the market for $680,000. That’s an extreme case, but she expects some of the out-of-state buyers won’t stay in Maine long-term.
“We’re going to keep the big guys who believe in our state and want to stay,” Davin said.