by Dava Davin, Broker/Owner Portside Real Estate Group
Is the Maine real estate market as hot as it seems? Yes, yes it is!. With low median days on market, high list to sale price ratios, and rising prices, we are in a seller’s market. In Portland and beyond, multiple offers are commonplace even during the winter months. Let’s take a look at what is driving this robust market, its stability and what to look for in the balance of 2018.
As a Realtor working with sellers, the two most frequently asked questions I receive are:
1. How much can I get for my house?
2. How long will it take to sell my house?
In 2017, the majority of the time I was able to answer question 1 with “more than you paid for it” as Cumberland County’s median price is at an all-time high. And to question 2, “it will take about two weeks to get a contract on your house!” It’s a great time to be a seller. But it’s not necessarily a great time for buyers as they are struggling with the challenge of low inventory and competition from multiple offers. Some buyers are writing offers on 5 or 6 properties before finally securing one.
In 2017 in Cumberland County, we saw the highest EVER median sales price at $285,000! Prices have increased 18% since 2013. If you purchased your home about 5 years ago you should be in good shape IF you have a median priced home. If you have a luxury home, you may not see an increase at all. The luxury market has remained stagnant. With homes priced above $500,000 in Cumberland County, the prices have remained flat for the last FIVE years.
How fast are homes selling? The median days on market for single family homes in Cumberland County was ONLY 15 days in 2017. So, for most folks in Cumberland County they sold their home in about 2 weeks! A blessing and a curse for some, as the scramble to find an available home was tough in 2017. Buyers need to be ready to make a decision at the time of the showing. If they want to sleep on it overnight, the house could be gone by morning.
The median days on market is at a record low. When looking at the median days on market since 2000, what I find fascinating is that the days on market during the 2006 – 2007 peak were over 60 days, compared to around 15 – 20 days in the last two years. This is a good sign for the real estate market in 2018.
Diving into the home value trend a little deeper, let’s consider pricing changes over the last 20 years. The previous price peak was in 2005, 2006 and 2007 when the median price for a single family in Cumberland County remained at $250,000 for 3 years. Then we had the dip and have climbed steadily to the new all-time high of $285,000. Prices are now 14% above the previous peak!
Are we due for a correction soon? I don’t think so, not quite yet. When we look at the percentage of price change year over year, we see the growth is a lot slower during this cycle. Last time we saw price growth rates at 12% – 14% was in the years preceding the peak (2002 – 2004), and most recent price increases are half that at 6%-7%. The prices are climbing in Cumberland County but at a slower rate. That is a very good sign!
What is driving the market?
– Millennials
– Lifestyle seekers
– Baby Boomers
The strong economy is raising incomes among millennials, which gives them the ability to save a down payment and qualify for a heftier mortgage, even as they repay their student loan debt. Millennials could account for 43% of home buyers next year, up from around 40% this year.
Maine was classified as an “inbound” state in 2017 as more people moved to Maine than moved out (Mainebiz, Jan. 3, 2018). Why are people moving here from Massachusetts, Connecticut and other states? It’s not for the job opportunities. We find that the folks relocating here that we work with are CHOOSING Maine – they have checked out other areas and fallen in love with our active lifestyle, our food and beer scene, our welcoming personalities and they usually have a tie to Maine – grew up here and are coming back, went to college here or had a family summer place here growing up – some kind of connection.
The baby boomers are downsizing and looking for one floor living and a first floor master. The ranch is making a comeback. Both millennials and baby boomer are looking for new construction or fully renovated homes with an open floor plan and thoughtful, usable spaces. Many buyers don’t want to do any work to their new home. They just want to unpack and move on with their life.
2018 will be “steady eddie”. We will see similar results to 2017. Inventory will remain low with supply catching up with demand toward the end of 2018. The cash offers and low days on market will continue. We will see growth and demand for new construction and in planned communities. Single level homes, smaller and efficient homes will be desirable for downsizers and millennials.