The beginning of the end of Maine’s hot real estate market may not have taken root in Augusta or Portland but in Washington, DC
Last week, the US Federal Reserve hiked interest rates to a 40-year high in a bid to fight inflation. Chairman Jerome Powell said Wednesday that Americans should expect more hikes.
Referring to the situation so far during the pandemic as the “extreme seller market,” Dava Davin, owner of Falmouth-based Portside Real Estate Group, one of the state’s largest real estate firms, said there were signs it was changing because of the Fed Relocation, high inflation, stock market declines and other factors.
“People’s purchasing power has changed, and maybe that’s giving them a little pause,” Davin said. “That sense of urgency isn’t there.”
Here are the key themes of the market that Davin touched on during a conversation with the Bangor Daily News.
Davin said she sees homes continuing to sell very quickly, but now with fewer offers. While a Portland home had 20 offers a few months ago, she recently saw one that only received two. It still sold for $60,000 over the asking price.
“We’re seeing the signs of this slow shift,” she said.
Houses still go fast. A single-family home on Washington Avenue in Portland that sold for $510,000 this week was listed Monday and sold to a physician assistant at Maine Medical Center by Tuesday. Redfin recorded 107 single-family home sales Monday through Thursday in Maine as of 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 the listing. The cheapest: a three-bedroom house in Guilford for $50,000 after being on the market for more than 250 days.
What goes up must also come down. Like other markets, the real estate market has a certain degree of natural history. Many in Maine have already bought homes they wanted to buy, Davin noted. Others appear to be withdrawing.
“We just have fewer buyers,” said Davin. “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: B. the shift to remote work since the start of the COVID-19 pandemic, as well as the increasing popularity of rural life since that time.
When asked why Americans who might choose to live in a rural state of the country would choose Maine, Davin noted that many seek proximity to the water. There is ample access to this in Maine, either by sea or lakes.
The Portland metro area has also begun to receive statewide recognition, she noted. The fact that she comes from there was hardly heard at real estate conferences in the past. People now tell her they are planning a trip.
“Portland is cool and everyone knows it,” Davin said.
She has also spoken to people who have wanted to come to Maine to escape the harsh effects of climate change in other states, including California, where some schools have had to cancel after-school sports because of poor air quality.
“If you’re going to be there every day and have the opportunity to exercise, that becomes part of that consideration,” Davin said.
Davin stressed that despite the latter’s recent declines, the market remains strong, with high demand and high prices. Some drops come quickly, including just a week after a listing is published.
“It’s a signal that there’s a cap on what people are going to pay,” Davin said. “They are becoming more price sensitive.”
Out of State Demand
Demand in the Maine real estate market is fueled by strong foreign interest in Maine homes. That number had risen from 26 percent of buyers in 2020 to 33 percent in 2022, according to data Portside collected on homes sold. That number was 37 percent in 2021.
Davin said Portside twice sold a home in Brunswick for $605,000 in February and then for $680,000 in May to overseas 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 anticipates some of the overseas buyers won’t stay in Maine long-term.
“We will be able to keep the big ones who believe in our state and want to stay,” said Davin.