When Mark and Elli Carter moved to a larger home within Cape Elizabeth in to accommodate their growing family of five, they were able to secure a 30-year mortgage with an interest rate of 3.6 percent.
That was in May. The Carters are now refinancing their loan at 2.6 percent, a reflection of rising home values and historically low interest rates.
Tight inventory and a surge in sales to out-of-state buyers continued to push Maine home prices upward in August. The median sales price of existing single-family homes jumped 17.4 percent compared with a year earlier to $270,000, according to a report released Tuesday by Maine Listings, a subsidiary of the Maine Association of Realtors.
The median indicates that half of the homes sold for more money and half sold for less. The number of home sales increased only slightly, by about 1.3 percent, from August 2019.
The share of homes sold in August to people moving to Maine from out of state increased by 9.7 percent from a year earlier, to roughly one out of every three transactions.
“This is the wackiest market I’ve ever seen,” said Karen Jones of Coldwell Banker Realty, a past president of the Greater Portland Board of Realtors who has been in the business for 22 years. “I truthfully don’t know how long we can sustain this.”
The statewide inventory of single-family homes listed for sale has been declining steadily over the past decade, according to Maine Listings data, which pegged the current supply of properties on the market as taking 2.6 months to exhaust. In the summer of 2010, it would have taken 23 months to sell through all the available listings. In the summer of 2018, inventory was sufficient to last 5.2 months.
“There was probably an eight-year span when there was not much in the way of building for residential homes,” said Tom Cole, president of the Maine Association of Realtors and managing broker of Better Homes and Gardens Real Estate/The Masiello Group in Brunswick. “That’s caught up to us.”
Meanwhile, Maine’s handling of the coronavirus pandemic has resulted in transmission rates among the lowest in the country, which makes the state an appealing destination for those seeking to escape crowded metropolitan areas.
“If I’m worried about being in New York in a 200-unit building, Maine is looking pretty good,” said Tom Landry, broker/owner of Portland-based Benchmark Real Estate.
In August 2019, buyers moving to Maine bought 482 single-family homes. Last month, that number rose to 707 homes. A recent analysis by the online real estate database company Zillow ranked Portland 11th in the country among most desirable mid-sized cities, pegging the share of homes that sell above list price at 38.9 percent and noting that they usually go under contract within two weeks.
When Mark Poirier of Portland listed his 3,000-square-foot Spanish-style home on Brighton Avenue in early summer, he received five offers, all of them well above the asking price of $595,000. The house eventually sold for $665,000, more than double what he had paid for it five years ago.
“It’s an excellent time to be a seller and a tough time to be a buyer,” said Poirier, who moved into a smaller house he purchased a year ago and had been renovating. “There’s not a lot of inventory and there’s a lot of demand.”
For the three-month summer quarter, home prices in all 16 counties rose from 2019 to 2020, according to Maine Listings, and by double digits in a dozen of them. Franklin County led the way with a 29.5 percent increase in median price to $194,250.
Not far behind Franklin was Washington County, with a 19.3 percent increase in median price to $158,000. Al Rummel, broker/owner of Due East Real Estate, said he has 12 agents spread among offices in Calais, Lubec and Eastport, and they’re busier than ever.
“We’ve had a couple of sight-unseen, full-price cash offers,” Rummel said. “It’s insane.”
Rummel said vacant land is also selling more than usual. After two decades of selling real estate in Washington County, Rummel understands the appeal of a rural area adjacent to the Down East coast, but he knows it’s not for everyone.
“You have to be ready to be up here,” he said. “There’s no shopping. You’re too far away from the grandkids. There’s no fine dining. Somebody asked me, ‘Where can I get dry cleaning?’ Well, there isn’t any until Ellsworth, and that’s 100 miles away.”
Even so, Rummel said his agency already has sold more real estate this year than in all of last year. More sales are pending, but appraisers and housing inspectors are all backlogged because of the demand.
Cumberland County saw a 10.5 percent drop in the number of homes sold, but an 11.1 percent rise in median price, to $375,000.
Landry, of Benchmark Real Estate, said homes listed between $300,000 and $600,000 are the most likely to inspire bidding wars.
“Absolutely unprecedented buyer demand,” Landry said. “The higher end is not quite as robust.”
Sandy Johnson, a broker for Town & Shore Real Estate in Portland, said she sees two different demographic groups that are looking to put down roots in Maine.
“One is the baby boomers that we’ve been seeing for a while,” she said. “They’re coming to Portland and settling into urban condos. They can travel without worrying and have medical facilities close by.”
The other group, she said, is younger people with our without families who have decided they want to spend at least a portion of the year away from a metropolitan area “where they can feel safer and their children can play outside.”
She said she doesn’t know how long the trend will last.
“And, of course,”she said, “it’s confined to people with means.”
The pandemic that reached Maine in March resulted in home sales falling by 15 percent in April and 21 percent in May compared with the same months a year earlier. Since then, the market has bounced back such that sales for all of 2020 are only 0.7 percent behind those of a year ago, Cole noted, which was Maine’s best year on record.
Regionally, single-family home sales rose by 5.7 percent in the Northeast with a median sales price of $349,500 – an increase of 10.4 percent over the same month a year earlier. Over the same time period, national sales were up 11.0 percent to $315,000 – up 11.7 percent.
“The increased demand for the smaller supply of for-sale homes has created intense competition in some markets, leading to higher pricing,” Cole said. “As more for-sale inventory comes onto the market, we should see a balancing.”