Maine Real Estate News

The show is a locally produced show about Maine Real Estate News, hosted by master real estate practioner Harrison Smith, who will bring a weekly summary of all things real estate that's not in Maine news.

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Factors Affecting Maine Housing Market

The Maine housing market has seen a tremendous surge in home sales and prices over the last several years. This was due to a variety of factors, including low interest rates, buyer demand, and an increase in remote workers.

Buyer Demand:

Maine's housing market has also seen an increase in buyer demand from out-of-state shoppers who are looking for vacation homes or second residences in Maine's picturesque landscape. Buyers from nearby states like Massachusetts and Connecticut are taking advantage of Maine's discounted property prices when compared to other locations with similar amenities. As a result, many Maine towns have experienced an uptick in out-of-state buyers looking for a place to call home away from home.

Increase In Remote Workers:

The rise of remote working has also been beneficial to Maine's housing market. With people able to work from anywhere they choose, many potential buyers now have the opportunity to make Maine their full-time residence without sacrificing income or career opportunities. This has opened up Maine’s real estate market to out-of-state workers who may not have considered Maine before the onset of the pandemic.

The combination of these factors has helped propel Maine’s housing market forward during this unprecedented time period. Although there may be some level of uncertainty as far as how long these trends will last, it appears that Maine’s real estate sector will continue on its upward trajectory over the coming months and years ahead

Maine Real Estate snap shot 2023

In Maine, the sales of single-family existing homes are still being impacted by both the increasing mortgage interest rates and the limited inventory of homes available for purchase. According to Maine Listings, there was a significant decline in sales of 34.99 percent in January 2023, as compared to the same month in the previous year. However, the median sales price (MSP) for homes sold in January 2023 saw a notable rise of 11.21 percent from January 2022, reaching $325,000. This means that half of the homes were sold for a price higher than the MSP, while the other half were sold for a price lower than the MSP.

The Truth

The headlines of popular press outlets will have you believing the market is slowing down due to lack of sales, however there's simply less homes available for sale. Seeing housing prices had an increase of several thousands of dollars across the region it is evidence of a strong seller's market and not a buyer's market as indicated by the median price comparison. It is important to always look at the analytics of local markets because often the news uses averages from around the country.

Maine Housing Inventory

The number one driver of the sharp increase lack of housing inventory to fulfill the home buyer demand. Home buyers often see bidding wars and must be able to act swiftly to see a property, prepare and submit an offer, otherwise they risk the property not being available on the market longer than 2 few days.

For first time home buyers this can be a stressful time since it is typically the biggest asset of one life. However, homes owner ship is the the best investment you can make and offers security so it is a good time to buy, providing the interests don't continue to creep up.

Housing Market Predictions for Next 5 Years

The Maine real estate market is expected to remain strong over the next five years and Maine housing prices are predicted to . Low interest rates, increased demand from out-of-state buyers, and remote working opportunities will all continue to drive prices upward. According to Maine's Property and Economic Development Division, Maine's real estate market has already seen an increase in median home prices of about 4% since 2020. This trend is expected to continue into the future, with Maine’s median housing prices projected to increase by an additional 5-7% over the next five years.

As Maine continues to attract new buyers from out of state, it's likely that homes sales will surge even more as well. The Maine Association of Realtors forecasts that existing home sales should reach a record high in 2021, with a growth rate of 8%. Furthermore, Maine's population is also expected to grow at a steady rate over the next five years due to its increasing draw for retirement-age residents and young professionals looking for a change of scenery. This influx of buyers could further push up the prices of Maine's housing market as demand outpaces supply.

At the same time, investors are still wary of another potential housing bubble forming due to Maine's limited land development opportunities. In order to avoid this problem "bubble bursting", Maine officials are taking steps towards controlling house price inflation through various measures such as taxes and restrictions on new construction permits. This should help prevent Maine's housing market from overheating while still allowing its economy to benefit from increased activity in home sales and purchases over the next five years.

What Is a Housing Market Bubble?

A housing bubble is when a certain area's market experiences an unsustainable rise in price driven by speculation. This can lead to a rapid increase in the cost of homes, often faster than the actual growth of wages and incomes that enable people to buy them. When this happens, there are more buyers than sellers and prices can continue to rise until demand eventually decreases or supply increases.

Housing bubbles usually take place in areas with limited land development, such as Maine, where population growth is low and there are fewer opportunities for new housing construction. As demand continues to outpace supply, the prices of properties will skyrocket. This rapid appreciation may not be supported by economic fundamentals such as income levels or local wages. Eventually, when the pressure for buyers wanes and the market reaches its peak, it could lead to a crash in prices which have been artificially inflated.

It's important for potential homebuyers to be aware of a potential housing bubble before they make any decisions that could result in financial distress down the line. It's also advisable to talk with local real estate experts who can provide insight into Maine's current housing market conditions.

Is a Market Crash coming to Maine

The housing market is unlikely to crash for the following reasons,

Strong Demand:

There is a demand for homes across various demographics. With more buyers than available properties, the market is likely to remain stable.

Strict Lending Standards:

Most people who get mortgages now have excellent credit, reducing the likelihood of defaults.

Fewer Foreclosures:

The majority of homeowners have significant equity in their homes, making their personal balance sheets much stronger than they were 15 years ago. This difference means that there is no threat of a foreclosure crisis, which can destabilize the housing market.

Limited Inventory:

This scarcity of housing options means that buyers are willing to bid up prices, and the supply-demand curve suggests that prices are unlikely to crash anytime soon.

Insufficient New Construction:

This shortage of new housing supply contributes to the low inventory and helps to stabilize prices.

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