PHOTO / COURTESY VITALIUS REAL ESTATE GROUP
Brit Vitalius, principal at Vitalius Real Estate Group in Portland, expects to see continued interest by investors in multi-family housing in southern Maine.
Updated: January 10, 2022
2022 Economic Forecast
2022 Forecast: In a hot real estate market, multi-family homes have a new niche
Multi-family home values in southern Maine had what Brit Vitalius of Portland-based Vitalius Real Estate calls “a wild ride” in 2021.
In many towns in southern Maine, prices spiked 14% to 40% and volume was up more than 50%.
There were a couple main drivers of this, Vitalius told Mainebiz.
First, the smaller multis — those of two to four units — are in high demand from owner-occupants. It’s essentially the same demand driving single family house prices: People need a place to live and there simply are not enough houses or multi-family properties for everyone.
Second, the same demand for housing extends to the rental market. As rental rates increase, the value of multi-families increase, he says.
Vitalius cites the wave of new residents fleeing cities or more densely populated or more expensive areas. Many of the people who have relocated to Maine are working remotely and retaining “big city income,” he says.
“They are able to pay more when buying a home or when paying rent and are likely coming from cities with even higher housing costs, so there is no sticker shock,” he says.
In addition to Portland, investors are looking to Westbrook, Biddeford, Lewiston and Auburn.
“Multi-family owners in other towns with relatively lower rental rates are discovering that there are now tenants who can and are willing to pay significantly more for rent,” Vitalius says. “Building by building, units are improved to meet the tastes of this new, more affluent tenant base. [Landlords are] commanding higher rents.”
Even as Portland’s year-old rent-control law has capped rents, the value of small multi-family homes continues to rise. In many cases, Vitalius says, the small multis are being acquired by owner-occupants, who are not affected by the rent-control measures. Most three-units on Munjoy Hill, for example, sold for over $1 million in 2021.
But Vitalius says there are signs larger, so-called investment grade apartment buildings are seeing the effect of rent control.
“Buyers are locked into current income with no other upside rent potential, even when a unit turns over,” he says. “Fed up with Portland, investors have focused their attention on nearly every other city in Maine, pursuing value-add opportunities as the market transforms around the new influx of residents, higher demand, and higher rent rates.”
He expects those trends to continue in 2022.
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