Updated: October 5, 2020
Biz Money
Biz Money: Maine housing market still bullish
Maine’s housing stock remains hot — you can say despite the pandemic or because of the pandemic. However you look at it, sales of existing homes nudged up slightly in August, though the median home price surged by 17%.
We’ve been hearing anecdotal information for the past several months that brokers were fielding calls from Boston, New York, Texas and so on from people eager to leave their cramped city life and move to Maine (or other states dominated by rural areas). There have been bidding wars and some are buying places sight unseen.
Even before these new residents started buying up properties, housing inventory was already tight.
Last year, Maine hit a 12-year high for building permits, according to U.S. Census data, and this year is not far off of last year’s pace — even with a momentary pause in March.
There were 4,760 permits issued last year. While this can’t compare to the building boom of the mid-2000s, which peaked at 8,765 permits in 2005, it’s further evidence that housing is in demand.
Single family homes are the most common permit issued. But there’s also been steady demand for properties with five or more units. Last year, building permits were issued allowing for 1,061 units, compared to 863 units in 2018 and 627 units in 2017.
Through July, 2,916 building permits have been issued, versus 2,991 in the same months a year ago. March, when the pandemic shut down municipal offices statewide, was the only month that was significantly off the pace from a year ago.
Economist Charles Lawton, a principal at Planning Decisions Inc., says the numbers are not surprising.
“Maine’s in an extraordinary position because it’s close to Boston and we have no inventory,” says Lawton.
The recession of 2008-09 not only cooled off the housing boom of the mid-2000s, but also sent many of the construction workers packing for other markets. Now with in-migration, the work-from-home trend and the demand from out-of-state buyers, housing is again a top priority. And home builders are working to meet that demand.
“We’re playing catch-up now,” Lawton says.
That’s putting pressure on home values. Maine’s median price for existing homes shot up 17.39% in August, to $270,000, according to the Maine Association of Realtors. A year ago, it was $230,000.
Nearly any homeowner watching this trend has no doubt checked Zillow for the estimated value of his or her current home. I’ve heard more than one person say, “I could never afford my house today.”
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