July 19, 2004
Fast lane to the slow life | Second-home buyers are spurring Oxford County real estate to new heights. But will they drive out local workers?
By Rebecca Zicarelli
Andy Cormier was born and raised in Rumford. After graduating from Rumford High School in 1977, he joined the military and spent the next 27 years in California. Last December, though, he came back to Rumford, buying a home and a business, the Penalty Box, a restaurant and bar on Canal Street. "I was thrilled," Cormier says of his return to Maine. "I couldn't believe how cheap property was here. Where I came from in California, the average home costs $440,000. I purchased a home ˆ a 1920s mansard at the higher end of the spectrum ˆ for $150,000. That wouldn't buy you a cracker box in L.A."
For Oxford County, though, Cormier's $150,000 house represents a tremendous shift: The median sales price for a home in Oxford County has risen from about $80,000 in 2000 to more than $127,000 in the first quarter of 2004. And, despite the increase, the market is sizzling. Statewide home sales increased nearly six percent in January 2004 compared to January 2003, according to data provided by the Maine State Housing Authority. But red-hot Oxford County's January-over-January sales jumped by nearly 14%. In April, the last month for which MSHA has statistics and the beginning of the spring purchasing spree, sales jumped 17% and prices jumped 14% statewide year-over-year; in Oxford County sales increased a staggering 37% and prices more than 20%.
The trend is good news for real estate brokers in Maine's westernmost county, who attribute the growth to a number of factors, including young retirees buying second homes and out-of-state buyers with money to spare. "Everything that's been listed and sat on the market for 10 years is finally gone," says Roger Whitehouse, owner of Riverside Realty in Mexico, who adds that new properties typically sell within weeks. "A lot of it is people coming from out of state, and they're not even blinking an eye at the prices."
But those same factors raise concerns about the ability of local workers to afford real estate in the area. "People are being disenfranchised," says Michael Finnegan, director of MSHA. "Without affordable rental and ownership housing for the workforce, economic development is hamstrung."
The second-home phenomena
Cheri Thurston, a broker at Bethel-based ReMax in the Mountains, says she sees a number of trends coming together to heat up the Oxford County market. It all begins, she says, with low interest rates and buyers' equity from other homes. "The formula is baby boomers who have large amounts of equity in their homes and a strong desire to reconnect to a 'rural Maine village' lifestyle and seemingly almost free real estate," she says. But she adds that this isn't a repeat of the 1980s boom, where anything would sell. "Today's buyers are savvy about the market, informed and thorough and demanding results from their brokers."
In Mexico, Whitehouse says most of the people he's seeing are second-home buyers, usually from out of state. "I advertise in a magazine [Suburban Real Estate News] that's distributed throughout New England," he says, "and the people who respond say they feel like this is the place to go." One reason for that feeling, Whitehouse says, is the abundance of recreational opportunities in Oxford County.
Both Thurston and Whitehouse also say there's a Sept. 11 component to the boom. They say it's not driven by fear of living in urban areas, but by a reconsideration of what's important in people's lives, a search for those intangible quality-of-life factors. Those are, after all, the things that brought Cormier home after nearly 30 years. "Most people aren't afraid to re-evaluate their lives anymore," he says, "to look at themselves, their families, their money and their toys now. And when they do, quality of life becomes key."
Thurston says she also sees a lot of people who want to retire to Maine or want to work here, either by telecommuting to a job elsewhere or starting their own business. "Have Maine and Georgia exchanged spots on the map? We are seeing more and more people buying here to retire," Thurston says. "Some have homes in Florida as well. They tend to be very active adults who have been connected to winter/outdoor/water recreation activities all their lives and refuse to settle for golf and shuffleboard. They usually say something like, 'Maine is a healthier place to live.'"
Many of Oxford County's buyers are Mainers escaping the escalating prices and sprawl of York and Cumberland counties, New Hampshire and beyond. "The out-migration from Portland is passing Lewiston," Whitehouse says. "They're going into the rural areas because they say it's just a matter of time before the Lewiston market out-prices them, just like the Portland market has."
Whitehouse guesses that about 40% of his business right now is the sale of primary homes. It's a trend that has residents signing on to longer commutes, because job growth in the western part of the state hasn't kept pace with real estate growth. "I've got one couple who just moved here, and the husband commutes to Peabody, Mass.," Whitehouse says. The commute from Rumford and surrounding communities to Portland, which can take up to two hours, isn't unusual anymore.
The red zone
Finnegan of MSHA calls that trend ˆ and the overall boom in Oxford County real estate ˆ a good news, bad news story. "The good news is that Maine has always been a leader in second-home housing stock ˆ now we're number one in the nation," he says. "Properly managed, this can be a part of Maine's economic development blueprint going forward."
Second-home owners benefit Maine communities by paying property taxes without drawing heavily on the more expensive public services such as education, Finnegan says. They also pour a tremendous amount of tourism money into the economy. But the influx of their healthy checkbooks also makes prices creep beyond the range of affordability for local workers.
MSHA publishes a map that charts what it calls the Affordability Index. Towns in white don't have enough data because there are too few sales to track affordability. Towns in green are affordable for people who earn the median income in the community. Towns in red are considered unaffordable. In 2000, Fryeburg, Lovell and Bethel were Oxford County's only red-zone communities. By 2003, all the towns in the southern end of the county up to the Oxford Hills region and Rangeley, located in the northern end of the county, were in the red zone.
With the median price at about $127,000 for a single-family home in Oxford County, residents are competing with the out-of-state buyers, who both Thurston and Whitehouse say typically want to spend about $100,000 of the equity they've pulled out of their primary homes. In that market, providing affordable housing for the local workforce becomes tricky ˆ in part because it is against the law to discriminate against out-of-state buyers, Finnegan says.
It's possible that the real estate surge may help grow the job base. Whitehouse says investors increasingly are looking for both commercial properties and multi-family housing for investments ˆ people who, he says, have studied the markets and see the area as prime for economic growth. Thurston says she's seeing an influx of people with an entrepreneurial spirit who "believe that western Maine is a frontier that awaits their skills and knowledge. Western Maine is still a place where you can find an opportunity to be your own boss."
How the balance of housing affordability versus growth in jobs and incomes in Oxford County plays out remains to be seen. But Whitehouse sees a future bright with both economic and population growth. "I think within five years, we'll be back to where we were in 1963, with a population of over 9,000," he says of Rumford. "This is a desirable location with friendly people. The woods are friendly. There's nothing to be afraid of; the worst we get is a severe snowstorm."
For Oxford County, though, Cormier's $150,000 house represents a tremendous shift: The median sales price for a home in Oxford County has risen from about $80,000 in 2000 to more than $127,000 in the first quarter of 2004. And, despite the increase, the market is sizzling. Statewide home sales increased nearly six percent in January 2004 compared to January 2003, according to data provided by the Maine State Housing Authority. But red-hot Oxford County's January-over-January sales jumped by nearly 14%. In April, the last month for which MSHA has statistics and the beginning of the spring purchasing spree, sales jumped 17% and prices jumped 14% statewide year-over-year; in Oxford County sales increased a staggering 37% and prices more than 20%.
The trend is good news for real estate brokers in Maine's westernmost county, who attribute the growth to a number of factors, including young retirees buying second homes and out-of-state buyers with money to spare. "Everything that's been listed and sat on the market for 10 years is finally gone," says Roger Whitehouse, owner of Riverside Realty in Mexico, who adds that new properties typically sell within weeks. "A lot of it is people coming from out of state, and they're not even blinking an eye at the prices."
But those same factors raise concerns about the ability of local workers to afford real estate in the area. "People are being disenfranchised," says Michael Finnegan, director of MSHA. "Without affordable rental and ownership housing for the workforce, economic development is hamstrung."
The second-home phenomena
Cheri Thurston, a broker at Bethel-based ReMax in the Mountains, says she sees a number of trends coming together to heat up the Oxford County market. It all begins, she says, with low interest rates and buyers' equity from other homes. "The formula is baby boomers who have large amounts of equity in their homes and a strong desire to reconnect to a 'rural Maine village' lifestyle and seemingly almost free real estate," she says. But she adds that this isn't a repeat of the 1980s boom, where anything would sell. "Today's buyers are savvy about the market, informed and thorough and demanding results from their brokers."
In Mexico, Whitehouse says most of the people he's seeing are second-home buyers, usually from out of state. "I advertise in a magazine [Suburban Real Estate News] that's distributed throughout New England," he says, "and the people who respond say they feel like this is the place to go." One reason for that feeling, Whitehouse says, is the abundance of recreational opportunities in Oxford County.
Both Thurston and Whitehouse also say there's a Sept. 11 component to the boom. They say it's not driven by fear of living in urban areas, but by a reconsideration of what's important in people's lives, a search for those intangible quality-of-life factors. Those are, after all, the things that brought Cormier home after nearly 30 years. "Most people aren't afraid to re-evaluate their lives anymore," he says, "to look at themselves, their families, their money and their toys now. And when they do, quality of life becomes key."
Thurston says she also sees a lot of people who want to retire to Maine or want to work here, either by telecommuting to a job elsewhere or starting their own business. "Have Maine and Georgia exchanged spots on the map? We are seeing more and more people buying here to retire," Thurston says. "Some have homes in Florida as well. They tend to be very active adults who have been connected to winter/outdoor/water recreation activities all their lives and refuse to settle for golf and shuffleboard. They usually say something like, 'Maine is a healthier place to live.'"
Many of Oxford County's buyers are Mainers escaping the escalating prices and sprawl of York and Cumberland counties, New Hampshire and beyond. "The out-migration from Portland is passing Lewiston," Whitehouse says. "They're going into the rural areas because they say it's just a matter of time before the Lewiston market out-prices them, just like the Portland market has."
Whitehouse guesses that about 40% of his business right now is the sale of primary homes. It's a trend that has residents signing on to longer commutes, because job growth in the western part of the state hasn't kept pace with real estate growth. "I've got one couple who just moved here, and the husband commutes to Peabody, Mass.," Whitehouse says. The commute from Rumford and surrounding communities to Portland, which can take up to two hours, isn't unusual anymore.
The red zone
Finnegan of MSHA calls that trend ˆ and the overall boom in Oxford County real estate ˆ a good news, bad news story. "The good news is that Maine has always been a leader in second-home housing stock ˆ now we're number one in the nation," he says. "Properly managed, this can be a part of Maine's economic development blueprint going forward."
Second-home owners benefit Maine communities by paying property taxes without drawing heavily on the more expensive public services such as education, Finnegan says. They also pour a tremendous amount of tourism money into the economy. But the influx of their healthy checkbooks also makes prices creep beyond the range of affordability for local workers.
MSHA publishes a map that charts what it calls the Affordability Index. Towns in white don't have enough data because there are too few sales to track affordability. Towns in green are affordable for people who earn the median income in the community. Towns in red are considered unaffordable. In 2000, Fryeburg, Lovell and Bethel were Oxford County's only red-zone communities. By 2003, all the towns in the southern end of the county up to the Oxford Hills region and Rangeley, located in the northern end of the county, were in the red zone.
With the median price at about $127,000 for a single-family home in Oxford County, residents are competing with the out-of-state buyers, who both Thurston and Whitehouse say typically want to spend about $100,000 of the equity they've pulled out of their primary homes. In that market, providing affordable housing for the local workforce becomes tricky ˆ in part because it is against the law to discriminate against out-of-state buyers, Finnegan says.
It's possible that the real estate surge may help grow the job base. Whitehouse says investors increasingly are looking for both commercial properties and multi-family housing for investments ˆ people who, he says, have studied the markets and see the area as prime for economic growth. Thurston says she's seeing an influx of people with an entrepreneurial spirit who "believe that western Maine is a frontier that awaits their skills and knowledge. Western Maine is still a place where you can find an opportunity to be your own boss."
How the balance of housing affordability versus growth in jobs and incomes in Oxford County plays out remains to be seen. But Whitehouse sees a future bright with both economic and population growth. "I think within five years, we'll be back to where we were in 1963, with a population of over 9,000," he says of Rumford. "This is a desirable location with friendly people. The woods are friendly. There's nothing to be afraid of; the worst we get is a severe snowstorm."
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