Homeward bound: Low rates, surging demand fuel southern Maine building, remodeling boom

Photo / Jim Neuger Developers Dan Bacon and Peter Michaud with a schematic view of the Downs development in Scarborough.

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By Renee Cordes

“I’m hoping our house will be over there with a daylight basement,” Betsy St.Pierre says in a snowy field off of Nathan Smith Road in Hollis.

She’s standing on land she bought with inheritance money — 45 acres for her family, and 35 acres for a dozen other houses.

Not your typical property developer, St.Pierre stepped into the role after a house search turned up empty and took the plunge to buy the land and create a subdivision. She’s named it Totem Pines, inspired by a song by Canadian rock band Rush and the property’s totem pole-like white pines.

“It’s kind of really come together and interesting to see it unfold,” St.Pierre, human resources manager at Scarborough-based Town & Country Federal Credit Union, says of the evolving plan. “It’s like a magical moment in time.”

Photo / Jim Neuger

Betsy St.Pierre, HR manager at Town & Country Federal Credit Union, points to the location of her future house on her property in Hollis.

This is also a bustling moment for home construction and residential development across southern Maine, mirroring a national trend. That’s keeping companies in a host of sectors busy — from architects, developers and suppliers to brokers and bankers — and pouring money into the economy. A flurry of home remodeling activity during the pandemic is doing the same.

Among larger-scale developments, residential construction at the Downs in Scarborough is progressing at a fast clip on 525 acres being transformed into a new “live-work-play” community.

“We’re building a community, not just a subdivision,” says Peter Michaud of Crossroads Holdings Inc. during an afternoon site visit. Green open spaces are a key component, like the small “pocket parks” in the town center residential area currently under construction, and trails used by people already living there.

With 200 and 300 construction workers on site every day, Michaud puts the project’s economic impact through August 2020 at $80 million, saying, “We’re damn proud of that.” He predicts that to double in the next 18 months, adding, “Whatever we do at the Downs is good for the state of Maine, and there’s your evidence.”

Photo / Jim Neuger

The median home price was $340,000 in August, an increase of 9.68% from August 2021, according to the Maine Association of Realtors. The Downs in Scarborough is pictured here.

Hot housing market

In Maine, single-family homes are most expensive in the state’s two southernmost and most populous counties amid greater competition for a shortage of homes listed for sale.

In the three months ended Nov. 30, the median home price in Cumberland County was $385,000, up 16.7% over a year earlier, while the median price in York County was $368,000 or 22.7% above a year earlier. Statewide, the median sales price in November rose 20% from a year earlire, to $270,000, while nationwide the median sales price rose 15.1%, to $315,500.

In Maine in November, one in three home sales involved a buyer from out of state, up from one in four a year earlier.

While there is no further geographic breakdown, greater Portland remains highly desirable — and pricey, though not totally out of reach for buyers from out of state with cash in hand.

“For a lot of out-of-staters coming out of Boston, New York or Connecticut, Maine is still a bargain,” notes David Jean, a principal at Portland accounting firm Albin, Randall & Bennett who advises construction and real estate development firms. He says that’s true even for southern Maine and that those bringing high-paying remote jobs benefit from “New York pay, Maine living.” With many of his clients reporting full plates for 2021, Jean predicts a strong year for the sector, saying: “Where the bubble will stop,” he says, “who knows?”

Some of the reasons behind the current home-buying — and refinancing — frenzy: Pent-up demand and historically low mortgage rates, with the 30-year fixed rate around 2.65% in early January. While southern Maine’s rising prices reflect a national trend, the region — greater Portland in particular — has become even more desirable as a refuge from COVID and urban congestion. Realtors expect prices to keep trending higher.

“In this market in the past few years, there’s been several times we thought we’ve been at the peak and it keeps going up,” says Rachel Davey, associate broker at Vitalius Real Estate Group in Portland. “I anticipate 2021 will be another strong year.” Lately, she says she’s seen a number of buyers shut out of multiple-offer situations who get burned out, then turn to new construction where there is sometimes less competition.

That’s also true nationwide, with U.S. housing starts and permits both registering strong growth in the latest Commerce Department report. It shows a 6.2% jump in permits for future building in November from October and 8.5% higher than a year earlier.

Housing starts rose 1.2% in November to a seasonally adjusted annual rate of 1,547 million units and 12.8% above a year earlier.

In southern Maine, permits for single-family dwellings were up in both counties in 2020 — going from 666 units to 722 units in Cumberland County and from 529 units to 593 units in York County. By constrast, permits for units in multi-family dwellings fell from 814 to 614 in Cumberland County and rose from 95 to 97 in York County last year.

Buying land as an option

For some eager buyers in today’s overheated market, buying land on which to build like St.Pierre has done is an option. Though not a common one, it’s also gaining more traction amid low borrowing costs, says Town & Country FCU President and CEO David Libby.

“We saw a big uptick in land loans this year, and expect that to continue,” he says.

That includes land for second homes and camp properties, he says, a good option for buyers who aren’t in a hurry. His advice for anyone pursuing that route: Find the right location and contractor.

Back in Hollis, St.Pierre couldn’t be more pleased with that location of her future house, as the sun starts to go down in the late afternoon. She knows it well from riding all-terrain vehicles with her husband and son. She now visits daily, thinking about what she is undertaking with the money her dad left her.

“I want to make him proud,” she says.

Similarly, the developers of the Downs are aiming to beautify their hometown, with a mix of housing and at different price points as new neighborhoods spring to life.

“We’ve really spent some time figuring out now only what the market wants, but we’ve also come up with a mix of housing types that are good for the tax base and good for the town of Scarborough,” says partner Roccy Risbara.

Meanwhile at the site, Michaud and M&R Holdings Development Director Dan Bacon describe what the town center residential area will look like when it’s done, not far from the old harness racing grandstand that seems out of place.

Eyeing wooden frames made of white pine, Michaud remarks, “This is going to be great.”

The Downs: Residential snapshot

Mill Village: 30 single-family units, 48 apartments, 48 condos and 12-bed memory care home built and occupied; 39 senior affordable units under construction and 38 planned

Town Center: 23 single-family, 58 apartments and 54 condos under construction; 8 single-family, 18 townhouses and 2 duplexes in permitting.

‘Significant demand’ for home revamps

Photo / Tim Greenway

Maya Bogh, co-owner and business manager for Great Northern Builders in South Berwick and president of the Home Builders and Remodelers Association of Maine, says this is a busy time for aging-in-place remodels.

Can’t find your new dream home and need more space for living, learning and working at home?

Remodeling has taken off during the pandemic, especially kitchens, basements and home offices. That also boosts a home’s value when an owner decides to sell.

What else are people spending money on? “Aging-in-place remodels are a big category for us,” says Maya Bogh, co-owner and business manager for Great Northern Builders in South Berwick and president of the Home Builders and Remodelers Association of Maine, a nonprofit group based in Scarborough.

“We see significant demand in that area,” Bogh says, particularly amid safety concerns surrounding nursing homes during COVID. “There is also demand for multigenerational houses as well.”

Great Northern Builders, a six-employee firm founded by her husband, Len, in 2002, handles a wide range of jobs from custom bars to a sea wall in Eliot on the Piscataquis River.

More recently it’s done projects on houses purchased by people from out of state before moving in. Bogh says that demand remains strong despite costs that are “all over the place” and product delays.

“Recently we had a client with medical needs who needed a step-in-tub,” she recalls. “We put the order in four months ahead of time, and the day it was supposed to arrive we were informed the tub hadn’t been made yet.”

For those thinking about a remodel, Bogh suggests using her association to find a reputable contractor, setting a realistic budget and finding someone with time since contractors are booked out as much as a year.

Her general business outlook: “The boom is not going to slow down.”

Lumber suppliers bullish

Photos / Kevin Hancock Courtesy of Hancock Lumber; Mike Hammond by Jason Paige Smith

Kevin Hancock, chairman and CEO of Hancock Lumber, left, and Mike Hammond, president and CEO of Hammond Lumber Co.

Southern Maine’s home-building and renovating boom is keeping the state’s two-biggest family-owned lumber suppliers busy.

“With record-low mortgage rates and record-high builder confidence, there is exponential growth in home building and renovations throughout the southern Maine and greater Portland areas,” says Mike Hammond, president and CEO of Belgrade-based Hammond Lumber Co.

He says the company’s Portland branch is one of its busiest, with a strong mix of residential and commercial sales and a 30% sales volume increase last year. Business is so explosive, that Hammond Lumber is planning a 6,000-square-foot addition to its Portland retail space to upgrade its millwork showroom of windows, doors and kitchens.

“The expansion is planned for when we can obtain permits,” he says, with a start time of about three months from now.

Kevin Hancock, chairman and CEO of Hancock Lumber, reports a similar strong start to 2021, with sales at the Casco-based firm up well above 20%.

“When COVID-19 arrived in March 2020, no one really knew what impact it would have on our industry, and initially we were prepared for a big slowdown but in hindsight the opposite played out,” Hancock says. “The concepts of ‘home’ and ‘sanctuary,’ which has always been important, became even more important. As a result, construction activity – which was already strong before the pandemic – got even stronger.”

Hancock Lumber employs 565 people across 14 retail and manufacturing sites in Maine. Hancock says the company’s kitchen design teams are especially busy, adding, “The family gathers in the kitchen, and the kitchen is also a great long-term investment for the value of any home.”

He says that while demand remains strong, so do health and safety concerns.

“Everyone in the industry is erring on the side of caution, and there may be times this winter and spring when production can’t move as fast as normal because companies are rightfully prioritizing safety first,“ he says. “Additionally, essential workers in our industry are dealing with lots of stresses at home beyond work that demand their time and attention and companies want their employees to have as much flexibility as possible right now. All of this can impact normal productivity flow, but this is certainly a time when speed and volume produced must be secondary priorities.”

Hammond also says employee and customer safety is a priority at his firm, adding, “We are dedicated to serving all of our customers’ needs, from contractors to homeowners to do-it-yourselfers, as we continue to navigate the uncertainty of each day.”