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

“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.”

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.”

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.”