Real estate market trickles up: York County continues to outpace northern counties
Photo / Tim Greenway
Pat Rocheleau, a custom builder in York, says the market for vacation and second homes has picked up since the recession. He's pictured here in one of the homes his firm built.
Low interest rates, falling fuel prices and declining unemployment rates have combined to create a trifecta of good news for Maine's home sales and construction industries.
Much of the benefit is being felt in southern Maine, including York County. Overall, Mainers with more money in the bank may look to buy or build in 2015 as their economic outlook is optimistic. Amanda Rector, Maine's state economist, says consumers are feeling a bit more positive now than they have in recent years, which is bolstered by a few factors.
“The national economy is doing quite well, which flows through to the Maine economy,” says Rector. “Energy prices are down a lot, and will stay low through a good part of the year. Certainly that has good implications for the economy in terms of freeing up cash for consumers and businesses that they can spend in other areas instead of filling a heating oil and gas tank.”
A strong economy that could boost consumer spending is welcome news for the state's construction industry, which contributed $2.3 billion to Maine's GDP in 2013, with $1 billion coming from York, Cumberland and Sagadahoc counties.
On the real estate side, the number of single-family homes and condos sold statewide increased 7.6% from 2013 to 2014, from 13,198 to 14,222. The biggest movement statewide was for sales of homes and condos priced over $1 million, which increased 20.4 % last year. Many of those sales were pricey waterfront properties in York County, where property sales priced over $1 million grew 5.6% from 2013 to 2014.
When it comes to consumers with million-dollar budgets, buying and building in the area sometimes comes in one fell swoop. It's not unheard of that a pricey house on the water in the Kennebunk area is purchased and then demolished to make way for a new home surpassing $2 million, says Terry Philbrick, a third-generation builder in Kennebunkport.
“There's a lot of money going into the beach area. There are some huge projects and big wallets. Some [customers are] locals, but most are from out of town,” says Philbrick. His family construction business started 50 years ago and is now moving to his son, Joey, the fourth-generation Philbrick. The business relied on repeat customers, including the Bush family compound on Walker's Point in Kennebunkport, to keep busy through the lean years of the recession. “Thank God for repeat customers who I had a relationship with, because they kept me busy every year,” says Terry Philbrick.
The majority of his business relies heavily on “rehabs” — remodeling and additions to existing homes. Philbrick averages two or three rehabs a year, at an average price of $150,000 per project. Philbrick Builders has booked projects through the summer, and he has a positive outlook for the construction industry in the coming year. “I think the market will continue to grow,” he says.
The majority of custom builder Pat Rocheleau's business is in his hometown of York and nearby Cape Neddick, and many of those projects, whether new homes or remodeling jobs, are on the waterfront. His projects are typically vacation or second homes for Boston-area professionals who are in the top 5% of wage earners and have plenty of disposable income. As market prices receded in 2008 and 2009, the lower prices brought in buyers who had money to invest. While business has been steady for Rocheleau, he notes that 20 minutes inland the construction market is not as good.
“What I see and what I feel in the market are separate,” says Rocheleau.
Overall, the median sales price for homes in York County in 2013 was $220,000. That dropped slightly to $215,000 in 2014. The statewide home sales price from 2013 to 2014 was flat at $175,000.
The market for waterfront and vacation homes is often vastly different from much of the state's inventory of home listings.
The upper tier in waterfront real estate is seen in Kennebunk, where the market for million-dollar homes was buzzing in January. A home on Goose Rocks Beach set a sales record for that area at $3.07 million, and a house on Kennebunk Beach sold for $4.4 million, the third-highest home price in York County, according to records kept by MLS, the Maine Real Estate Information System. Both homes were sold by Bill Gaynor of Legacy Properties Sotheby's International in Kennebunk.
There are approximately 500 houses on the market in Maine for over $1 million, and roughly 125 to 130 will sell per year, says Gaynor. “Maine is still remarkably inexpensive” when compared to similar waterfront real-estate markets on Nantucket, Mass., and eastern Long Island, N.Y., where sales of $10 million to $20 million homes are not uncommon.
While the multimillion-dollar houses in York County are seeing activity, sales are forecast to increase in the over-$900,000 market and under- $400,000 listings, says Maureen Adams Weaver, another real estate agent at Sotheby's.
Weaver projects the mood of homebuyers will be increasingly optimistic in 2015, and has recently witnessed some interesting home-buying scenarios. “There have been increasing multiple offer situations and 'over-asking price' situations on properties that are priced correctly,” says Weaver.
Sales in the middle market will be slower, Weaver cautions, even with low interest rates. New construction could be prompted by the relatively tight inventory of houses and consumers' desire for energy-efficient homes, she adds.
Gorham Savings Bank has had heavy pre-approval activity at its Kennebunk branch, with consumers actively looking at land and properties, says Eric Andrews, chief banking officer. Interest rates for construction loans that convert to mortgages upon completion in mid-January were in the low 4% range, “That's pretty good for a one-closing product,” says Andrews. Gorham Savings has had a 48% increase in dollar volume for its residential loan portfolio from January 2014 to January 2015.
More real estate sales means more business for related businesses, including surveyors Livingston-Hughes, a 20-year-old firm in Kennebunkport. The surveyor's mortgage inspections have been very strong, says Tracy Hughes, co-owner with husband, David Hughes. Their business will take a deed supplied by a bank and apply it to the property monuments to ensure everything is correct, including setbacks and town building codes.
Complying with town codes and waterfront setbacks is an important aspect of the construction business, notes Hughes. New construction-related projects increased 168% for their business from 2013 to 2014, she says. The surveying firm stakes out where the footprint of a building should be, which is critical for waterfront homes.
“The construction industry isn't necessarily up that much, but builders are being a lot more cautious about what they're doing,” she says. “You put a lot of money into building a house, and to then find out there is a huge mistake? It's just smart to have someone have a look [at the setbacks].”
Weaver predicts much of the future construction, at least in York County, will move inland as the FEMA flood zones begin to limit waterfront construction.
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Maine home sales increase in January
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