🔒The Maine Housing Crunch: Single-family market is a wild, wild ride

Crazy. Wild. That’s how brokers are characterizing today’s single-family residential market throughout Maine.

“It’s been a strong sellers’ market,” says Dava Davin, owner of Falmouth-based Portside Real Estate Group, which has seven offices stretching from Brunswick south to Portsmouth, N.H.

Buyers are offering cash, foregoing appraisals and inspections, and sometimes buying sight unseen. Listings attract dozens of viewers and multiple bids.

This was the case throughout 2021. Even though sales volume was down 21.48% in March versus a year ago, according to Maine Listings, the median sales price rose 21%.

The time a house spent on the market shrank from 11 days to nine. As recently as March 2019, a house was on the market an average of 70 days.

Bidding wars

How wild are the offers? In Brunswick, a 1,100-square-foot, three-bedroom condominium was listed for $265,000 and sold for $366,000, in cash.

A South Portland home listed for $389,900 and closed at $550,000.

“Every day we just shake our heads,” says Davin.

Bidding wars and crowded open houses are the norm.

“Having traffic jams caused by open houses is normal,” says Davin. “A dozen to 25 offers is normal.”

The phenomenon is occurring across Maine, as out-of-state buyers surge into the market.

“It’s across the board — every price point and statewide,” she says. “It’s not the super-hot towns that we used to talk about. It’s every town, every property.”

Buyers are getting creative. For example, allowing sellers to stay in the property, often at no charge, until they find their next home.

Inventory nowhere near pre-pandemic levels

After seven months of declining inventory, in March there was a 5.2% increase in single-family listings from the prior month.

But while the March inventory climbed, to 2,013 listings from February’s 1,913, pre-pandemic inventory would have been north of 10,000, says Chris Lynch, owner of Legacy Properties Sotheby’s International Realty in Portland.

“So it doesn’t take a lot of buyers at the moment to buy everything in sight,” he says.

While the overall housing rush may be good for real estate values, Lynch says that Mainers are losing ground in the market.

“The pandemic, remote work and community safety are the three most often cited influences that have broadened and deepened the out-of-state buyer base,” he says.

In 2019, Maine residents bought 74% of all homes available for sale. Massachusetts buyers closed on 8%. By 2021, Mainers made up 65% of the buyers, while Bay Staters grew to 10%.

On a dollar volume basis, California’s participation has soared by 58%. Connecticut, metro Washington, D.C., and Florida increased their participation by over 20%.

Maine’s dollar volume participation declined by 13%.

Cash wars have disproportionate impact on would-be first-time homebuyers unable to compete — and likely waiting in the wings, says Lynch.

A Portland case study

A house at 24 Carlyle Road in Portland was listed by Benchmark Real Estate at $499,000.

Within 36 hours, there were 44 showings.

After multiple bids, it sold for $650,000.

The buyer waived inspection and contingencies, says Benchmark’s owner, Tom Landry.

“The market is a combination of astronomical, shocking, on fire, whatever superlative you want to use,” says Landry. “And that’s coming off all superlatives we could ever think of throwing at the market last year.”

He adds, “Outside pressures like interest rate hikes, a looming recession, and talk of a real estate bubble could shift the near-term market up or down.”