Peter Christine - Midcoast Maine Realtor - Damariscotta - NewcastleRead all about it!

Check in with this page from time to time to read news and commentary about the midcoast Maine real estate market and an analysis of the latest Maine Association of Realtors housing reports.

Our market is, as are all real estate markets, local by nature and driven by forces both common to other real estate markets, but also unique to this one.  Here you may gain that broad and local perspective you may find valuable in your decision to buy or sell real estate in midcoast Maine.

 

 

 

Midcoast Maine Real Estate Market News

Wobbly Pyramid

 

You don't have to pore over too much data to know that the Baby Boomer generation was huge and is now approaching and going into retirement. As they came into their own in the '70s a surge of consumption began that lasted throughout their working years culminating with the now infamous halt of real estate investment in 2005. The population pyramids show the generation of young adults now coming into their working years is quite a bit smaller. In other words, what for the boomers in the 1950's was a pyramid with a broad foundation, has now become a bit top-heavy. Younger Americans simply aren't there in great enough numbers to soak up the inventory of primary housing, let alone the secondary and vacation real estate investments of which the Boomers are now divesting themselves.  This is true of other forms of consumption as well.

To exacerbate the problem, the past 20 years has seen a dramatic increase in college tuition. Many young people that, in another time might have been buying houses, commercial, and vacation real estate as their careers got under way, cannot afford to due to huge amounts of student loan debt.  The problem of this negative impact on housing markets and wealth generation in the U.S. is discussed here in a white paper issued by the Federal Reserve Bank of Boston.  The intimation is that colleges may, by their declining cost/benefit ratios, be trending toward obsolescence.

Although some markets show signs of transaction and price improvements, midcoast Maine's real estate market only shows signs of transaction improvement.  We are experiencing greater numbers of buyers than in recent years entering the market, willing to buy, but only at a price that is in keeping with the new economic conditions.  Price pressure is still to the downside due to the major demographic shift and college debt burdens.

Baby Boomers In US Population 1970/1985                                Baby Boomers in Population 2012

 

Tug-O-War

"What's up with the real estate market? Things are improving, huh?" Well, a very guarded "yes" is is the right answer with the qualification that we are in a drawn out transitional market.  One would think that with all the stories of the improving real estate climate and tales of low inventories that we would clearly be in a seller's market, but dont' tell that to the buyers here in Maine. Many pockets of the market are still overhung with inventory (the high end most notably and lakefront properties), but other sectors are wanting for good quality, updated homes (in this case, the in-town market).  General pronostications about the improving real estate market have left some sellers wondering why there is little activity on their listing while some buyers are scratching their heads wondering why the seller of that fine cape walking distance to town amenities is so stubborn about the price and improvements.  Neither side can yet plant a banner to claim this market as theirs.  It is definitely a case-by-case exercise.

Hold up, there.

Following a year in which there was much excitement over the upbeat changes in the real estate market, a bit of reflection on where we are would not go amiss. Although the steady increases in “units sold” held up (except February 2013) month to month through October and was in step with the seasonal nature of Maine’s market, late fall greeted us with some trepidation from buyers. The bickering in Washington didn’t help confidence in the face of a steady stream of reports that the global economy was limping along.

Some buyers began to think better of an expenditure just yet and reigned in plans in a “wait and see” defensive mode. Inventory is suffering in quality as many good homes were picked up earlier in the year. There are still pockets of price softness, especially for homes that saw the year without contracts.

On the data, the tendency would be to label the current market a “seller’s market”, but with the economy muddling through that pronouncement would be premature. Price appreciation is not a factor in most buyer’s calculations, so sellers will need to keep their expectations in line with the quality of their offering and what is becoming a long-range view of modest economic activity.

Anybody Home?

My absence from this page for such an extended period speaks volumes about the activity in this market.  Although the news of the housing recovery has been out for more than a year now and emanating from California to Boston's suburbs, there are important differences in Maine's midcoast market. Other than the usual local relocations, we are a destination market - a place people have their eye on for recreation and retirement.  We have not yet faced the unit shortages that buyers are encountering elswhere and not all sectors of this market are fully engaged yet.  Choice is still available at the high end while in the middle and low end markets the quality inventory is disappearing quickly.  And not just to relocation and rusticators, but to investors picking up rental properties at good prices and good rates.  The big banks are more than eager to get rates back up again now that much af their toxic debt that caused the near-meltdown has been absorbed so watch for your lock-in rate carefully and come out to tour property!  Lets hope the Fed can keep the rates such that this recovery isn't still-born.

What a Difference a Year Makes

There can be no doubt now.  Virtually all markets around the country are confirming that the trend in real estate is up.  In some markets there are now tight inventories in the more modest price ranges.  Here in Maine we are at the head of an incredible 16 consecutive month juggernaut of year over year unit sales improvements.  Moreover, we have now seen median price increases each month since March 2012 with the exception of July.  Whether it is a buyers’ or a sellers’ market depends on your price range.  Under $400,000 some buyers are beginning to lose out in multiple offer battles while the higher end – over $1m – is still adjusting prices to attract those few, but savvy clients.  Land still remains the sleeper.  There are some choice parcels, but with construction costs remaining intractably high, the existing housing market followed by a remodeling job will retain dominance.  Best wishes for a great holiday season.

Skimming the Cream

We are now getting breezes taking us out of the May doldrums, a phenomenon brought on by school graduations and wedding plans.  With June upon us, these new contracts have us looking forward to an active season. There seems to be some reluctance on the part of buyers to move forward. Whether the reluctance is the renewed worry about the Euro-zone, one can only guess. Whatever it is, some buyers are beginning to lose out on a favored property as more decisive clients begin to skim the cream off the inventory. Maine real estate enjoyed its ninth month in a row of sales increases, images/mainehousingreport-march2012.pdf , so with the trend in place and the inventory beginning to be brought back down, we are optimistic for a return to normalcy - steady as she goes if you please.

The Trend's Your Friend

What may have been construed as “blips” on the economy’s radar screen last fall can now be considered the trend.  According to the monthly housing reports from the Maine Association of Realtors, images/mainehousingreport-december2011.pdf, we have seen six consecutive months of year-over-year improvements of existing home sales in Maine. In the broader market, the National Association of Realtors reports the third consecutive month of increasing existing home sales and a drop of almost 10% in inventory.

Supply and demand look to be coming back toward normalcy.  The good news in the economy is also evidenced in new three year lows in both December’s and January’s numbers for unemployment and consumer sentiment also has had six months in a row of increases.  The best news is that housing prices are still low and at least here in midcoast Maine, there are some great quality homes on the market.  As they say on Wall Street, “The trend’s your friend.”

And October Makes Three

My Blue Heaven's lyrics referencing "a smiling face, a fireplace, a cosy room, a little nest that nestles where roses bloom" may be apropos since October marks the third month in a row in Maine of year-over-year increases in unit home sales.  View the report: images/mainehousingreport-october2011.pdf.  This is not surprising considering that every broker I speak with from Camden to Portland is very busy with showings and that the pens are finally being put to paper during a time of the real estate year that is usually quiet.  This trend is continuing even between the holidays!  This might convince all but the most intractable nay-sayers (media) that we have definitely turned a corner.  But when have the pessimists ever prevailed.  "I am an optimist. It does not seem too much use being anything else." - Winston Churchill 

Strange Days Indeed

This has been an unusually busy fall. Normally in October in midcoast Maine we begin to go into real estate dormancy, but buyers/lookers are keeping the schedule humming along and the activity is continuing into November. Maine's housing sale numbers were up in both August - images/mainehousingreport-august2011.pdf and September - images/mainehousingreport-september2011.pdf with 14.74% and 7.56% increases repectively and with September reporting increases in 15 out of 16 counties. Local interest rates are hovering between 4% - 4.5% for a 30 year fixed, no points and the Fed's tool box is almost empty, so these rates may be the best we see. Europe seems to be making progress on what had seemed an intractable debt crisis. The jobs numbers from Washington, while not stellar, are showing an economy that is not slipping into another recession. Buyers are aware of the changing business climate and are beginning to skim the cream of the real estate inventory. Even the mid-range which had been comatose has started to gather attention. Bottom fishers are so focused on finding the exact bottom that they often forget the importance of and consequently don't see the change in the overall trend.

A Silver Lining?

Mmmmm....let's see....the stock market has burned us badly 3 times in the last ten years, gold is way too high, commodities are too quixotic, bonds don't pay anything and there's no downside left in rates, banks hardly pay anything on CD's, young people don't buy antiques....mmmmm....where can I put some money and actually have something tangible at the end of the day, something with some of the downside risk taken out? Real Estate!?

What's Wrong With This Picture

Clients have been shaken recently by national data regarding housing starts.  Housing starts are not existing housing and our midcoast area is a retirement/second home market for which there has been ample interest this spring in the existing inventory of good homes at good prices.  Local 0-point 30 year rates are now around 4.75%.

The home sales numbers (see the linked reports below), looked great in February, but not so pretty in March and April.  Remember though, the homebuyer credit ended last April 30th, so there was a March and April rush to close sales last year which artificially skewed the numbers higher leaving this year's numbers poor by comparison.  The on-the-ground fact remains that most of my colleagues and I are extremely busy with showing requests - much busier than last year at this time.  See the Maine Association of Realtors' housing reports here: images/mainehousingreport-march2011.pdf and images/mainehousingreport-april2011.pdf

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Contact

Reach me at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at

(207) 592-2951

Peter is a broker with Drum & Drum Real Estate, 17 Bristol Road, Damariscotta, ME 04543

 Drum & Drum

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