LEWISTON — In the post pandemic real estate world of low inventory, higher interest rates and over-the-top cash offers, the million-dollar question is when will things begin to change?
In Maine, it may already be changing in parts of the state.
Even the most optimistic real estate agent will tell you it will be five to 10 years before there is enough inventory to end the housing crisis. But there are signs of subtle shifts in the real estate market that anyone looking to buy, sell or build a home should pay attention to.
The Maine Association of Realtors released its monthly sales figures last week for existing single-family homes for June, declaring, “there are positive signs on the horizon.” It’s a mixed bag of statistics to sift through, however. Home values in Maine increased 6.45% over June 2022, but sales were down 19.24% over the previous year, mostly due to the lack of inventory, the organization explained.
The number of homes sold jumped 27% from May to June and there was a 14% increase in the number of homes available for sale, which is significant. Carmen McPhail, president of the Maine Association of Realtors, suggests it is an indication that additional inventory is becoming available — potentially leading to a more balanced market. However, it’s not unusual to see more homes on the market in the summer.
WHAT REALTORS ARE SEEING
The Sun Journal spoke with seven real estate agents, with a range of experience from one year to more than 25 years and with sales territories covering all of Maine to just the Lewiston-Auburn area. Most of the agents said they have had to expand where they look for homes for clients out of necessity. Three of the agents had only ever sold in a COVID-19 or post COVID-19 environment. All the agents were asked the same set of questions, revealing some of the trends they are seeing.
Dana Curtis is owner and designated broker of Maine Homes and Camps and has been in mortgage banking and real estate for more than 25 years. Submitted photo
All the real estate agents interviewed agree it’s still a seller’s market, but there are signs that is changing. Dana Curtis is the owner and designated broker of Maine Home and Camps in Fayette, with more than 25 years as a Realtor and mortgage banker in Portland and New Hampshire. “Buyers aren’t as rabid as they were even a year ago or two years ago,” he said.
Offers of $60,000 or more over the listed price are no longer the norm, and he said fewer buyers are waving home inspections. “The buyers are getting back to negotiating in (an) inspection contingency, where they’re actually having time to do a home inspection once they go on their contract.”
Michelle Gosselin is a partner agent at Hearth & Key Realty in Auburn and has been a real estate agent since 2019. Submitted photo
Michelle Gosselin is a partner agent with Hearth & Key Realty and has been a Realtor since 2019. She predicts a very active summer that will continue to see homes go under contract within a few days of going on the market. She too said offers of $30,000 to $60,000 above asking price are behind us.
“On an average basis, I am seeing $10,000 to $20,000 over asking price. And we are not yet experiencing a trend of offers below asking price,” she responded.
The average number of days that homes stay “on the market” is rising, representing another shift, with statistics from Maine Listings bearing that out. In Cumberland County, where the average list price of a home in June was $622,626, the average number of days on the market was 16, up from 14 days in June 2022. In Androscoggin County, where the average list price of a home in June was $286,459, the average number of days on the market was 18, up from 10 days in June 2022. Statewide, the average listing price of a home in June was $451,438, while the average number of days on the market was 28.
Jennifer Sumrall is a real estate agent with Keller Williams of Greater Portland. Submitted photo
Jennifer Sumrall is a real estate agent with Keller Williams of Greater Portland and services southern and central Maine. While the Auburn resident has only been selling properties for about 18 months, she has sold more than 50 houses. Sumrall talked about another recent trend that is starting to wind down — and that is buyers waiving home inspections as an incentive to sellers.
“People are still waiving inspections and I think that’s the worst thing you can do. It’s dangerous for many reasons, especially a first-time home buyer that doesn’t necessarily know what they should be looking at and the cost of things.” Sumrall points out that not having a home inspection puts an additional burden on the appraiser to find issues that should have been found with a home inspection, which may not happen. Appraisers are hired by the bank or mortgage company, not by the buyer.
While cash offers are not usually dependent on an appraisal, a home purchase that involves financing is, and agents say that aspect of the home purchase is also shifting.
Elaine Pratte is a real estate agent with Meservier and Associates in Auburn and has been involved in real estate for more than 18 years. Submitted photo
Elaine Pratte is a real estate agent with Meservier and Associates in Auburn. She’s been an agent for six years but has been investing in real estate for 18 years. She said appraisers are starting to balk at over-the-top contract prices that don’t pass muster.
“Appraisers are starting to push back a little bit and be a little more strict,” she said. “They’re not going to these higher prices. I’ve had four or five properties in the past month that have not come in at the appraisal value. So, we’ve had to renegotiate before the closing date.”
BEING A BUYER OR SELLER TAKES PATIENCE AND PREPARATION
Brittney Moore and her husband set out last year to buy one of the most difficult homes to find in one of the most competitive markets in Maine. She works as a chef in Westbrook, and they wanted to live in the Portland area. Their price range was what they could afford — $200,000 to $250,000.
“Our first attempt we looked for a couple of months, and then just gave up because there was nothing,” she recounted. “Well, the issue is, every time we would put in an offer, we would get outbid by at least $50,000.” Frustrated and discouraged they stopped looking. Moore didn’t give up and enrolled in a home-buying class, which are widely available.
“We saved up an extra like $10,000 for closing costs, on top of what we already had,” she said, bringing their total available cash for down payment and closing costs to $17,000. Their wish list was basic — a two-bedroom, one bath with a small yard for their dog, within an hour of Westbrook, and a fixer-upper was fine with them.
House hunting was limited to one day a week because of her job. Starting in January, she and Sumrall would go out once a week and look at a bunch of listings. “I would make a bid every single week on a house, whether it was our dream home or not,” Moore said.
Finally, they found a house in Porter and were soon under contract. Five days before closing, her bank called to tell her she didn’t qualify for a MaineHousing FHA loan because her income was above the threshold. Heartbroken, Moore said she just felt like quitting. But they kept looking and just over a week ago closed on their new home in Readfield — a 75-minute commute to Westbrook.
Moore’s advice to buyers is to take the home-buying course first. “It explained a lot about, like, where the fees are coming from, the closing costs, what you should be looking for in a house and why you shouldn’t wave inspection. Things like that.”
Brittney Moore and her husband just closed on this three bedroom, one bath home after searching for almost a year. Submitted photo
Despite that, the Moores did waive the home inspection. “With everybody in the market waiving inspections, signing appraisal gaps, I felt like that’s the only option that I had at this point in time, if I actually wanted to get a house within my price range,” she said.
There were some issues they had to fix immediately as a result, but Moore said she has no regrets, even if it’s further from work than she wanted to be. But they traded renting an apartment for owning an 1,800-square-foot three-bedroom, one bath home with a yard and another bedroom in the basement.
“So, I didn’t believe it until the day we signed the closing, as I knew I had been burned before,” Moore said. Her other piece of advice to buyers? “If you think you have enough money for a down payment — you don’t!”
Other areas where real estate agents are seeing changes include putting a property on the market at a random price, not pegged to comparable homes or property sales in the immediate area and doing little or no work to prepare the home for showings.
Curb appeal is important to buyers and sellers need to be aware that having a home that looks sharp, is decluttered and move-in ready will push your home to the top of the list.
BUYER’S REMORSE?
All the agents interviewed for this story agree lakefront or waterfront property remains the hardest to find in Maine. There is a lot of competition from within Maine and out of state for the dream camp, lake cabin or vacation home.
Realtor Dana Curtis focuses on those types of homes from his base in Fayette. “You know, I still have a lot of people that are wanting something that they can kind of get away from people.”
He said there are still cash buyers out there, but not as many as a year or two ago. Buyers are more deliberate now, and some who bought at the height of the COVID-19 pandemic may be experiencing a bit of buyer’s remorse.
“It will be interesting to see, I think, in this state in another couple of years. You know, people that have moved here, been here for three or four years, maybe they didn’t necessarily know what the landscape of Maine really was like during the winter,” he asked rhetorically. “And you know, a lot of times you have to drive 45 minutes to get to a Hannaford. And that’s a problem for people who didn’t realize the remoteness of Maine.”
This four bedroom, two bath home with two-car garage on the east branch of the Nezinscot River in Buckfield is listed by Elaine Pratte of Meservier & Associates in Auburn for $425,000. Submitted photo
There’s also poor or no cellphone service or internet in the more rural areas of the state, which may also play a role.
“So, I think, I think there’s going to be a real change. And the problem is, you know, if these people try to sell, and the market does do a correction …” While Curtis doesn’t believe there will be a housing market crash like back in 2009, he does believe there will eventually be a correction, even in Maine.
Editor’s note: In addition to the real estate agents quoted in the story, the Sun Journal would like to acknowledge the following agents who contributed to it: Shaquille Alston of Maine Real Estate Experts, Kylie Bureau of Keller Williams, and Matthew Mocciola of Realty One Compass.
Send questions/comments to the editors.
