For this report, we are examining the Maine real estate market. Highlighted in this report are the average sale prices for single-family, condominiums, and multi-family homes in Maine along with the number of homes listed for sale and placed under contract. Although Lamacchia has been assisting buyers and sellers in Maine for years, this is our first mid-year report for Maine.
The Maine housing market had a somewhat unique trend compared to other states in New England. While sales increased here like in New Hampshire, they decreased in other states. However, similar to New England, prices rose when compared to the mid-year of 2023.
Number of Homes Sold Increased by 3.1%
Home sales increased to 7,192 total sales compared to the first half of 2023 which had 6,974 sales.
- Single family sales increased by 2.3%, condos increased by 10.4% and multi-families increased by 0.7%.
- With an increase in available listings (see the Homes Listed section below), buyers have had a better selection, resulting in stronger sales compared to this time last year.
- Reviewing the chart below, monthly sales in 2023 and 2024 were nearly equal, with 2023 surpassing 2024 in only 2 out of 6 months, resulting in an overall 3.1% higher sales for 2024.
- Sales levels from the pre- and post-pandemic years (2019-2022) were significantly higher, and we expect a gradual return to those levels as the market continues to recover over the next few years.
Prices Increase 9.4%
Average prices for homes climbed to $486,811 in the first half of 2024, a 9.4% increase from the first six months of 2023 at $445,116.
- Prices increased in all three categories: singles are up by 10.2%, condos are up by 5.6% and multi-families are up by 4.9%.
- Prices have been rising in Maine for years, but there was the Covid-era
spike due to frenzied demand and since then a drop just hasn’t happened due to low inventory (see yellow line in chart to right). The high demand will make it very unlikely that we will see a price drop. - If rates are a strong deterrent for buyers looking for more affordable monthly payments, there are several alternative options such as mortgage buydowns or assumptions that are worth exploring.
- The chart below shows how monthly prices over the past four years have steadily increased with 2024 having a record year for Maine.
- Historically low interest rates in recent years have skewed our perception of what is “normal.” Current rates in the 6%-7% range are not exceptionally high in a long-term context and are likely to feel increasingly standard over time. Waiting for interest rates to decrease before buying a home is generally not a sound strategy. Once you own your home, you can potentially refinance to a lower rate mortgage if rates drop significantly, and your home’s value has increased. It’s unlikely that potential interest rate reductions will offset rising home prices.
Homes Listed for Sale in ME
Listings increased by a welcome 14.7% in Maine, currently at 10,986 compared to 9,582 in the first half of 2023.
- Many sellers were trying to delay listing their homes as long as possible to hold on to their low, pandemic-era mortgage rate. An increase in listings indicates that these want-to-be sellers are finally getting off the sidelines. Most sellers have been pushed to list due to unavoidable lifestyle changes such as divorce, family growth, empty nesters, relocations, changes to job/income, etc., where eventually moving is the only option.
- With listings up, hopefully, pending sales will push up as well in the coming months, as the number of new listings is typically an indicator of future pending sales.
Pending Home Sales (contracts accepted)
The number of homes placed under contract declined 2.1% year over year with 7,786 pending sales over 7,949 this time last year.
- Even with listings up and inventory up, pending home sales are still down in Maine for the first half of the year compared to the first half of 2023. Buyers are currently facing many strains on affordability, so even if there are more options available in the market, higher mortgage rates, higher average sale prices, etc. could still be hampering a buyer’s ability to make an offer on a home, that is, if they can even enter the market to begin with.
Predictions for the Rest of the Year
The Maine market outperformed New England in sales while also showing a rise in prices, aligning with earlier predictions.
Last year, many sellers hesitated to list their properties due to the low interest rates secured during the Covid era, making it difficult to accept current rates of around 7%. These rates are unlikely to change dramatically soon, and over the past six months, sellers have begun to move past them and list their properties.
Sellers typically list their homes only when necessary or due to significant life changes. Events such as divorces, expanding families, relocations, and downsizing have driven the market, but these factors haven’t significantly boosted inventory to meet demand. As a result, average housing prices have continued to rise.
Buyers are determined to find homes within their budgets, now lower due to rising rates and prices. Monitoring rates and keeping pre-approvals up-to-date is crucial to be ready to strike if rates drop.
Homeownership offers advantages over renting, including full control over your living space, fixed monthly payments, and asset growth through equity. Mortgage interest is often tax-deductible, especially in the early loan stages.
At mid-year, sellers face varied market conditions. The first half of the year tends to favor sellers, while the second half leans towards buyers. Listing your property now can still be beneficial. Setting a competitive price can attract more buyers and give you greater control over negotiations. Sellers should not wait, as hoping for lower rates might mean missing out on the perfect home. If rates drop and prices remain steady, refinancing can help secure a lower interest rate.
National factors affecting the market include commission changes and the election. The commission class action settlement will alter how real estate commissions are handled, causing some confusion. Starting in August, sellers may only need to pay their agent’s commission, while buyers will cover their agent’s fees out of pocket. This change would have impacted VA buyers, but a temporary amendment allows their benefits to continue. Buyer affordability might be affected since this fee can’t be included in the mortgage. The election year may slow down the real estate market this winter, but a faster-paced market is expected in 2025 once the changes settle.
Data provided by FlexMLS then compared to the prior year.