Maine home sales activity is slowing, but it’s not a buyer’s market yet

Maine’s real estate market has felt like a record-breaker for months: falling sales, skyrocketing prices, soaring demand, and paltry inventory.

May home sales numbers released Tuesday by the Maine Association of Realtors tell a similar story, but realtors say a new chapter is about to begin.

Interest rates are going up, and while the lists are going up, there hasn’t been much release of the state’s tight stock, especially in the “affordable” range below $300,000.

The cooling effect has already begun, according to some real estate professionals.

Sales in Maine fell about 12 percent last month from a year earlier, while the average sales price was up 15 percent. May was the eleventh consecutive month of year-over-year sales decline.

The statewide median sales price for homes sold last month was $350,000. The mediator indicates that half of the houses are sold for more money and half are sold for less.

Sales for the past three months have been historically low, but there have been “small gains” in the number of homes for sale across the state, said Madeline Hill, president of the association and designated realtor at Roxanne York Real Estate in Harpswell.

Some of those gains are a seasonal increase for typical spring home sales, she said, but we’re also seeing home purchase demand impacted by higher mortgage interest rates and higher home prices.

Hill isn’t quite ready to announce a change in the market, but she is watching closely.

“With sellers and buyers adjusting, time will tell if we move into a more balanced market with slower price growth and less competition from buyers for selling inventory,” she said.

Analysts expect slowdown

Interest rates have more than once rebounded from pandemic-era lows to their highest since before the Great Recession.

According to Freddie Mac, the median price listed on buyer contracts for 30-year, flat-rate conventional mortgages was 5.23 percent in May, up from 4.98 percent in April. The average rate through 2021 was 2.96 percent, the organization said.

Mortgage rates continued to rise. Last week, in the biggest one-week jump in decades, 30-year fixed-rate mortgages jumped 5.78 percent, according to Freddie Mac. That’s a level we haven’t seen since 2008, and realtors estimate that it will slow buying dramatically.

In Cumberland County, the median price was $510,000 for the three months ending May 31 — a 17.8 percent increase from the same period a year earlier, and the highest average price in the state. But sales continued to decline at a higher rate of 19.3 percent.

The Realtors Association is also looking at three months of data for provincial comparisons to get a larger sample size of sales transactions.

Hancock County saw the biggest drop in sales. Between the beginning of March and the end of May 2021, realtors in Hancock County sold 242 homes. In the same three-month period this year, it sold 139, down 42.6 percent.

Orostock County saw the largest year-over-year price increase in the three months — 43.5 percent — but with an average price of $155,000, the county still has the lowest-priced real estate in the state.

Tom Landry, owner of Benchmark Real Estate in Portland, felt a shift two or three weeks ago, like a little air was coming off the market.

Landry said there will be a lull, especially with higher interest rates coming into effect, but that it will be a few months before that is reflected in any sales data.

List prices, initially high, drop as sellers swing in their expectations and buyers rethink their willingness to bid.

However, these price cuts come after prices are up nearly 50 percent in some cases, Landry said, so the market remains strong.

He doesn’t expect to see a crash but sees the market starting to turn.

“If you’re a seller, it’s a perfect time to get it,” he said, “but be reasonable.” “Buyers, may your time come, and may it come in the form of a spade.”

No more food frenzy

However, others aren’t sure what the state’s housing market will do next.

Irene Lamarsh, a Caldwell Banker-based realtor in Kennebunkport, expects to see the seller’s market for at least another year or two.

“I think the economy has to collapse completely” to become a buyers’ market, she said.

However, Lamarche said it also sensed a shift in market conditions.

Some first-time homebuyers have more success securing a contract, in part due to lower competition from others who have decided to take a break from searching. She said it was by no means the norm, but there was a slight uptick.

Lamarche said it has seen more price cuts in the past two weeks than in the past two years. It is especially common in properties that need more TLC.

“I think buyers are starting to decide, ‘If I’m going to pay more on interest and the rates are too high, I’m not going to bid on something that might need more work,'” she said.

Lamarche said there are signs that a market turnaround may be beginning, and the next few months will be impressive. She just doesn’t expect it to be all that drastic.

Michael Heitz doesn’t see a market crash on the way, but he sees changes, too.

Buyer interest remains high, particularly with starter homes that are ready to move in, and housing shortages putting pressure on prices, but he said there was never tough competition there once.

“It’s no longer a frenzy with crazy numbers of shows on the lists,” said Heitz, the realtor at Maine Home Connection in Portland.

He said higher interest rates are causing some people to put off, but if they are waiting for prices to come down, “buyers are going to wait a really long time.”

Hetz said those still in the game are more fickle and selective, which helps bring the price list back to a more realistic range.

If change is coming, Hitz is ready to embrace it.

“I welcome a bit of slowing down, because what we’ve been through for the past two or three years has been absolute madness,” he said.

The national mediator exceeds 400 thousand dollars

Nationwide, home sales are essentially back to pre-pandemic levels after ‘two years of gang performance’.Help Lawrence Yun, chief economist at the National Association of Realtors.

Nationally, single-family home sales are down 3.6% from April of this year and 7.7% from May 2021.

While sales have declined over the past four months, prices are still on the rise.

The median US single-family home sale price in May was $414,200, an increase of 14.6 percent from a year ago. This is the first time that the median price of existing homes has exceeded $400,000, according to the National Assembly.

In the Northeast, sales in May were slightly higher than the previous month, with a 1.5 percent increase, but were 9.3 percent lower than in May 2021. The median home price was $409,700, up 6.7 percent from the year Past.

Yoon said further declines in sales, driven in part by the increase In the mortgage rates in June, are expected in the coming months.

However, “appropriately” priced homes are still selling quickly, and Yoon said inventory levels should roughly double before home price increases subside dramatically and buyers have more choice.

Lianne Barchdorf Nichols, Broker with Keller Williams Realty in Portland, Also, don’t expect to see any major changes until more inventory becomes available.

There aren’t enough units, so prices have gone up, and you don’t see much convenience for buyers in sight.

“This is all driven by demand, and what will change that?” Nichols said.

If anything, high prices and interest rates have only helped drive domestic buyers out of the market and make room for out-of-state buyers, she said. The spring market was noticeably more “aggressive” than she thought it would be.

Like LaMarche, Nichols said everything has to collapse completely before the market swings in favor of buyers.

There were some price cuts, yes, but she said these were largely corrections from people who had “goed on their skates” and listed a property at an unreasonably high price.

“Until we see a significant increase in inventory, I think we see more of the same,” she said.

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