Erin Murphy and her partner have been shopping for their first home since March, concentrating on Orono, where they have been renting an apartment.
“Pickings are slim,” said Murphy, noting that they’re looking for a home under $150,000, and in the relatively limited geographic area of a single town.
“We love this town, so we don’t want to leave.”
In the last few weeks, said Murphy, more and more homes have come onto the market. But they’re choosy, waiting for exactly what they want. They’re not in a hurry, they’re preapproved for a mortgage with a low interest rate, and they have “all the time in the world,” she said.
“We’re just going with the flow,” Murphy said.
That largely sums up the residential real estate market in much of Maine: Things are starting to pick up, with more and more houses going on the market — but it’s still a buyer’s market.
“Buyers are so discriminating now — they’re still running the show,” said Glenna Irvine, an agent with Benchmark Residential and Investment Real Estate in Portland.
Across the state, agents pointed to various parts of the market that are showing strength as we enter the traditional busy season for home sales. Interest is picking up, most said, though pricing homes remains difficult — and prices have fallen substantially since the boom times of only five years ago.
Homes that went for $250,000 five years ago are selling for 20 percent to 25 percent less now, said Dan Sargent of Sargent Real Estate in Ellsworth. But he’s seeing a shift in the market this year, with strong interest in homes in the $200,000 to $300,000 range. Last year, the area of interest was in the more affordable homes, from $140,000 to $170,000. The last few weeks have been incredibly strong, he said.
“There’s obviously pent-up demand after a long winter like what we’ve had,” said Sargent. “My hope is that the market will remain strong.”
Last year, the market was off to a good start, but then tapered off, said Sargent.
While rates are good, housing stock is plentiful and prices are realistic, there are still challenges for the market, he said.
“Interest rates and affordable housing don’t mean a lot if you’re sitting out there with no job,” said Sargent.
Charles Colgan, an economist with the University of Southern Maine’s Edmund S. Muskie School of Public Service, said there are two big negatives and one big positive affecting the housing market. The first negative is the overall economic situation, particularly with regard to job growth. There’s a lack of mobility in the job market, he noted.
“There’s a kind of dual relationship — not being able to sell a house makes you less mobile, and not having any jobs makes the demand for housing less,” said Colgan.
Another negative, though not as serious in Maine, is the foreclosure issue. Because of the record number of foreclosures, the amount of housing stock available exceeds demand, driving down prices, said Colgan.
A year ago, he expected to see home prices in Maine begin to rise by this summer. He has pushed that forecast out a year, Colgan said.
But those low prices are also a positive, Colgan said.
“The positive thing is the decline in housing prices has shot the affordability indexes way up. Even in fairly expensive markets, affordability indexes are going up,” said Colgan. “That will be a key part of turning the housing sector around, once the macroeconomic factors turn around.”
According to the latest numbers from the Maine Association of Realtors, home sales in the state dropped in March, compared with March 2010, with statewide single-family existing home sales decreasing 20.74 percent. At the same time, the state’s median sales price of $159,700 was a 3.15 percent decrease, March over March.
According to survey data released this week by the National Association of Realtors, total sales of single-family homes, condos and co-ops nationwide in the first quarter rose 8.3 percent over the previous quarter, but were down 0.8 percent from the same quarter a year ago.
According to preliminary numbers, Maine saw a 15.7 percent increase in the first quarter over the previous quarter, and a drop of 4.8 percent from the first quarter in 2010.
Mike LePage, president of the Maine Association of Realtors and owner of RE/MAX Heritage in Falmouth, said state Realtors are “looking forward to price stabilization, which some markets are already realizing.”
Lending practices in Maine overall were more prudent than in other parts of the country, he said, so the impact of the foreclosure crisis wasn’t as great here.
“Nonetheless the job market is the biggest challenge,” LePage said. “Lost jobs, underemployment and other factors have made life difficult for too many Mainers, and we need to move forward with a more robust job market.”
He said he’s optimistic that the market will improve.
“The underperformance of the first quarter can turn around quickly with an active spring and summer, and we are right now starting to see healthy signs emerging,” LePage said.
LePage said that in the Portland market over the past few weeks, he has heard of multiple offers on homes for sale, and of properties selling closer to their asking price. Condos are doing better, LePage said, and he expects multiunits to become popular soon as the rental market has become tighter.
Angelia Levesque, president of the Bangor Board of Realtors, said that in the past year, first-time homebuyers really fueled the market. That has changed, she said.
“Where it was such a driver of the market, it’s not the only thing that’s selling anymore,” said Levesque.
She’s seeing purchases of land, apartment buildings, and second and third homes. That’s good in that it loosens up the market, she said.
Earl Black, president of Better Homes and Garden Real Estate Town & Country in Bangor, said pricing the homes remains the biggest challenge for Realtors. His agency covers territory that includes Camden, Belfast, Ellsworth, Mount Desert Island, Dover-Foxcroft, Bangor, Pittsfield, Skowhegan and Unity. They have more than 900 properties listed, he said.
“If we price the house for the market, if we can convince the seller on the price, we’ve had them sell in less than a week,” said Black.
Some sellers are still adjusting to the fact that the days of buying a home one year and selling it for a tidy profit the next are gone.
“The real norm is that single-family housing is a quality of life issue,” said Black.
Terry Sortwell is a principal and regional manager at Landvest’s Camden office. The firm deals in high-end properties, generally more than $1 million. He suggested that the current market conditions have shown, once again, that real estate is not a liquid investment.
“If there’s not a lot of demand for the property you own, you can reduce the price way down below what one would think it’s worth and still not sell it,” said Sortwell. “You can’t make a market for it — that’s part of the frustration many sellers are going through.”
The market he deals in got very quiet about three years ago, reviving a bit last year, said Sortwell.
“Basically, buyers have been very hesitant to buy, and sellers have been slowly recognizing that their prices need to be adjusted and come down,” said Sortwell. “This is a reflection of lack of demand.”
Demand has been erratic in the multimillion-dollar home market, he said. That said, Sortwell noted that his agency recently put a $15.5 million home in Northeast Harbor under contract.
“I look at that and say that’s a good sign,” said Sortwell. “Here’s a buyer who feels we have truly reached a bottom, and now is the time to buy.”
Sortwell said he also is seeing a shift in the age of buyers. There are fewer baby boomers buying the homes in the $1 million to $3 million range, perhaps becoming more cautious as they approach retirement.
“We’re starting to see this new demographic of buyers in their 40s and early 50s who feel this is a good time to buy, have had their eyes open and are starting to step into the market,” said Sortwell.
Nancy Hughes, president of the Coastal Mountain Board of Realtors and a Realtor in the Camden market for 17 years, said she has seen activity picking up in her area, as well.
She thinks that reflects an increase in confidence in real estate as a tangible, long-term investment, as opposed to the stock market. They may not expect a profit in two or three years, but may be eyeing a time horizon five, seven years away, she said.
She said prices have dropped in the region and that part of the reason is the excess inventory on the market thanks to foreclosures.
“The banks were basically giving them away to get them off their inventory,” said Hughes.
Condos are hot, she said. The Knox Mill Condominiums project had stalled, but now is selling, she said. Located in a former MBNA building, the condos sell for $200,000 to the mid-$400,000s, she said. There are 30 units in the project, and more than half are sold or under contract, she said.
She said she expected homes prices will remain fairly consistent throughout the year, at a lower level than what has been paid for the last five years. She did suggest that sellers needed to realize they must make necessary improvements, such as a new furnace or roof, if they want their home to sell.
Five years ago, she said, such maintenance improvements didn’t matter to buyers — they would deal with it after they bought the property. Today, in the buyer’s market, those fixes are critical to getting a property sold, she said.
In Aroostook County, Jane Towle, a RE/MAX agent in Presque Isle, said the market has remained steady, lacking the highs and lows in other parts of the state, or country, for that matter. And while spring represents a busy season for many areas, after the winter, that’s not necessarily the case for Aroostook, Towle said.
“We’re a hardy bunch up here, the snow doesn’t always stop this market,” said Towle.
Sales of homes and camps around the area’s lakes remain strong, she said.
“A lot of the buyers of lake properties are people who have moved away, years ago,” said Towle. “They’re coming because they want to, bring their families here, they want to make and keep that connection.”
That’s similar to the case in the Millinocket region, said Dan Corcoran, owner of North Woods Real Estate. The market there has been soft for a number of years because of the decline in the paper mills, he said. But, he added, most of that decline has been realized — the mills used to employ 4,000, and were down to 400 before they were shut earlier this year.
Corcoran said he believes the market has bottomed, pricewise. Today, he said, “you can buy a very nice home in Millinocket for $75,000 to $100,000, and in some cases, less than that.
He said he has seen an increase in sales to retired people moving to the town, attracted by the quiet community, scenic area and low home prices.
In addition, homebuyers now include people looking for second recreational homes in Millinocket. His agency is seeing an increase in people from away buying homes specifically to support their winter sporting activities — they’re looking for homes with garages, where they can keep their snowmobiles, he said.
“Millinocket is becoming a four-season tourist destination, it’s in the very early stages of that, and it’s going to have a positive impact on residential housing and recreational camps out at the lake,” said Corcoran. “The market is changed — it isn’t dying, it’s changing, and we’re trying to adapt our marketing strategies.”