Pedestrians cross the street in downtown Augusta on Wednesday, Dec. 29, 2021. Augusta is expected to have a spike in home prices over the next year. Credit: Troy R. Bennett / BDN

Maine’s capital city is expected to see home prices jump 7.7 percent in the coming year, making it one of the fastest growing in the nation, according to data from online real estate marketplace Zillow and Fortune magazine.

Augusta is in the top 15 areas among the nation’s 37 largest regional real estate markets where home prices are projected to grow 7 percent or more from this April until next April. No other Maine or New England cities made the list. Sevierville, Tennessee, topped the predicted rises at 10.3 percent.

Augusta has seen a severe shortage of both properties for sale and for rent at a time when mortgage interest rates have doubled over the past year and inflation has sidelined potential buyers and sellers. That makes it especially hard for first-time homebuyers to get into the market.

In the same timeframe, prices in Portland and South Portland are projected to rise 6.1 percent, according to Zillow. Bangor is expected to be up 6.9 percent and Lewiston-Auburn up 6.2 percent. A comparatively hot market in the past two years, Boston-Cambridge-Newton in Massachusetts is expected to see a more modest sales price rise of 2.2 percent.

Zillow’s price projections for Augusta sound realistic to Michelangelo Floridino, a broker at Landing Real Estate. He said the average sales price for the first five months of this year already is 8.14 percent higher compared to the same time last year. He predicted it will be even higher in three months.

“We have what might be the lowest inventory of homes ever recorded,” said Floridino, who has been a real estate agent since 2005. “People who don’t want to pay a six and one-half percent interest rate are staying put and making do.”

There were only 14 new listings in the Augusta area in April, down 26 percent from last year, he said. The average sales price was $261,742 in April, up 35 percent from last April. Only 12 homes sold in April, down 40 percent.

The real estate market cooled from last fall through the winter, with fewer homes seeing multiple offers, bids over asking price and waived contingencies. But those hurdles to first-time homebuyers are back, Floridino said, because “there’s nothing to buy.”

He said the real estate market now is similar to someone going to the supermarket to buy a loaf of bread and refusing to pay $5 for it. But then they buy it because they want a sandwich.

“Buyers are frustrated,” Floridino said. “But they need a place to live.”

Lori Valigra, investigative reporter for the environment, holds an M.S. in journalism from Boston University. She was a Knight journalism fellow at M.I.T. and has extensive international reporting experience...