Rising inventory and leveling costs suggest Maine’s housing market is beginning to stabilize, but it hasn’t flipped to favor buyers, bucking a nationwide trend.
The estimated 1.9 million home sellers in the U.S. outweighed the 1.5 million homebuyers by nearly 500,000, Redfin reported in late May. Those numbers show that the national housing market is flipping for the first time in more than a decade to favor those looking for a home rather than those selling one.
That trend hasn’t seemed to reach Maine, according to Chris Lynch, president and owner of Legacy Properties Sotheby’s International Realty, which has six offices throughout the state.
Lynch’s team of more than 100 real estate agents across Maine reported demand for properties hasn’t slowed since people in large cities looked to Maine to escape crowded areas during the pandemic.
“A lot of those people have come and they told their friends back where they were how great it is here,” Lynch said.
However, inventory is increasing, which could be a sign that Maine is trending toward a more balanced — but still competitive — housing market in the coming years.
While Maine hasn’t completely flipped to favor buyers, it does suggest that the turbulence the state’s housing market endured during and immediately following the pandemic is over. This could lead to it becoming easier to buy homes in Maine.
A “seller’s market” means there are more people looking to buy properties in an area than listings available. This high demand and low supply favors sellers, as it often leads to higher prices and quick sales.
Conversely, a “buyer’s market” happens when the quantity of available properties outweighs the number of people looking to buy. A large supply with low demand benefits buyers, as the situation can lead to lower prices and more favorable terms for buyers.
National housing market fluctuations generally begin in major cities and states like New York, California and Florida and can take months or years to reach Maine, Lynch said. Sometimes, the trend doesn’t get a chance to make noticeable change in the state before another market shift takes hold.
At fewer than 20,000 home sales each year, the Maine housing market is small compared with other states, “so it doesn’t take many buyers in the market to make a significant difference,” Lynch said.
Maine had a relatively balanced market, meaning the supply of available homes and those looking to buy them were roughly even, in 2019. But the sharp increase in people looking to buy in Maine during and following pandemic, which drove up prices, made the market turn to favor sellers, Lynch said.
The last time Maine had a buyer’s marker was in 2010, according to Lynch.
“We’re in a market that’s not nearly as hot as it was in 2021 and 2022,” Lynch said. “In my opinion, it’s getting healthier because there’s a little more inventory for buyers to look at but the sellers have the unique asset and there’s more buyers chasing them.”
A region’s absorption rate, which tracks how long it would take to sell all active listings if no new properties came on the market, also shows how balanced the housing market is, according to Harrison Wolfington, partner broker at Laflin & Wolfington Realty.
Maine had three months of inventory in June, Wolfington said, which is nearly double the 1.8 months of inventory it had during the same time last year. While that’s a notable uptick in supply, Wolfington said the market is still a long way from the six months of inventory it would need to be considered balanced.
“Coming off of a super sharp increase like that, if it starts to trend back a little toward normal, even if it still favors the seller, it feels like it’s not as hot as it was,” Wolfington said. “I don’t think we know yet whether we’ll see prices drop.”
Median home prices in Maine have stayed at roughly $416,000 since late last year, according to Zillow. That suggests the state’s housing market is leveling off, but not dropping.
Although Redfin reported there were more than 8,000 properties in Maine for sale in June, marking a five-year high, housing supply in Maine isn’t growing as quickly as other regions for two primary reasons, Lynch said.
First, high labor and construction material costs have prevented the building of new homes in Maine.
Second, people aren’t selling their homes if they don’t have to move, even if they want to, Lynch said. This is because there are few options for people to move to and high interest rates on mortgages mean a buyer could be paying the same amount or more on a new home, even if they downsize.
“We don’t have enough properties for sale relative to the number of buyers to drive prices down,” Lynch said. “There’s nothing on the horizon that I see that could pop the bubble in Maine.”