Housing
This section of the BDN aims to help readers understand Maine’s housing crisis, the volatile real estate market and the public policy behind them. Read more Housing coverage here.
More home sellers across Maine are accepting offers that are less than what their property is listed for, presenting a new opportunity for hopeful buyers who have been scared off by high prices since the pandemic.
Last month, only a quarter of Maine homes sold for more than their asking price, according to data from Redfin. That dropped from five years ago when roughly half of Maine’s single family homes sold for more than they were listed for.
Local real estate professionals believe several factors are contributing to this trend, though all agreed it’s a sign of how the market has corrected from the frenzy that erupted during the pandemic. It could be the first glimpse of hope for many families who were boxed out of the market for years by fierce competition and record-high home values.
At the height of the pandemic, demand for Maine homes skyrocketed but there weren’t enough properties to go around, leading to bidding wars over homes that stayed on the market for only a few days before closing.
“Two years ago, you listed, got half a dozen showings and were under contract in four or five days,” said Karen Burns, a Bangor-based broker for Century 21 Real Estate.
Mainers continuing to overprice their homes is perhaps the foremost factor of more of them selling under asking. This is fueled by sellers believing they can rake in pandemic-era profits when, in reality, the market has softened and slowed considerably in the last few years, Burns said.
“I list homes every day and some people are thinking about what their neighbor sold their house for two years ago,” Burns said. “It’s a different market now.”
While prices haven’t reverted to what they were before 2020, inventory has remained healthy and properties are staying on the market longer, said Laurie Smallidge, a realtor at Better Homes and Gardens Real Estate The Masiello Group. This allows buyers to be selective and negotiate favorable terms and fair prices.
“It’s not like COVID where there were multiple offers on a property and you had to do whatever it takes — no contingencies, cash, close in 30 days,” Smallidge said.
Homes with more reasonable prices usually get more attention from buyers rather than sitting on the market, growing stale and needing price cuts to regenerate interest.
In Bangor, nearly half of single-family homes on the market had at least one price reduction, according to Redfin data.
Some single-family homes in desirable areas of southern and coastal Maine are the exception to this trend, as they’ll likely still sell for more than asking. This is especially true if the home is updated or unique in some way, said Tom Landry, Broker at the Landry Team at Benchmark Real Estate.
Additionally, mortgage interest rates have risen to 7% or more at a time when families are already grappling with high prices and additional economic uncertainty. This means more buyers aren’t willing to make hefty economic investments — such as sinking their savings in a pricey home — and are looking for a fair price, Smallidge said.
On the seller’s side, most homeowners want to get their properties off their hands before winter and the holiday season when Maine’s real estate market quiets, Burns said. For sellers who have already moved into a new home, they usually don’t want to pay to heat and maintain two homes through the winter.
This urgency to sell before the snow falls will make sellers more likely to accept an offer below asking.
For prospective buyers yearning to own a home but waiting for interest rates to decline, Landry urged them to act now while the market is leaning in their favor, as mortgages can always be refinanced if and when interest rates decline.
“This is a unique opportunity for buyers and they shouldn’t squander it,” he said. “Rates might go down in a year or two, but you’ll already have the house and you didn’t deal with a bidding war.”