For years, the housing market in Portland has been so scorching hot that the prospect of buying a home in the area seemed impossible. Between skyrocketing home costs, low inventory, and out-of-state buyers coming in and buying homes sight-unseen at huge markups, the chances of purchasing a home around town would be enough to make any local flinch.
But while prices remain high – perhaps unsustainably high – it appears at least one of those factors has leveled off: the inventory.
Rebecca Kingsley, an associate broker at the Hatcher Group of Keller Williams Realty, said she sees a shift in the market happening, which is the result of many factors. She said rising interest rates and an increasing amount of “discouraged buyers” who “tapped out” helped lead to the moment Portland is in now, where there is more inventory.
“I would say a lot of sellers have heard stories of other sellers getting everything they wanted and more in terms of price and terms, like no home inspections or having to address other items,” Kingsley said. “Sellers have been very spoiled. It’s been challenging for buyers to feel they have any leverage and protection.”
Kingsley said on Friday that she conducted her first inspection in more than two years, as many potential buyers were waiving inspections just to get a leg up. She said inspections are an important protection for both buyers and sellers, and are “part of the process no one wants to skip over.” The trend of skipping inspections may be ebbing, but there is always a lag time in what the actual industry statistics are and when people see them.
“A lot of sellers now, they probably started having conversations with their brokers months ago, and that was a very different market,” Kingsley said. “Unless they’re represented by a very good broker, what we’re seeing is (the seller) holding onto the price they might have initially been quoted by the broker, and it’s no longer necessarily appropriate.”
Kingsley said as pricing is a decision often made by a seller, and sellers are not as in touch with market trends, they may get a number in their head that’s not appropriate for this climate. For example, if their neighbor sold their home in the spring for 30 percent above the asking price, the new seller would probably want the same, even if the market has shifted.
Kingsley said she thinks there is good news on the horizon for those discouraged buyers she mentioned. Even with rising interest rates, she said local credit unions are still offering good values for buyers. A recent client of hers closed at 5 percent under asking price, which is a marked difference from the 30 percent over that had been the trend.
“Do I think prices will go down and people should be concerned about the security of an investment? I don’t,” she said. “It will take a long time before inventory catches up with the demand of my client list.”
According to an annual survey produced by the Maine Association of Realtors, the prices of homes in Maine actually increased by 12 percent, from July 2021 to July 2022, but sales eased because of inventory.
According to their survey, Maine realtors sold nearly 1,700 homes statewide this past July, which accounts for more than a 15 percent dip from July 2021. The median sales price was $354,000 in the same month, which was an increase of more than 12 percent from July 2021.
In a statement, Madeleine Hill, president of the Maine Association of Realtors, said summer activity remained “steady but impacted by low for-sale inventory.” She said there were 30 percent fewer single-family homes for sale than in July 2021, and 66 percent less than before the pandemic in July 2019.
Hill said sellers and buyers are adjusting to higher mortgage interest rates. Buyers are showing better judgment, and sellers are responding.
“Overall, in Maine, it’s still a seller’s market though we’re beginning to see a leveling in some areas as evidenced by higher days on market and downward pricing adjustments,” Hill said.
According to the Maine Association of Realtors survey, the statewide median sales price jumped from $315,000 in 2021 to $354,000 in 2022. In Cumberland County, those numbers jumped from $450,000 in 2021 to $506,000 in 2022, which is just over a 12 percent hike. The number of units available shrank slightly, from 1,165 in 2021 to 1,049 in 2022, which accounts for nearly a 10 percent drop.
However, at least from driving around town and looking at popular websites like Zillow.com and Realtor.com, it would appear inventory in Portland has increased, if only slightly, from the incredible lows from earlier this year and late last year, when the number of homes available dropped into the single digits for a city of nearly 68,000.
Elise Loschiavo, a partner and broker at Vitalius Real Estate Group, also pointed to May’s rising interest rates as something that “really affected what buyers were able to afford,” and something that knocked a lot of people out of the market.
“It also seemed like home sellers got nervous and pulled back on their plans to list, or pushed to list as soon as possible,” she said.
Loschiavo said she’s seen a lot more inventory available in June, the same time a number of buyers were dropping out of the market, which made bidding wars less competitive. A home in Portland that may have seen 40 bids this time last year was now only seeing 10.
“It’s not in any means a buyer’s market,” she cautioned, adding there were still more buyers than sellers, but not an overwhelming amount.
She said summer is also a slow listing time, and expects the market to pick up after Labor Day.
She said the market is stabilizing. For example, interest rates that had gotten into the 6 percent range are dropping back down to the 4 percent area. She said as brokers get through the backlog of people who wanted to buy, which is happening, the market will even further stabilize.
“I don’t think that prices are going to go down considerably, but the circumstances by which people need to compete and win competitive offers will be reduced,” she said. “When and how, that can’t be predicted.”