The Universal Notebook: Real Estate Appreciation 101

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Back in 2014, my lovely wife Carolyn and I paid a little over $300,000 for our four-bedroom home in Brunswick. Eight years later, a house up the street that is the size of our garage sold for just under $300,000. That probably means our house is now worth close to $500,000, but that doesn’t make me happy in the least.

I am often surprised and saddened when I see how much homes are selling for. There are currently homes in our neighborhood listed at $579,000 and $695,000 that strike me as overpriced by $100,000 to $200,000, but then I’m not in the real estate business.

Edgar Allen BeemMy frame of reference for home values begins in 1960 when my parents paid $14,500 for our first house in Westbrook. Twenty years later Carolyn and I paid $42,000 for the little cape in Yarmouth where we raised our three daughters.

Nowadays, the median price for a home in Maine is somewhere around $350,000. In Portland the median is closer to $500,000. In 2014, when we moved out of Yarmouth, we looked from Scarborough to Brunswick but couldn’t afford anything in Portland, Falmouth or Yarmouth. The house we bought in Brunswick for $300,000 would have cost closer to $500,000 if it had been in Yarmouth.

Brunswick was the affordable alternative. Brunswick Naval Air Station had just been decommissioned in 2011 and hundreds of units of former military housing were on the market for between $150,000 and $250,000. Now Brunswick is essentially a suburb of Portland and I worry how young families are going to afford half-million dollar houses.

I think it was back in the 1980s that I started to see million dollar homes appear in the Down East magazine real estate ads, a source of daydream and fantasy for thousands of people hoping to move to Maine one day. The first million dollar homes were lavish estates of the sort that show up in Sotheby ads. Now a million dollar home in Maine can be nothing special and in the middle of nowhere. When I window shop Down East I find myself asking, “Who’s buying these places?” and “How can a young Maine couple afford a home these days?”

According to a Sotheby’s online newsletter, in 2019 Maine residents purchased 74 percent of houses on the market. By 2021, however, the percentage of in-state buyers had declined to 65 percent. More importantly, last year, Maine buyers represented only 56 percent of all dollars spent on Maine homes and only 28 percent of luxury property buyers.

Not sure what Sotheby’s considers a luxury home, but they were mostly purchased by folks from Massachusetts, Florida, New York, New Jersey and D.C. 

So at least 33 percent of Maine homes in 2021 were purchased by out-of-state buyers, a pandemic acceleration of a trend that has been pushing Maine natives farther and farther out into the countryside in search of places to live. When you sell a house in Massachusetts for big bucks you can afford to buy a house in Maine for more than a local buyer can afford, driving prices ever higher.

If the median family income in Maine is $59,000, that suggests a family earning the median needs to find a home for $329,000 and will pay a mortgage of close to $1,800 a month. Good luck finding a rent for that kind of money, let alone a mortgage.

That’s why I find real estate appreciation so depressing. 

Edgar Allen Beem has been writing The Universal Notebook weekly since 2003, first for The Forecaster and now for the Phoenix. He also writes the Art Seen feature.

 

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