Maine Realtors Predict Busy Spring Season
Raymond Labonte knew the house he built on spec would sell. What the Maine resident didn’t expect was how quickly the $779,900 property would go.
“It’s got to be a desirable location, the house has to be different from the norm. When you do that, you’re going to get people looking,” said Labonte, owner of Raymond Labonte of Winding Brook Associates in Scarborough to the Portland Press Herald.
“But selling it on the first open house was a surprise for us.”
That’s because there’s a nationwide slump in home sales. Last year, the median price of a single-family home in Maine rose $2,000 to $193,000, compared with 2005, and the number of units sold dropped by more than 1,000, from 14,672 in 2005 to 13,489 - the first drop since 2000.
Nationally, the number of single-family and condo sales fell from 7.07 million in 2005 to 6.5 million in 2006, according to the National Association of Realtors. Recent grim forecasts among home builders and a growing number of high-risk mortgage loan holders struggling to make payments also are raising concerns nationwide.
Conventional wisdom holds that most of Maine, including Cumberland County, has been and remain a buyers’ market. But with the traditionally active spring real estate season, Realtors reportthat the balance may be shifting somewhat.
David Banks, broker and owner of RE/MAX By the Bay in Portland, said he’s getting multiple offers for property listings, while biggest concern that he hears from buyers who don’t think there’s enough inventory.
In Maine, the median sales price for homes rose steadily after 1998, with large jumps in the first half of this decade. Powered by low Maine mortgage rates, it increased by $17,000 in 2005 compared to 2004, hitting $191,000.
Today, the market is not so blistering.
New England was one of the first regions to go into a housing slump, back in late 2004 and early 2005. The primary reason for New England’s entrance onto that list was the high job losses, particularly in the Boston area during 2000-2002.
Nevertheless, historically low mortgage rates fueled a frenzy of speculative buying and sparked double-digit price increases throughout the region.
Some experts predict that foreclosures on homes carrying subprime mortgages in southern Maine will accelerate in coming years, and that the widespread bad credit mortgage woes gripping much of the country will also slow Maine.
Tougher lending standards are expected to remove 100,000-250,000 potential buyers from the housing market during the next two years, estimated David Lereah, chief economist for the National Association of Realtors.
That by itself could decrease home sales by up to 3 percent, and it’s unlikely the Maine housing market would be immune from any drastic change such as this.
“It’s problematic but not catastrophic,” said Lereah.
He is counting on still-low mortgage rates and a strong labor market to help soften the blow from subprime and Alt-A mortgage problems.
SOURCE: Portland Press Herald