By Lisa DiBiase
Real Estate Trend #1: Home Prices Are Still Rising Despite a Short Pause in our Spring Market
Through the first nine months of 2020, sales of existing single-family homes were running 2.6% ahead of last year’s record pace. With historically low interest rates, and more buyers than sellers, sales of single-family existing homes increased 22.78 percent comparing September 2020 to September 2019. According to statistics released by Maine Listings, the median sales price (MSP) for homes sold in September 2020 rose 19.56 percent to $273,500, compared to September 2019. With more buyers than sellers in most local markets, we are seeing strong competition, faster sales and increasing pricing. Even with the pause, the state has seen 347 more homes sold through the first nine months of this year over last year.
Real Estate Trend #2: Mortgage Interest Rates Remain Extremely Low
Mortgage interest rates have been trending down—even before the pandemic. Economists think interest rates will continue to stay low until the economy is close to normal again. But interest rates probably won’t hit rock bottom as lenders still have such a high demand from current homeowners to refinance their mortgages into lower terms and rates. 86 percent of recent buyers financed their home purchase. Real estate experts suggest the current low rates are worth capitalizing on. While they may dip lower, there’s a risk to waiting too. Mortgage rates could shoot up overnight if, for example, scientists make speedy work with developing a vaccine that could point to the end of the outbreak. On the other hand, interest rates could further fluctuate if the economy worsens. Given the increase in mortgage applications, prospective buyers should act quickly to get in line to lock in the low rate.
Borrowers should anticipate waiting about eight to 10 days longer than average to close on their loans. This could result in up to 55 days or more to close a loan.
Real Estate Trend #3: Millennial Home Buyers Are the Majority
According to NAR, millennials took the lead as the largest group (38 percent) of home buyers last year. Older Millennials at 25 percent and Younger Millennials at 13 percent of the share of home buyers. 86 percent of Younger Millennials and 52 percent of Older Millennials were first-time home buyers, more than other age groups. Older Millennials had the highest share of married couples (67 percent), while Younger Millennials had the highest share of unmarried couples (21 percent) buying homes. Older Millennials were the most educated age group, with 79 percent holding at least a bachelor’s degree, followed by Younger Millennials. They were most likely to purchase a previously owned home and a townhouse. Convenience to their job and commuting costs were both more important to this group, and they were most likely to find their home online and to use the internet in their home search.
Real Estate Trend #4: Out-of-State Buyers Are Coming to Maine
The allure of Maine’s quality of life and response to COVID-19 from across the country has added to the puzzle of our Maine real estate market. Typically, about 25 percent of home purchases in Maine are made by out-of-state buyers, and we are now seeing that percentage increase to around 33 percent. In September of 2019, Maine had 445 single family homes purchased by out of state buyers. In September 2020, that number was 735.
What if I’m Not Buying or Selling a Home This Year?
Everyone can take a deep breath. From what we can see, the real estate market is not going to crash anytime soon. While low mortgage rates are motivating buyers to enter the market, this increases demand. But there’s still a record-low supply of home listings. This is keeping home buying somewhat competitive and allowing home price growth to stay steady. Regardless of where you are located here in Maine, buyers remain interested. As we continue through 2020 homeowners’ equity is here to stay. <
This article provided by Lisa DiBiase, Owner of Landing Real Estate located in Portland and Windham. Call 207-653-0823.