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.
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.
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