Real Estate: As August heats up, so does the market

By Matthew Trudel

Prices continue to rise across the entire State of Maine, and just in the last few weeks the median home price has increased $5,000 to $10,000 depending on which county you look at. 

What is driving this market to highs we have never really seen?  Buyers are frustrated by being outbid by other buyers time and time again.  As realtors it is also just as frustrating showing countless houses, writing numerous offers, and having our clients miss out on a home they really liked and wanted. 

Here a few things that I feel are driving the prices up and/or at least keeping this frenzy of a market going.

There is a lot of out-of-state money coming into Maine for several reasons.  With everything that has happened over the last year or so, many original Mainers who had moved away for better paying jobs are opting to move back to Maine for a better quality of life and they can work remotely from about anywhere in the state. 

Maine also has the most affordable housing prices comparatively in the New England area.  On average you will spend $75,000 to $100,000 less on a house here in Maine than a similar home with our neighbors to the left, The Granite State of New Hampshire.

Lack of inventory is a major factor in prices climbing steadily over the past five years.  There just are not enough homes available to fill the demand. 

So why not just build more homes quicker and create more inventory?  Some towns are very much against this for many reasons from overcrowding the school system to increased traffic and infrastructure problems. 

Our local labor force has dwindled across the board in all fields of work, and contractors, builders, and developers are struggling to find and keep workers.  This is true for all our local restaurants in town as well.  The labor force just is not available or is choosing to not work.

Interest rates are still extremely low and dropped a little bit the last couple weeks.  This is giving buyers more buying power when they put in their offers and allowing for them to go considerably over the asking price. 

A lot of potential buyers are thinking they should wait because the housing prices will come down in a few years and they can save $25,000 to $35,000 on the purchase price. 

Possibly true, but you will also likely have an interest rate of 5 ½ to 6 ½ percent.  You are better off purchasing a house now at 3.5 percent interest rate because you will save more than the $25,000 in interest payment in the first five years of ownership compared to what you would pay at the higher interest rate.

At this point it doesn’t seem like this market is showing any signs of slowing down.  Houses that are priced right are under contract in less than 10 days.  Many times, there are multiple offers.  Trying to get your offer accepted takes a lot of thought and sometimes some clever negotiations. 

Work closely with your realtor on researching how to make your offer stand out from the others.  The highest offer is not always the best one for the seller. <

This article was written by Matthew Trudel, the owner of Five Star Realty, Windham. Call him at 207-939-6971.