Real Estate: State of the Maine Market

By Lisa DiBiase

WHAT TO EXPECT

Sales of single-family existing homes in Maine continue to be affected by rising mortgage interest rates and a smaller number of available homes for sale. Maine Listings announced a 34.99 percent sales decrease in January 2023, compared to January 2022. The median sales price for homes sold in January 2023 reached $325,000, an increase of 11.21 percent over January 2022.

While we are feeling the effects of the lack of inventory, we are continuing to see multiple offers and properties selling for over asking.

Based on Single Family Homes in Cumberland County, in the graph you can see the median sales price is still up at $505,500 which is slightly below what we recorded compared to last year.

The number of closings fell 14.3 percent this year. Also, the number of new listings fell 11.8 percent. This will continue the sellers’ market we are currently still experiencing.

Then we have interest rates. Despite these increases, many housing market watchers still hold out hope that interest rates already hit their peak last year. However, most experts also expect mortgage rate increases to continue for the next few weeks or until inflation is more clearly under control—whenever that is.

Mortgage Rates Predictions for March 2023

According to Forbes Advisor, though the average 30-year, fixed-rate mortgage has cooled from last year, home shoppers remain locked out of the market due to a trifecta of high interest rates, tight inventory and elevated home prices. Consequently, mortgage applications have slumped in recent weeks.

“After a brief revival in application activity in January when mortgage rates dropped to 6.2 percent, there has now been three straight weeks of declines in applications as mortgage rates have jumped 50 basis points over the past month,” says Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association (MBA), in a news release. “Data on inflation, employment, and economic activity have signaled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on rates.”

Those who purchased homes in recent years at record-low interest rates are staying put.

Moreover, new home construction fell again in January, compounding the long-standing inventory problem. Tight inventory issues, in part, are keeping prices from dropping off, which is perpetuating affordability challenges for many, especially first-time homebuyers.

Though home prices remain high year-over-year, they’re not as eye-popping as they were in early 2022. Even so, how much further home prices dip in 2023 will likely depend on where mortgage rates go.

Housing Market Forecast for March 2023

Home prices will be steady in most parts of the country with a minor change in the national median home price,” according to NAR chief economist Lawrence Yun. Due, in part, to the ongoing inventory problem keeping home prices elevated, many economists predict the housing market is more likely to correct itself from the double-digit percentage jumps seen in home prices the past few years rather than crash.

Buying a house, in any market, is a personal decision. Because homes represent the largest single purchase most people will make in their lifetime, it’s crucial to be in a solid financial position before diving in.

Best advice is to start with a budget and stick with it.

As I have said before, please call a local REALTOR for all your real estate needs no matter how big or small. We are trained professionals here to make your life easier. It's best to surround yourself with the right team of professionals that can continuously give you the right advice for all your circumstances. <

Lisa DiBiase is the President for the Greater Portland Board of Realtors. As the Broker/Owner for Landing Real Estate, she and her company represent buyers and sellers in the Greater Portland area. For all your real estate needs, contact by email lisa@landinghomesmaine.com or phone 207-775-SOLD.