Maine Real Estate Info

Real Estate at the Crossroads: Choosing to Thrive

Recapping the shift in the real estate market at Family Reunion, Gary Keller urged attendees to seize the current market to their advantage.  Keller explained that the 10-year run-up in real estate that began in the early 1990s, led to an environment in which homes were no longer affordable, lenders were willing to take unreasonable risks and inventory rose to record levels.

This chain of events led to mortgage lenders pulling back, followed by a credit squeeze, increased inventory, dropping prices, rising defaults, slipping consumer confidence and reluctant buyers.

MSHA NEWS:  The Maine State Housing Authority (MSHA) provides these notable updates - a) for the month of February 2008 their First Home Rate remains 4.95% and Maine Assist at 5.25%; b) beginning March 3, MSHA will offer 0 point, 2 point and 40-year term options.  The current 3 seller point requirement will be discontinued.  Program guidelines, webinar training dates and marketing initiatives will be announced during February.  Will apply to first-time homebuyers, veterans and active duty military; c) MSHA borrowers who lose their jobs now have Maine HOPE (Home Ownership Protection for umEmployment).  Maine HOPE may be available to assist borrowers who become unemployed by making 4 of their MSHA mortgage payments, including taxes and homeownership insurance.  The Maine HOPE loan is interest free and repaid when the borrower pays off their MSHA mortgage or stops using the home as their primary residence.  For more info - (800) 452-4668 or http://www.mainehousing.org/HomeLoan/

New home construction in Maine will bottom out in 2008 and industrial lease rates will stabilize due to low demand, experts said yesterday at the Maine Real Estate & Development Association’s annual conference.Presenter Charles Colgan, a former state economist and professor at the University of Southern Maine’s Muskie School of Public Service, said new home construction in Maine will continue to fall in 2008, but not nearly as low as in other parts of the country. Meanwhile, lease rates for industrial sites in southern Maine will stay mostly the same, so landlords should try to keep existing tenants if possible, even if that means lowering rent, said Michael Miller of NAI The Dunham Group.

The MEREDA conference, held at Portland’s Holiday Inn by the Bay, included forecasts for the commercial and residential real estate markets in Portland, Lewiston-Auburn and Bangor.

This is the type of information we need to know and be able to communicate with our buyers and sellers, says Paul McKee, Team Leader of Keller Williams Realty Mid Maine. The Maine real estate market is holding steady regarding prices, slightly up in 07, but the number of transactions have decreased from the previous year.  Over all, Maine is fairing much better than what you here Nationally and that message needs to made clear to our clients.  Buyers need to know that prices are actually slightly higher, so “give aways” are not happening like they think, and sellers need to know that there are far less people out there making purchases and more properties for those fewer buyers to look at, so their price and the condition of the home needs to be “in the market” to even have a chance of selling now. Keller Williams Realty Mid Maine is located at 34 Center Street in Auburn Maine and they can be reached at 207-784-2525

Read the full press release here:

MEDIA REPORT:  In a press release to the media today, MREIS reports a 10.07% decrease in home sales comparing 2007 to 2006. Maine’s median sales price reached $194,000 in 2007, up 0.77% from 2006.  Median sales price indicates half of the homes were sold for more and half sold for less. During the month of December only, the statewide median sales price decreased 4.62% and sales were down 23.27 percent. Nationally, single-family home sales declined 21.6% and sales prices dipped 6.5% in the month of December.  NAR reported for all of 2007, home sales fell 13% and median sales price decreased 1.8% to $217,800. In the Northeastern United States, sales were 22.4% lower than last December.  The regional median sales price decreased 8.9% to $258,600.  Go to:  http://www.mainerealtors.com/MaineHousingReport-December2007.pdf

NOTABLE QUOTE:  This last sentence in a Kennebec Journal editorial on 1/19/08 - “But if you’re selling one house in Maine and then buying another, the issue is a little less urgent for you. What you might lose on one end, you can make up on the other.”  To read the entire editorial - http://kennebecjournal.mainetoday.com/view/columns/4671783.html

A great article came out in our local newspaper regarding the housing market in Maine. Here things are a little bit different. Home prices in Maine have actually risen. The article talks about a trend tahat highlights a disconnect in Maine: Over the past year, the number of homes sold has declined by double digits nearly every month. Despite that, median prices continued to edge up, or remain flat.

In November, home sales statewide were off more than 10 percent compared with a year earlier, but the median price – the point at which half the homes sold for more and half for less – rose more than 1 percent, to $188,000.

You can read the whole story here at The Maine Today site: http://pressherald.mainetoday.com/story.php?id=163046&ac=PHnws&pg=1

MREIS PRESS RELEASE:  In a press release to the media today, MREIS reports that the number of homes sales in Maine in November dropped 10.63% comparing November 2007 to November 2006; and the median sales price increased 1.62%.   NAR reports nationwide single-family home sales decreased 19.9%; and national median existing sales price dipped 3.7% to $208,700.  Home sales in the Northeastern U.S. mirrored national statistics with a 19.4% drop in sales, with median sales decreasing 3.2% to $258,300.  The complete press release is posted at http://www.mainerealtors.com/MaineHousingReport-November2007.pdf

During the week after Thanksgiving, mortgage application volume rose 22.5 percent on a seasonally adjusted basis to 791.8, recovering significantly from a holiday slowdown.
On an unadjusted basis, applications rose 51.5 percent and were up 24.2 percent from the same week in 2006.
The Refinance Index increased 31.9 percent to 2761.3 from 2093.0 the previous week. The refinance share of mortgage activity increased to 56.0 percent of total applications from 51.4 percent the previous week.
These numbers reflect a correction made to the Thanksgiving Week numbers released by the association. The previously reported numbers were too high, making the Thanksgiving week fall off more dramatic than was reported last week.
This week’s rising numbers appear to be at least partially in response to falling interest rates.

• 30-year fixed-rate mortgages decreased to 5.82 percent from 6.09 percent
• 15-year fixed-rate mortgages decreased to 5.38 percent from 5.69 percent
• 1-year ARMs increased to 6.28 percent from 6.24 percent

Source: Mortgage Bankers Association (12/05/2007)

In a press release to the media today, MREIS reports a 1.95% decrease in median sales prices and 12.23% decrease in unit sales for homes statewide in Maine comparing October 2007 to October 2006.  The median sales price was $188,500 in October, down from $192,250 one year ago.  Median sales price indicates half of the homes were sold for more and half sold for less.  NAR reports national sales of single-family existing homes dropped 20.8% in October.  The national median existing single-family home price decreased 6.3% in one year to $205,700.  In the regional Northeast, sales were down 12.6 percent; and the regional median sales price rose 1.3% in October to $258,700.

In Androscoggin County where unit sales are down 22.56% in 2007 verses same time period in 2006, however, the median sales price is up 1.66% during the same time frame.

YES!!!  However many would-be buyers are scared off and the media is fueling that fear. Talk of foreclosures, short sales, subprime loans this and Mortgage that, and blah, blah, blah…It’s no wonder consumers are shaking in their boots. Maine has held her own compared to most other states in that we have not seen the prices drop so severly. That’s great news for Maine property owners. Let’s look at Maine Real Estate investment indicators:

1. Mortgage rates are still at an all time low
2. Prices are down
3. Inventory is UP
4. The economy is still growing; although not a fast as some would like
5. Sellers are offering incentives, in some cases
6. Maine is known as VACATIONLAND

Everybody loves to vacation and Maine is a desireable location to put up one’s feet. So if your still thinking of investing, think of Maine as a place to invest in real estate. There is a pay-off…and it’s not just emotional!

Copywite: Michael Meservier - Meservier & Associates

Five Solutions for a Troubled Housing Market
How do you fix a troubled housing market? Forbes.com asked that question of a broad range of housing experts, including CEOs of real estate firms, real estate practitioners, economists from lending institutions, and research directors at analytics firms. Here are five of their best suggestions.

1. Restore investor faith. “Mortgage fraud, by both borrowers and insiders, must be identified and prosecuted in order for faith to be restored in the market,” says Anthony Sanders, professor of real estate finance at Arizona State University.

2. Expand Fannie Mae, Freddie Mac and the Federal Housing Administration loans. “Our local banks and community banks have done a great job providing funding. (FHA) should be there as a supplemental for people who have good credit,” says Congressman Lincoln Davis (D-Tenn.)

3. Cut construction and prices. “The market will only hit bottom after builders cut construction and sellers slash prices,” says Mark Zandi, chief economist at Moody’s Economy.com. “The longer builders and sellers hold on, the longer the market will struggle.”

4. Bring back non-agency loans. “The dramatic seizing of the mortgage-credit markets caused the elimination of almost any loan that wasn’t backed by Fannie Mae or Freddie Mac,” says Bob Walters, chief economist at Quicken Loans. The revival of non-agency loans “will add much-needed mortgage funding to potential home buyers and folks looking to refinance.”

5. Buyers and sellers get real. Nelson Gonzalez, senior vice president of Esslinger, Wooten Maxwell, REALTORS® , believes that once buyers realize that they’re not going to convince a seller to accept a rock-bottom price, fluidity and activity can return to the market. “There is much pent-up demand,” he says, “and buyers have been sitting on their hands for some time now.”

Source: Forbes, Matt Woolsey (11/07/07)

 MREIS - SALES UP 6.74% IN AUGUST: In a press release to the media today, MREIS reports that for the second month in a row, sales of single-family existing homes in Maine have increased.  According to MREIS, 1,425 homes sold across the state during August 2007 - a 6.74% jump from last August’s total of 1,335.  The median sales price for those homes remained unchanged at $195,000. The median sales price indicates that half of the homes were sold for more and half sold for less. Nationally, sales of single-family, existing homes dropped 13% since last August.  According to NAR, buyers paid a median existing home price of $223,900, a figure that is essentially the same as last year. NAR also reported sales in the regional Northeast were down 5.7% from one year ago.  The median sales price in the area rose 3.6% to $282,300.  Complete press release posted at http://www.mainerealtors.com

In 2006 our local market began to slow, causing many buyers to postpone buying hoping that prices would drop.   This causes an increase in inventory.  When supply increases and demand decreases, the market is described as a “buyer’s market”. 

 In some areas of the country and in some segments of the market, prices have declined. However, in other high demand market predominately in the western part of our country prices have actually increased compared to a year ago, mostly for upper end properties.

Mass psychology influences home-buying patterns. For example, when buyers decide that it is not a good time to buy due to fear of falling prices or rising interest rates, this has a tendancy to create a self-fulfilling prophesy. When the number of home selling drops, buyers tend to hold back. When sales increase again, buyers perceive this as a good time to buyer.  In these conditions, buyer feel they should buy immediately before home prices rise, interest rates go up and they can’t afford the home they want.

Buyers tend to follow the herd, which is really very counter productive.  In my opinion, the best time to buy would be when there isn’t alot competition from other buyers.  Most home buyers feel more comfortable buying when alot of people they know are buying. The comfort of the masses helps validates that their decision is a good one.

Home sales go thru normal cycles.  There are up markets, down markets, and flat markets. Ideally, anyone would want to buy at the end of a down cycle, just before the prices pick up again.  It’s actually impossible to time the real estate market, by the time the down cycle has passed the market is moving up again.

In a changing market, buyers who are not sure about how long they will be living in an area may be better off rentiHere’s my best advice…Since all housing market experience normal cycles, buying a home can be risky unless you have a long-term perspective in mind. If you decide to buy at the peak of a cycle and sell soon after in a softer market, you’ll could end up selling for less than the price you paid.  Most buyers who can stay put and ride out the cycles are in a better position to recoup their investment when they sell, and possibly make a profit.

Good candidates for buying in our current local market are buyers who are ready to invest for the long run and stay put for awhile. This means two things, that they aren’t planning on moving soon and they’re buying a home that suits their long-term needs.  There is currently much less competition amoung buyers in our market.  My best advice…for the right type of buyer it’s a perfect time to buy!

 JULY ONLY CHART                      

 From July 1-31, 2006 and July 1-31, 2007

County                                # Units Sold      #Units Sold            %                       MSP                       MSP                       %Change

                                               2006                     2007                     Change                2006                     2007

STATEWIDE           1196               1247               4.26%             $190,000      $199,000      4.74%

ROLLING QUARTER CHART

 From May 1, 2006 - July 31, 2006 -and- From May 1, 2007 - July 31, 2007

County                                # Units Sold      # Units Sold          %                       MSP                       MSP                       %Change

                                               2006                     2007                     Change                2006                     2007

STATEWIDE           4135               3669              -11.27%         $195,000      $197,000      1.03%
Androscoggin             313                  258                  -17.57%           $168,400        $165,000        -2.02%

Aroostook                   113                   101                  -10.62%           $85,000          $93,000          9.41%

Cumberland               976                  953                  -2.36%             $255,000        $255,588         0.23%

Franklin                      100                  79                    -21.00%          $135,000        $136,000        0.74%

Hancock                     179                  43                    20.11%            $187,000        $205,000        9.63%

Kennebec                    397                  334                  -15.87%           $155,500         $148,250         -4.66%

Knox                           151                   155                  2.65%              $215,000        $210,000        -2.33%

Lincoln                        120                  102                  -15.00%          $235,250         $237,393          0.91%

Oxford                        177                  170                  -3.95%             $143,000        $155,000        8.39%

Penobscot                   489                  437                  -10.63%           $148,000        $145,000        -2.03%

Piscataquis                  66                    60                    -9.09%            $97,486           $127,000        30.28%

Sagadahoc                  137                  103                  -24.82%          $210,000        $205,000        -2.38%

Somerset                     131                   95                    -27.48%          $112,000         $117,300         4.73%

Waldo                         112                   90                    -19.64%           $152,500         $153,675         0.77%

Washington                12                    12                    0.00%             $100,000        $116,750         16.75%

York                            662                  577                  -12.84%           $240,000        $240,000        0.00%

Source: Maine Real Estate Information System, Inc. Note: MREIS, a subsidiary of the Maine Association of REALTORS, is a statewide Multiple Listing Service with over 5,800 licensees inputting active and sold property listing data. Statistics reflect properties reported as sold in the System within the time periods indicated.

Whenever I read something positive and worthwhile, there is an instant urge to tell someone about it. Of course the blog is the first place I think about going to. Then it’s the rest of my team and then the office…yeah, in that order. And today’s news-worthy tidbit is no exception. Amidst the long faces in the office of those Realtors who may never of had to work in this type of market, this brings hope. And then there are the seasoned Realtors, who are true veterans and have been through it all, say, what housing bubble?…slow market?…what are you talking about?…ohh that news, well INBD (It’s no big deal). Either way it’s GOOD news.

Housing Bounces Back: Here are the Signs
Several factors suggest that housing is looking better, after a year when a slump has had a hold on not only housing but also economic growth in general.

Here are some of the signs that things are starting to look up:

• Sales of new homes soared 16.2 percent in April, the largest monthly gain in 14 years, reaching an annual rate of 981,000.

• Total single-family sales - both new and existing - during the first four months of the year have averaged 5.5 million, about the same pace as in the final four months of last year.

• Through May 25, the four-week average of applications for new mortgages was at its highest level since early 2006, according to data from the Mortgage Bankers Association.

To put the decline into perspective, nationwide home prices are up 29.2 percent over the past three years and 64.3 percent over the past five years. That should be enough to comfort consumers who might be worried about the value of their homes, say Business Week Magazine analysts,.

Source: Business Week, James C. Cooper (06/11/07)

I have to say our team has a very positive outlook and attitude. It is a pleasure to work with them on a daily basis. Keep on smilin’!