Portland housing market stabilizes, rents may increase
Property values in Portland are expected to hold steady in 2012, especially for property owners in the city's east and west ends. The market for single-family homes will favor investors, according to one broker, and multi-family units will also continue to be strong in Portland, where rents are expected to increase. But the value of similar properties in Lewiston and Biddeford are expected to continue to decrease.
Nicholas Dambrie, associate broker at RE/MAX By the Bay, says he doesn't expect single-family home values to drop much in the coming year, perhaps a by percentage or two "here and there." Home values are the steadiest in Portland's east and west end, as well as Deering Center and Willard Beach in South Portland, he says.
"The East End is very chic now," says Dambrie. "The West End will always be desirable to live in -- it's a status symbol."
Dambrie, who recently presented information about the single-family home market at the Maine Real Estate and Development Association's annual forecast conference, says location within towns and cities is a key factor in sales of $250,000- to $350,000-homes, which spend about five months on the market.
But the condition of home is "huge," says Dambrie, noting that an extra investment in a home's curb appeal, or a hiring a home stager to set up photos, could reduce the amount of time on the market. "A lot of the inventory out there is tired," he says. "If a property is updated and nice, it will sell faster."
Dambrie says there is an opportunity for those looking for investment properties. In addition to low prices and interest rates, he says people are becoming familiar with investment strategies that were the one-time providence of wealthy investors: Self-directed IRAs and 1031 tax-deferred exchanges.
"It's finally becoming common knowledge that you don't have to be Donald Trump to do that [type of real estate investing]," Dambrie says. "Those things are becoming more popular with the middle of the market. I think the opportunity is here. I do see people purchasing single-family homes as investments."
Meanwhile, Portland landlords continue to see the values of their multi-family apartment buildings remain stable as their rent prices increase, particularly for units that include heat.
John Graham, a broker at Sullivan Multi Family Realty who presented the Greater Portland rental market at the MEREDA forum, says high demand is driving up rents for Portland apartments. And those high rents, he says, are prompting some parents to buy multi-unit apartment buildings for their children, feeding an increase in the number of owner-occupants. "The rental market is very tight," says Graham.
Portland and Greater Portland -- South Portland, Scarborough, Westbrook and Falmouth -- vacancy rates dropped by 4% in 2011, Graham says, but increased by 20% to 25% in Lewiston-Auburn and by 10% to 15% in Biddeford/Saco.
Rents for heated apartments are higher in Portland than Greater Portland. The average rent on a heated single-bedroom apartment in Portland last year was $910 compared to $767 in Greater Portland. A heated Portland two-bedroom and three-bedroom averaged $1,021 and $1,297, and in Greater Portland averaged $858 and $950.
Overall, Graham said, investors are encouraged by the stability in Portland's rental market, which continues to draw a stable pool of renters -- one-time homeowners who have been forced out of their homes through foreclosure.
"We've definitely had an adjustment," Graham said of the per-unit sales prices. "But it's been pretty steady since 2008."
Properties in less popular locations, such as Lewiston-Auburn, Biddeford and around Portland's Kennedy Park and St. John Street, may see their values decline for a few more years, Graham says.
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