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March 26, 2018

Bath's housing shortage results in bidding war won by a nonprofit

Courtesy / Magnusson Balfour
Courtesy / Magnusson Balfour
This century-old multi-unit apartment in Bath resulted in a bidding war that jacked the purchase price above the asking price — a reflection of Bath's tight housing market.

Bath Housing Development Corp. found itself in a bidding war for a century-old multifamily house to add to its portfolio of affordable homes in Bath.

Ultimately, the nonprofit won, by paying $26,000 above the asking price of $299,000, for a total of $325,000.

The 6,358-square-foot house, comprising six units on three stories, is located in a quiet residential neighborhood at 41-43 Lincoln St. in Bath. Bartlett Flanagan and Donald Miller were the sellers in the deal, which closed March 6.

Michael Atienza of Magnusson Balfour represented the seller and Poe Cilley of William Raveis Real Estate represented the buyer.

Built in 1915, the property, on 0.21 acre, includes off-street parking and is within walking distance to the downtown and to Bath Iron Works.

Seller's rep Atienza is partial to historic buildings. Last year, in Bangor, he brokered the sale of a Federal-style multi-family building built in 1860, at 151 Broadway; and a Victorian-style office building built in 1880, at 268 State St. His listings currently include four historic sea captain's homes and a church on Washington Street in Bath across from Bath Iron Works. They all date back to 1900 or earlier and are being sold as a package. Originally listed at $1.49 million, the price was recently reduced to $1.29 million, he said.

Atienza is seeing high demand in Bath. The 41-43 Lincoln St. property sold in under a month.

"There was a bidding war for this one," he said. "Multi-units with six units and up, that generate good income and are close to downtown, are very desirable properties."

Bath Housing Executive Director Debora Keller said the nonprofit currently owns buildings comprising 175 affordable rental units.

"The real estate market here in town is pretty hot right now," Keller said. "We're especially interested in making sure that Bath has a range of housing options. That means that it's important to us to have moderately priced apartments. Part of our strategic plan is to make sure we actively seek out opportunities to do that."

The Lincoln Street property was fully occupied at the time of purchase and tenants will remain, said Keller.

The agency always has its eye out for potential properties, she said.

Bath's tightening market

Courtesy / Magnusson Balfour
Courtesy / Magnusson Balfour
Michael Atienza of Magnusson Balfour represented the seller in the 41-43 Lincoln St. apartment building in Bath transaction.

"We keep our finger on the pulse of the community, and we have great relationships with many of the landlords who are in the area," she said. That means that landlords getting ready to sell their properties will often approach the nonprofit first, before listing on the market, she said.

The agency conducted a needs assessment in 2014 that predicted a tightening market – and those predictions thus far have borne out, Keller said. That's partly due to an influx of businesses at Brunswick Landing and the resulting need for workforce housing in a market that's already tight, she said.

"I don't think Bath is significantly different from many areas in the state when it comes to a mismatch of demographic needs with housing, as well as the need for quality housing and price points that meet wages," Keller said.

In addition, property that does turn over is often renovated to achieve higher rents.

Bath Housing has seen rents escalate by an average of 28.5% in a 21-month period from March 2016 to December 2017.

Its survey in December 2017 showed average rents were:

  • One-bedroom $887, a 14.7% increase
  • Two-bedroom $1,153, a 31.3% increase
  • Three-bedroom $1,542, 39.4% increase.

Findings from 2014 assessed the basic needs:

  • Although Bath's population fell by 13% from 1990 to 2010, the housing market population grew by 15%.
  • Although home values and rental values are lower in Bath than in the surrounding market area, housing affordability remains a major issue for Bath residents, due in part to lower incomes compared with surrounding towns and older housing stock with higher maintenance and operating costs.
  • Population and households would tick up, due to strong employment at Bath Iron Works, the city's proximity to Brunswick Landing and growing interest in urban living.
  • Future housing growth would put more pressure on low-income residents, as higher demand results in higher prices and rents.

At the time of the assessment, one in six Bath households experienced a federally defined "severe" housing problem — more than 50% of household income is used to pay for housing, or the unit has incomplete kitchen or plumbing facilities, or the household is overcrowded.

The nonprofit lost a similar bidding war in 2017, for a 20-unit apartment complex across two buildings at 1-2 Kings Arms Road in Bath, noted buyer rep Poe Cilley.

"It's emblematic of what's going on in the market," she said. "There were competitive bids on it before it even hit the market."

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