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January 23, 2019

Residential real estate has record year, but tight inventory affects Q4

Photo / Maureen Milliken
Photo / Maureen Milliken
Maine had record volume and price growth in the residential real estate market for 2018 overall, according to the year-end report from the Maine Association of Realtors.

Maine had record volume and price growth in the residential real estate market for 2018 overall.

But the volume slumped in the fourth quarter, although prices remained steady, according to Tuesday's report from the Maine Association of Realtors.

Maine set records in the single-family existing homes real estate sector in 2018:

  • A total of 17,864 homes changed hands in 2018 — a 1.31% increase over 2017.
  • Prices jumped 7.55% to a statewide median sales price of $215,000.

"The sales year 2018 ended with the highest number of reported residential real estate transactions and highest median sales price since we began compiling data 20 years ago," Peter Harrington, Maine Association of Realtors president and Malone Commercial Brokers broker/partner, said in the release.

However, fourth quarter transactions, especially those for December, showed a decline in the number of transactions, despite pricing remaining steady, Harrington said.

In December 2018, 1,215 residential units changed hands statewide, a 14% decline from 1,414 in December 2017. But the median sales price for December 2018 $217,000, a 4% increase compared with December 2017's $202,000.

He added, "It's difficult to gauge a market's direction during the month of December. The true test will come as we move into the spring selling season."

Piscataquis County had the greatest rate of volume increase for the year, at 21%; that represented 350 transactions for 2018, compared with 2017's 288.

Knox County had the greatest rate of increase for media sales price, at 20%; that represented $245,000 in 2018, compared with $204,000 in 2017.

In her presentation at the Jan. 17 MEREDA conference, Portside Real Estate Group Principal Dava Davin attested to strong demand and rising prices in the single-family market. A South Portland property, for example, drew 18 offers and sold 35%, or $85,000, over asking price. A Portland home drew eight offers and sold 16%, or $51,000, over asking price. A Yarmouth home sold at 13% over asking price, or $100,000, before it was even listed.

Tight inventory meant the pace of transactions slowed down, Davin said.

"Buyer demand was so strong that we didn't have enough inventory," she said.

Davin pointed out that of the 18 potential buyers for the South Portland home, 17 were left still looking. "Had there been more inventory, we would have had more transactions," she said.

Nationally, December-only sales across the country also eased, down 10.1% compared to December 2017, according to the National Association of Realtors. Prices rose 2.9% to a national median sales price of $255,200.

In the Northeast, home sales decreased 6.8% in December, and prices increased 8.2% to $283,400, comparing December 2018 to December 2017.

Harrington attributed some of Maine's sales decrease to the partial government shutdown and resultant consumer uncertainty.

"The shutdown has delayed or completely suspended some real estate transactions that were in the pipeline for government-guaranteed loans," said Harrington. The U.S. Department of Agriculture's Rural Development Program, which provides guaranteed low-interest homeownership loans, has been non-operational during the shutdown, he added. Those loans account for around 10% of Maine's home sale transactions, he said.

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