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January 21, 2022

MEREDA 2022: Pandemic fuels southern Maine home market, and not just in Portland

woman in blue dress File Photo / Tim Greenway Portside Real Estate Group owner Dava Davin spoke at the Forecast Conference of the Maine Real Estate & Development Association.

For southern Maine's residential real estate market, 2021 was all about COVID.

“We already didn’t have enough housing before the pandemic. There’s not enough rentals. There’s not enough homes,” said Brit Vitalius, owner of the Vitalius Real Estate Group, said at Thursday's forecast conference of the Maine Real Estate & Development Association.

Trends in 2021 included bidding wars, closing dates set at sellers' preferences, sellers staying for free until they were ready to move, buyers putting down huge deposits of 25% to 50%, and buyers bidding on homes they had never seen.

The influx of out-of-staters was real, representing 35% of buyers. Most of the transplants came from Massachusetts, New Hampshire, Florida and California. 

“Some are commuting back to Boston and New York. Some are keeping their jobs” as they relocate to Maine with out-of-state salaries, Vitalius said.

File Photo / Tim Greenway
Brit Vitalius is the owner of Vitalius Real Estate Group in Portland.

Portland’s rent control rules, which Vitalius said were the strictest in the country, kept rents stagnant in 2021. But towns such as Westbrook, Biddeford and Gorham saw rent increases of 25% and more in the last year.

Among Portland's smaller multifamily homes, with two to four units, prices increased and all the properties were owner-occupied, rather than being investments. For homes with more than five units, rent control reduced their value because any improvements couldn’t be spread over higher rental rates.

Portland’s small multifamily buildings will continue to be attractive for owner-occupied buyers, but investors will look elsewhere, Vitalius said.

“Everyone is looking outside” of Portland for investment properties. “Other locations are getting all the attention,” Vitalius said, citing Lewiston-Auburn, Brunswick, Gorham and Windham as increasingly hot markets.

Prices of single-family homes surged in 2021, with the statewide median sale price hitting $299,000 and the southern Maine median sale price reaching $419,000. Throughout the state, sale prices were above asking prices. 

Median sale prices rose 14% in Portland, but 43% in Westbrook, 30% in South Portland and 35% in Lewiston-Auburn, said Vitalius. 

Prices are expected to keep increasing in 2022, but perhaps at a more modest pace of 7% to 10%, said Dava Davin, founder of Portside Real Estate Group.

Out-of-state demand will level off, but not disappear, she added.

She also expects more growth in rural areas as people get priced out of key markets.

“People will drive until they can afford it,” Davin said. 

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