A spike in home prices in Maine in April is breaking a record high set last year and suggests that first-time homebuyers won’t be getting the break that realtors expected they would be having by now.
The median sale price for a single-family home in Maine hit a peak in June 2022 at $360,825, according to data from the Maine Association of Realtors. That same price, the data shows, surged to $367,500 in April, a reflection of a market that is not slowing down.
“It was crazy,” Buffie McCue-Quinn, a Bangor-based real estate agent and lecturer in management and marketing at the Maine Business School at the University of Maine, said of the market in April. “It was an absolute frenzy.”
Prior to the market slowing down last fall, realtors could barely keep up with how fast homes were being sold, and the volume of competing offers on homes for sale. McCue-Quinn said that pace came back in April.
One client, she said, had a house on the market for less than a week, but still had 55 showings and 20 offers.
After the peak in June 2022, median prices steadily dropped for the remainder of the year, aside from a small uptick in October. Experts at the time pointed to the Federal Reserve’s raising of interest rates in the first half of the year. The dropping median home price suggested that rising mortgage rates were having an impact, correcting a skyrocketing of home prices that had been soaring since the beginning of the pandemic.
But predictions that the market would further normalize in 2023 have not come true. The April median price of $367,500 represents a jump of $30,000 compared to March and passes the record-high recorded in June 2022.
Exactly why this is happening, particularly the jump in April, is hard to say. Carmen McPhail, the association’s president, said there is usually a seasonal surge in home-buying around this time of year.
“Spring always brings an influx of movement in the market, just because people waited out the winter to make their move,” she said. “People don’t like to move in January.”
For McCue-Quinn, it comes down to one word: inventory. It remains a problem, particularly in the $200,000-$450,000 range popular among young couples and other first-time home buyers.
“There’s no way to get ahead of that inventory curve unless a bunch of people decide to move out of the state of Maine,” she said.
McPhail also noted that prices in Maine are higher in more populated locations such as Cumberland County. Her firm is based in Lincoln, and deals with more rural areas. When asked if home buyers will start widening their search to such areas, she said she is already seeing it happening.
“We are seeing a lot of first-time home buyers who are willing to commute a little bit further in order to have more house,” she said.
McPhail also recommended first-time home buyers get pre-approval, which will make it easier to buy the house they finally choose, but she urged future borrowers to be realistic about their own finances, and not just trust what the bank tells them is possible.
“Know what you can afford, but also know what you want to afford,” she said.
McCue-Quinn also said buyers, especially those who are renting and looking for something permanent, need to be realistic about what they want in a home, perhaps paring down their wish list down to the essentials.
“What are your definitive deal-breakers, what are the must-haves, and can we manage any of those in a trade-off for being able to get out of a rental property, and get into something different?”