What Your Dollar Is Worth in Maine

Article from February 2010 Down East Magazine

* By: Joshua F. Moore


Fifty-six years ago, the very first issue of Down East featured five properties for sale, including a quarter-acre Colonial in Camden for what must have seemed the exorbitant sum of $10,500. Ten years later the Magazine of Maine featured thirty-seven available homes, and just last August we had twenty-five pages of house ads. Mainers and readers from away have found a thirst, whether based in real need or voyeuristic thrill, for learning what homes from Kittery to Calais and Fort Kent are worth. Such fancy now extends far beyond our pages — publications ranging from the New York Times to Seattle Metropolitan now regularly include columns explaining “What You Get For . . . Such-and-Such.”

These days, of course, as the Great Recession reels on, some homeowners might prefer not to know the current valuation of their homes. But our survey of Maine properties sold over the past year proves that they might be missing out on the best opportunity since, well, you could buy a magazine for less than five bucks. Although the median sales price of single-family homes in Maine declined nearly 9 percent last year to $164,000, the number of homes sold jumped by 10 percent. Maine beat the national statistics on both counts — total sales increased just 5 percent nationwide, and median sales price dropped 12 percent.

“There were plenty of sellers who were able to sell their homes last year — I sold a home and bought a new one myself — and while maybe they weren’t selling it for what they thought they could in 2006, they were able to get into another quality home,” says Marc Chadbourne, president of the Maine Association of Realtors. “It’s a yin and yang thing, because we didn’t get those appreciation levels that San Francisco or Florida got, but they had a lot farther to fall when the markets did decline.”

In a state as enormous as Maine, of course, where you decide to buy will have a huge impact on how much your budget will get you. In Piscataquis County, for instance, where the median sales price dropped 21 percent last year, you might be able to afford a couple of hundred acres and a stunning farmhouse. Dream of moving to coastal Knox County, though, where prices dropped just 3 percent, and that same money will see you in a much more modest home. And if your needs have you searching on the water someplace farther south, like York, you could have to shell out more than eight hundred dollars per square foot — nearly ten times what you might pay in Aroostook County.

As the economy shows signs of rebounding the demographics of Maine buyers has shifted due in part to federal stimulus funds. “The retired population has been the largest-growing group of buyers in Maine until recently, when the tax incentives for the first-time buyer came into play,” Chadbourne says. “ I assume that will continue, because Maine offers a quality of life and an affordability compared to other markets.”
Indeed, the Maine way of life seems to be the most important market condition for both buyers and sellers.

“I had a client tell me recently, ‘You know, we’ve always lived in kind of a down economy in Maine, so this is nothing new,’ ” Chadbourne says. “We’re a hardy bunch, and we do what we need to do to maintain the lifestyle that we’re used to. We like living here.”

And deal or no deal, boom or bust, isn’t that the name of the game when it comes to buying or selling real estate in Maine?

Maine Home Sales up 14% in February

SOUTH PORTLAND (March 23, 2010)— The median sales price of existing single-family homes in Maine remained unchanged during the month of February 2010 compared with February 2009, according to the Maine Real Estate Information System, Inc. While home sales increased by double digits (14.09 percent) in February 2010, the median sales price of $158,000 is the same as one year ago. The median sales price indicates that half of the homes were sold for more and half sold for less.

According to the National Association of Realtors (NAR), existing home sales nationwide rose 4.3 percent in February 2010 compared to one year ago. The national median sales price for those homes dipped 2.1 percent to $164,300. Regionally, sales in the Northeast were up 12 percent and the regional median sales price increased 7.5 percent to $254,700.

“Prices seem to have stabilized somewhat, rates remain within everyone’s reach, and there are plenty of deals to be had, and lenders are working overtime to help secure financing for buyers.”

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To complete a search as described in this video, go to www.WaterfrontPropertiesOfMaine.com and click on "Customized Property Search"

Federal Tax Credit Extended and Expanded

The program providing first-time home buyers a tax credit of $8,000 has been extended to April 30, 2010 and expanded to allow for existing home owners who have been in their home for at least 5 years of the last 8 years to receive a $6,500 tax credit if they purchase a new primary residence.

Key considerations include:

First-time Home Buyers Tax Credit at a Glance

* Buyer must be someone who has not owned a home during the 3 year period prior to purchase.
* The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’ principal residence within 3 years after the initial purchase.
* The tax credit is equal to 10% of the home’s purchase price up to a maximum of $8,000
* The tax credit applies only to homes priced at $800,000 or less.
* The tax credit applies to sales occurring after 1/1/2009 and on or before 4/30/2010. However, in cases where a binding sales contract is signed by 4/30/2010, a home purchased by 6/30/2010 will qualify.
* For homes purchased after 11/6/2009 and on or before 4/30/2010, income limits are $125,000 for single taxpayers and $225,000 for married couples filing jointly for the full tax credit.

The Tax Credit Move-Up/Repeat Home Buyer

* Buyer must have owned and lived in their previous home for 5 consecutive years out of the last 8 years.
* The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within 3 years after the initial purchase.
* The tax credit is equal to 10% of the home’s purchase price up to a maximum of $6,500.
* The tax credit applies only to homes priced at $800,000 or less.
* The credit is available for homes purchased after 11/6/2009 and on or before 4/30/2010. However, where a binding sales contract is signed by 4/30/2010, the purchase qualifies if it is completed by 6/30/2010.
* Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.


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Maine Real Estate Report

While home prices in some U.S. markets increased 15-20% annually in the early 2000’s, Maine prices went up around 5% annually. In our cyclical real estate market, what goes up must eventually come down a bit, soMaine didn’t have as far to fall. The market re-set here about 20-25% below its peak in 2006.

In line with the national upward trend, Portland, Maine median sold home prices for the 5 months starting in July were 207k, 198k, 204k, 200k, and 212k respectively. Volume on the other hand has been way up for this area.

So it now seems we have found the approximate bottom of the real estate market, with prices firming up and sellers refusing to go lower than 25% from the peak in 2006 to move their property now..

In short, we are cautiously optimistic that 2010 will be a year of healthy sales volume, as there is a large inventory to choose from, and borrowing costs are as low as they will be for a long time to come.

If you haven’t tried a search for your “dream property recently, you might be interested in having us check the current inventory and prices that meet your personal criteria. Just go to our Customized Property Search page by clicking on the following link:

http://waterfrontpropertiesofmaine.com/customized-property-search.html

2010 Real Estate Forecast

New Year’s 2010 looks a whole lot more positive for real estate and housing than things did last year at this time.

The out look right now is a complete contrast -- home sales have been rising for several months, thanks in part to the federal tax credit programs, new home starts and permits are up in most parts of the country, and prices are generally trending up in most of the markets that got shell-shocked in the bust.

So here’s what many economists are projecting:

• 2010 will continue to be an optimum buyer’s market, where those in a position to purchase will continue to receive and negotiate optimum deals.

• Home prices are expected to rise 3 to 5 percent in 2010

• Mortgage interest rates are projected to move up from just over 5% for 30 year loans to 6% by late 2010.

Home Prices Climb for 2nd Straight Quarter

NEW YORK (CNNMoney.com) -- Home prices rose for the second consecutive quarter but remained nearly 9% lower than a year earlier, according to a housing market report issued Tuesday.

Prices nationwide rose 3.1% in the three months ended Sept. 30, according to the S&P/Case-Shiller Home Price Index, a closely watched gauge of housing market direction. That followed a similar 3.1% rise during the second quarter of the year.

Prices were still below a year ago, however, down 8.9% compared with the third quarter of 2008. Nevertheless, that's an improvement from the double-digit price decreases the index had been reporting; the second quarter year-over-year decline was 14.7%. Prices had dropped 19% year-over-year during the first quarter of 2009.
0:00 /2:49Economic progress really a bust

"We have seen broad improvement in home prices for most of the past six months," says David Blitzer, Chairman of the Index Committee at Standard & Poor's.

The Case-Shiller 20-City Composite index posted its fifth monthly increase in a row in September, rising 0.3% from August levels.

The worst performing market continued to be Las Vegas, where prices have dropped for 37 consecutive months. They're now 55.4% off their highs.

Midwestern cities staged a comeback in September, with Minneapolis and Detroit prices each gaining 1.8%, the most of any of the 20-cities covered. Chicago prices jumped 1.2%; San Francisco climbed 1.3%; and Los Angeles and Phoenix both rose 0.8%.

Stopping the home price slide is an important factor in any economic recovery. Falling prices increase the number of "underwater" homeowners, those who owe more on their mortgage balances than their homes are worth.

Underwater mortgage borrowers are much more likely to lose their homes to foreclosure. Indeed, it's a crucial factor in whether people lose their homes or not, as Mark Goldman, a San Diego State University real estate professor pointed out.

"If they have a home worth $300,000 and they owe $250,000 and can't pay their mortgage, they'll just sell the house," he said.

It's when they have a house worth $200,000 and they owe $250,000 that these people default, because the sale of the house would not pay their whole debt.

A report from First American CoreLogic released Tuesday, revealed that nearly a quarter of all mortgage borrowers are underwater. That, as well as the ongoing foreclosure problem, has contributed to doubt about the staying power of the recent price trend.

"I think it's temporary," said Pat Newport, a real estate analyst with IHS Global Insight. "I can't see home prices stabilizing as long as we have that problem."

According to Newport, foreclosures could worsen over the next several months as many toxic loans go through resets, making them much less affordable for their borrowers.

A significant contributor to the improvements in the housing markets have been programs such as the tax credit for first-time homebuyers, according to Bob Walters, the chief economist for Quicken Loans.

"[But] the real driver in all of this -- from home sales to home pricing appreciation -- has been the protracted run of favorable mortgage rates," he said. "It will be interesting to see how home prices react when we see rates begin to increase, as they are sure to do over time." To top of page