For the third consecutive year, Maine home sales set a new sales record in 2017 as 17,796 single family homes were sold, representing an increase of .9% over 2016 when total volume was 17,641.
As a point of comparison, sales in 2015 were 15,868. Homes sales have increased for six consecutive years and have been up annually each year except two since the historic low of 9,782 in 2008 – at which time they had declined an unprecedented 19% from the year before.
While single family sales continued to grow statewide in 2017, sales in the southern part of the state, specifically in Cumberland and York Counties, experienced surprisingly different results. Sales in York County were unchanged from 2016 to 2017 as 3,149 units were sold each year. Sales in Cumberland County declined 3.8%. As the graph at the end of this report illustrates, nearly every community in the greater Portland area experienced sales declines in 2017 – some in double digits. For example, Portland, eclipsed 600 annual single-family homes sales for the first time in history in 2016, recorded a decline of 15% in 2017.
Monthly sales in Cumberland County started 2017 behind 2016, but as the year progressed this gradually changed. Beginning in August, monthly sales equaled or exceed prior year each month, thus lessening the amount of annual decline. For example, sales in September were 19% ahead of the same month a year earlier and represented the best performing period of the year.
Effect of Inventory
Throughout 2017 media outlets across the country reported that home inventory levels were low and Maine was no exception. Beginning in January 2017, total inventory available was 20% lower than in 2016, but as the year progressed inventory increased, ending the year only 10% below the prior year.
Focusing on Cumberland County the same trend was evident. Inventory in January 2017 was 22% below that of 2016 – yet was 47% lower than the highest level recorded in January 2006. The situation improved gradually throughout the year, but not until October did inventory levels get within 10% of the prior year. As a result, median home prices were driven up in virtually every town and the days on market were at their lowest level ever recorded.
In 2017 there were nine months with a DOM (Days on Market) below 25 days and four below 15 days. This was unprecedented and competitive bidding on desirable properties was not uncommon. For the entire year, the median DOM was 15 in 2017 vs 21 in 2016.
In any given month during 2017, between 50% – 60% of all inventory was under-contract (pending). By December, the total inventory stood at approximately three months of supply.
But not all inventory is created equal! The inventory of homes priced above $500,000 was significantly more plentiful, never dropping below 5% of 2016 levels while shortage homes priced below $350,000 was much more acute, running at more than 15% below the prior year almost every month of 2017. Homes priced below $350,000 represented 66% of the total market and were on the market for 13 days.
The YTD (Year-to-Date) median single-family price of $200,000 represented a 5.3% increase over 2016. It was the highest year-end level since 2007, when $194,000 was achieved. Overall, pricing was up in 15 of Maine’s 16 counties. The highest single month was August at $206,745, followed by September and October at $206,500. Each month of 2017 was higher than 2016. Between 2007 and 2011 median prices declined each year, reaching their lowest level in 2011 at $165,000. From 2012 onward, pricing has increased ever year, with one exception - 2014.
The median selling price in December 2017 was $201,000 versus 185,000 in December 2016, reflecting an increase of 8.6%.
Both Cumberland and York counties experienced healthy price gains in 2017. The median price of $285,000 for Cumberland County is far and away the highest in the state, increasing 7.5% for the year. The median price in York County of $258,000 represented a 7.9% year-over-year increase.
Cumberland County monthly prices ranged from a low of $260,000 in January and March to a high of $300,000 in June and August. December’s monthly price of $285,000 represented a 9.7% increase the year before. Similar to statewide results, median prices were higher each month of 2017 versus 2016.
The chart at the end of this report includes median price comparisons for many towns in the greater Portland area. Virtually every community experienced significant price gains in 2017 vs 2016.
Condos and townhomes represented 11.4% of the entire market, compared to 9.8% in 2017. The median price of a condo increased from $211,500 in 2016 to $220,000 in 2017, representing an increase of 4.0%. Overall, the number of units sold increased 5.1%, reflecting a total of 2,023.
The three largest markets for condos were Portland (395), Old Orchard Beach (147) and Wells (158). All three markets experienced growth in both units and prices in 2017. In many communities the percentage of condos sold is a small part of the overall sales mix, resulting in wide fluctuations in median prices on relatively small volumes.
Regarding Portland, sales increased 12.9% and prices increased by 10.1%. Additionally, the trend to higher-price, luxury units continued on the peninsula in 2017, as new developments became available. In 2017 there were 10 sales valued at over $1,000,000 compared to only two in 2016. There were 64 total sales valued over $500,000, representing 16% of the total mix. At year end there were 18 condos valued at over $500,000 available for sale.
Waterfront properties of all kinds are an important part of Maine real estate – whether as a permanent residence or a vacation home. Sales of oceanfront properties (owned waterfront) increased from 537 in 2016 to 545 in 2017. The median price also increased from $507,000 in 2016 to $537,500 in 2017, reversing a trend from previous years of declines in this market segment. This group of properties were on the market for 98 days, selling at 89% of their original list price. Inventory was considerably lower than prior years, contributing to higher overall selling prices.
Surprisingly, the sales of lakefront properties also declined in 2017 as 1,094 properties were sold statewide, reflecting a decline of 2.1%. The median price, however, improved significantly from $220,000 in 2016 to $235,000 reflecting a 6.8% improvement. In Maine, lakefront homes range from small camps to large estates, and pricing can vary considerably. Additionally, these results include only those properties with actual “owned” waterfront, and like oceanfront homes, many with only “views” of the water can also be found in a similar wide range of prices.
Whether on the ocean or near a lake, second homes and vacation homes continue to increase as a larger percentage of the sales mix.
Outside of Maine
Nationally, sales of existing homes & condos increased 1.1% in 2017, resulting in the best year since 2006. Total sales were 5.5 million compared to 5.4 million the year before and 6.5 million in 2006.
While sales slowed somewhat during the end of the year, the last 12 months were influenced by strong job growth which fostered demand. Like in Maine, inventory was low, driving up prices in most regions. Higher prices, however, did have a dampening effect on the overall sales strength.
As in Maine, the number of homes available for sale was persistently low. At year end only 1.48 million properties were listed for sale, reflecting a decline of 10.3% - and the lowest level since 1999.
Coupled with the shortage of homes, according to a Joint Center for Housing Study at Harvard University, homeowners are expected to spend nearly $340 billion in 2018 on improvements and repairs - a 7.5% increase from 2017. This would be the steepest growth in renovation activity in more than a decade.
In the Northeast, December sales fell 7.5% to an annual rate of 740,000 and ended the year 2.6% below a year ago. The median price in the Northeast was $261,400, which was 3.0% above December 2016.
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Data is derived from the Maine Real Estate Information System, Inc. and the report was produced by this brokerage, Maine Home Connection.