Many years ago, on a business trip to San Francisco, I told the taxi driver that I was from Maine. He replied, “Is this part of Canada?”
Well, today it’s safe to say that almost everyone knows exactly where Maine is located on the map. During the pandemic, Pine Three’s popularity increased, attracting more out-of-state buyers and skyrocketing property prices.
More people “from afar”
While Maine residents still account for the lion’s share of home purchases, the percentage of out-of-state buyers is growing. According to Maine Real Estate Information Systems (MREIS), 29.71% of single-family shoppers for all of 2020 came from outside Maine. In the first quarter of 2021, this percentage rose to 34.29%. The same data show that over the past two years, the top ten states from which they moved were, in descending order, Massachusetts, New Hampshire, New York, California, Florida, Connecticut, New Jersey, Pennsylvania, Texas and Virginia.
Where are they moving?
While Maine shoppers often have a specific city or area in mind, out-of-state shoppers are looking for specific amenities. Given the pandemic, many of those who come from metropolitan areas are interested in moving to the suburbs. Close to the city center but where there are lawns, swings, gardens and seclusion.
Compared to where they are moving from, cities like South Portland, Falmouth and Westbrook will be part of the subway or even part of Portland itself. Many out-of-state buyers do not care if they are in Falmouth or Scarborough, whether they have proximity to the city and a home that has all the amenities they need. Savvy shoppers who don’t need quick access to the city center will go even further. Others are more specific. Shoppers with children choose cities in which schools perform better on exams, and those for whom money does not matter much choose coastal coastal villages.
Prices have increased
In the first quarter of 2021, MREIS reported an average increase in single family home prices of 14.41% over 2020. Over the same period, prices in Greater Portland – Cape Elizabeth, Cumberland, Falmouth, Freeport, Gorham, North Yarmouth, Portland, Scarborough, South Portland, Westbrook, Windham, Yarmouth – rose 20%. In Portland itself, the average selling price jumped 39% year over year. Why? While declining inventories and rising consumer demand were the main driving forces, the rise in buyers from outside the state led to this.
These buyers come from larger markets where similar homes can be sold for two or three times the asking price in Maine. They often have reverse sticker shock. With cash from a recent sale and the ability to take their salary with them in a remote city, they are willing to pay heavily inflated prices.
Most realtors expect the upward trend to continue into 2021, creating a seller market with low inventory levels, strong buying demand and competitive supply situations. With the increase in work-from-home opportunities and baby boomers choosing to retire and buy second homes in Maine, our property prices and the percentage of buyers from afar are likely to continue. How long this will last is anyone’s guess, but for now, most in the real estate industry think it might take a while.
Tom Landry, owner of Benchmark Real Estate and CornerStone Building and Restoration in Portland, operates in South Maine real estate and builds and refurbishes residential and mixed-use real estate.