MEREDA 2022: Pandemic Fuels Southern Maine Domestic Market, Not Just Portland

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

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

Trends in 2021 included bidding wars, closing dates set according to seller preferences, sellers staying for free until they are 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 commute to Boston and New York. Some keep their jobs” as they move to Maine on 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 cities like Westbrook, Biddeford and Gorham saw rents rise by 25% and more the last year.

Among Portland’s smaller multi-family homes, with two to four units, prices rose and all properties were owner-occupied, rather than investments. For homes with more than five units, rent control reduced their value because improvements could not be spread over higher rental rates.

Portland’s smaller multi-family buildings will continue to be attractive to homeowners, 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.

Single-family home prices have surged in 2021, with the statewide median sale price reaching $299,000 and the southern Maine median sale price reaching $419,000. Statewide, selling prices were higher than asking prices.

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

Prices should continue to rise in 2022, but perhaps at a more modest pace of 7% to 10%, said Dava Davin, founder of Portside Real Estate Group.

External demand will stabilize, but not disappear, she added.

She also expects more growth in rural areas as people are shut out of key markets.

“People are going to drive until they can afford it,” Davin said.