Maine Real Estate Market Trends & Analysis


The Maine real estate market appears to be at the forefront of the national recovery. Today’s most important indicators are almost all in a better place than they were even just a few short years ago. Activity remains healthy, as sales prices, inventory, and sales volume have all seen increases from their 2018 counterparts. That, combined with a strengthening economic environment, has made real estate in Maine very attractive to prospective buyers and real estate investors alike.

The Top Maine Real Estate Markets


While the best real estate market in Maine is up for debate, here’s a list of the cities investors may want to pay special considerations to:

  • Auburn

  • Augusta

  • Bangor

  • Lewiston

  • Portland

Maine Real Estate Fees & Regulations

Real Estate

Closing Conducted by: Attorneys
Conveyance: Warranty or quitclaim deed

Foreclosure Procedure

Primary Foreclosure Method: Judicial
Process Period: 6 - 10 months
Notice of Sale: Court
Redemption Period: 90 Days

Taxes

Income Tax: 2% - 8.5%
Corporate Tax: 3.5 - 8.93%
Sales Tax: 5.50%
Estate Tax: 8% - 12%
Inheritance Tax: No
Median Property Tax: 1.09%
Property Taxes by County: http://www.tax-rates.org/maine/property-tax#Counties

Average Transactional Costs

Closing Cost: $2,497.00
Transfer Fee: 0.44%
Origination Fee: $1,854.00

Overview


  • Median Home Value: $235,900

  • 1-Year Appreciation Rate: +5.2%

  • Median Home Value (1-Year Forecast): +2.7%

  • Median Rent Price: $1,800

  • Price-To-Rent Ratio: 10.92

  • Average Days On Market: 62

  • Unemployment Rate: 2.9% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 1,338,404 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $53,024 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 22.84%

  • Foreclosure Rate: 1 in every 2,520

Median Home Prices In Maine


The median home value in the Maine real estate market is $235,900. Real estate in Maine has appreciated beyond pre-recession levels, and hits new highs with each increase. Nonetheless, prices haven’t always been as high as they are today. No more than eight years ago, Maine’s median home value bottomed out around $168,000 during The Great Recession. Since then, however, home values in the state have appreciated by as much as 40.4%. Thanks largely, in part, to a strengthening economy, increased optimism in the housing sector and a lack of existing inventory, home values in Maine have been able to ride the same tailwinds as the rest of the U.S. real estate market.

As a frame of reference, the median home value in the United States was able to outpace Maine’s appreciation rate over the same period of time. From December 2011 to today, the median home value in the United States increased 57.6%. That’s not to say the real estate market in Maine underperformed (quite the opposite, in fact), but rather that the entire country had a lot of ground to make up from its lowest point of the recession.

For the most part, real estate in Maine has managed to keep pace with national appreciation rates. While the country (as a whole) has vastly outperformed the state for the better part of a decade, things have been closer in recent history. Over the course of last year, for example, Maine appreciation rates were within one-percentage point of the national average — 3.8% and 4.7%, respectively. Not only that, but the next 12 months look as if they will continue the momentum. Whereas median home values in Main are expected to increase as much as 3.2%, home values across the United States may jump 3.4%.

Median Rent Prices In Maine


Rental rates tend to share a direct correlation with home prices, and the Maine real estate market is no exception to the rule. Traditionally, rental listing prices are forced to react to changes in home values to accommodate the market. As home prices inch higher, for example, more people will be priced out of the market and be relegated to renting. Competition for rental units will naturally increase, permitting landlords to increase their rental rates. The correlation is easy to identify in Maine, as both rental listing prices and home prices have increased for the better part of a decade.

Today, the median rent in Maine is $1,800. However, much like home values, rents have increased for nearly a decade. In December 2011, the average rent in Maine was as low as $998 per month, which means listing prices have increased 80.3% in as little as eight years — that’s about double the rate local home values increased.

Increases in rental rates have outpaced home values significantly, resulting in a market where it’s more affordable to own than rent. With a median rent of $1,800 and a median home value of $235,900, Maine’s price-to-rent ratio is about 10.92; anything below 15 suggests it is actually cheaper to buy a house than to rent one in the state of Maine. Despite nearly a decade’s worth of appreciation and a decline in rental rates, more people are inclined to buy.

Maine Foreclosure Trends & Statistics


According to data presented by RealtyTrac, an industry leader in foreclosed property information, Main has an average foreclosure rate. With approximately one out of every 2,787 homes in some stage of distress (default, auction or bank owned), Maine’s foreclosure rate is about 3.5%. At that rate, the distribution of foreclosures in Maine is lower than the country as a whole, albeit slightly. On a national level, one in every 2,453 homes are distressed, or 4.0% of the country’s inventory.

It is worth noting, however, that while most states have seen a decline in foreclosure filings, Maine has actually seen the number of foreclosures filed within its borders increase. Foreclosures are down 17.0% across the country year-over-year, but the Maine real estate industry didn’t do anything to help nationwide foreclosure numbers. As recently as October, in fact, “the number of properties that received a foreclosure filing in ME was 15% higher than the previous month and 6% higher than the same time last year,” according to RealtyTrac.

While the state, as whole, saw foreclosure filings increase, five counties across Maine have seen higher distributions than anywhere else:

  • Androscoggin (1 in every 1,654)

  • Penobscot (1 in every 1,835)

  • Aroostook (1 in every 1,896)

  • Kennebec (1 in every 2,222)

  • Waldo (1 in every 2,463)


Tax Lien Investing


  • Tax Lien or Deed: Tax Deed State

  • Redemption Period: Varies by county

Real Estate Investing In Maine


Real estate investors in Maine have made a habit out of dealing in distressed homes. If for nothing else, distressed assets may typically be purchased with greater profit margins. Additionally, as their names suggest, distressed homes are typically in the possession of owners who may be better off without them. As a result, distressed real estate in Maine may not only be had at a discount, but it may also be easier to land a deal; distressed homeowners are traditionally motivated homeowners. With that in mind, it may literally pay for real estate investors in Maine to prioritize the state’s distressed inventory. Doing so will increase their odds of landing a deal with better ROI (return on investment) than non-distressed properties.

Maine real estate investors should pay special considerations to pre-foreclosures. As their names suggest pre-foreclosures are merely at risk of falling into foreclosure; they aren’t actually in the foreclosure process. Their homeowners have neglected to keep up with mortgage payments for one reason or another, and are at risk of falling further behind. Perhaps even more importantly, however, is the volume of pre-foreclosures across the state. According to RealtyTrac, pre-foreclosures make up 56.1% of Maine’s distressed inventory. That means more than half of Maine’s distressed properties are currently owned by someone who may be motivated to sell sooner rather than later.

With the overwhelming majority of the state’s distressed homes classified as pre-foreclosures, investors seeking attractive profit margins should take a trip to their local courthouse; there, they’ll be able to look up the contact information of each home that is currently behind on payments.

Knowing where to find distressed homes is only going to take investors so far. Once investors locate and secure viable deals, they need to know what to do with them, which begs the question: Which exit strategies are working the best for Maine real estate investors? What should local real estate investors do with these assets once they acquire them? After all, there are several options to consider.

Fortunately, current market conditions don’t appear to favor one particular exit strategy, but rather all three of today’s most popular options: rehabbing, wholesaling and renting.

While it’s entirely possible to rehab in the Maine real estate market, attractive profit margins are harder to come by thanks to years of appreciation. As a result, investors may want to prioritize implementing a long-term rental strategy. Building a passive income rental portfolio in Maine has the potential to offset today’s high acquisition costs with years of cash flow. There’s no reason investors in Maine couldn’t make up for the extra capital it costs to acquire an asset with several years of rental income.

If, for example, buyers were to us a 30-year fixed-rate conventional mortgage with a 3.75% interest rate (the average rate for a 30-year fixed-rate loan in Maine) to buy a home for $235,900 (the median home value) and put down about $47,000 (20%), monthly mortgage payments would come out to be somewhere around $1,346 (roughly accounting for things like property taxes and homeowners insurance). With rental listing prices in Maine settling around $1,700 a month, it’s entirely possible for investors to pay off their mortgage each month while pocketing an additional $354. While that may not sound like much at first (and there are other expenses to account for), most rental properties in Maine are cash flowing, which means investors have the potential to pay down their mortgages with other people’s money. Each payment will, therefore, build equity in a valuable asset.

Maine Housing Market Predictions


The Maine housing market has managed to keep relative pace with national trends. Home values, recent appreciation rates, and even forecasts predicting the next 12 months all share similarities. Nonetheless, it’s good practice for investors to listen to what their local market is telling them. Making educated guesses as to where the Maine real estate market is heading could give investors the edge they need to succeed. It is entirely possible to take historical data and apply it to what may transpire in the foreseeable future. Therefore, let’s take a look at what is most likely to happen in the Maine real estate market sooner rather than later:

  • Plenty of reasons to remain optimistic: Real estate in Maine has become a commodity, not unlike just about everywhere else. Thanks to improving economic conditions, historically low interest rates, and a slew of other positive indicators, Maine residents will remain optimistic about their own housing market. As a result, activity should remain healthy and help anyone involved in the market for the foreseeable future.

  • Prices will continue to rise: Not unlike the rest of the country, prices in the Maine real estate market are expected to continue rising. In the next year, median home values are expected to increase at least 2.7%, which represents a slowdown, but an increase nonetheless.

  • Inventory will remain tight: Inventory levels — or lack thereof — have served to increase prices across the United States, and real estate in Maine is no different. The state simply doesn’t have enough months of available inventory to keep up with demand. The lack of listings should continue to drive up prices until more inventory is brought to the market. More homes are being listed, but there’s still some time until Maine sees enough inventory to balance the market completely.

Maine Real Estate Market Summary


The Maine real estate market has kept pace with national trends for the better part of ten years. Much like the rest of the country, Maine has seen prices appreciate at a historical pace, effectively leaving the recession in the rearview mirror. Not only that, but demand has remained intact, which suggests the market is healthy and active. Anyone looking to participate in the local real estate market should find plenty of reasons for optimism, especially investors.

Sources:



https://www.census.gov/quickfacts/fact/table/ME/PST045218
https://www.bls.gov/regions/new-england/maine.htm#eag
https://www.realtytrac.com/statsandtrends/foreclosuretrends/me/
https://www.realtytrac.com/statsandtrends/me/
https://www.realtytrac.com/statsandtrends/foreclosuretrends/
https://www.zillow.com/me/home-values/
https://www.zillow.com/home-values/
https://www.attomdata.com/news/market-trends/mid-year-q2-2019-foreclosure-market-report/
https://www.mainerealtors.com/wp-content/uploads/2019/08/MaineHousingReport-July2019.pdf

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