The Greater Portland real estate market recorded the lowest number of sales in over 14 years in 2011. But the news is not all bad. The market continues to stabilize and as sales have declined so too has inventory. The ratio of new listings to properties sold has steadily decreased to 1.85 since a peak of 2.10 in 2008.  Despite the sluggish sales, 2011 ended in a strong position with noticeable improvement in the fourth quarter both locally and nationally.

The Greater Portland market saw an 8% increase in the number of single family homes and Portland condos sold in the fourth quarter from the same quarter last year.

This reflected the positive news being reported nationally.  According to a WSJ online 12/21/11 report, residential construction “surged in November, pushing housing starts to… the highest level in 19 months”. Additionally, the National Association of Realtors, reported that existing home sales rose in November.

As for 2012, the predictions swing in every direction.

Nationally:

Franklin American, in their electronic newsletter, summed up the outlook for 2012:

The New Year is here. Of course, now we are inundated with predictions regarding what will happen in the coming year. If you read 100 predictions, you would get 100 different scenarios. For example, in October Fannie Mae predicted that rates on home loans would fall in the first half of next year, while Freddie Mac forecasted an increase in rates. In addition, Fannie Mae Chief Economist Doug Duncan rated the chance of a recession at 40% next year while Freddie Mac predicts that economic growth will likely strengthen to about 2.5% in 2012. More recently, a survey of 20 top economists conducted by CNN/Money predicted the risk of a recession next year at only 20% next year. This survey expected the fourth quarter growth rate to be the strongest of the year with over a 3.0% growth rate, but grow to slow to an annual rate of 2.4% next year.

Slow growth next year but no new recession? Sounds like a replay of this year. Our advice? Don’t get lost in predictions. Most of the time they are a reflection of what already has happened. Right now we have very positive trends with increased consumer confidence confirmed by the Conference Board’s survey released last week… The real question is, will these trends continue into next year or do we fall back into our ‘starts and stops’ pattern of economic recovery? If you want a clue to that question, watch the employment trends.

Rising rents are forcing renters to outspend home owners on housing costs, according to a recent study. Since 2005, home owners’ housing expenses have climbed from 31.9 percent of their household budget to 33.2 percent. On the other hand, in that same time period, renters’ expenses have jumped from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing Trends.  Source: RISMedia

The Greater Portland market:

Last year, Housingpredictor.com, an independent real estate news website, touted Portland as one of the top 3 markets for growth nationwide. Sadly, it doesn’t even make the top 25 this year. Their reasons:

“Extraordinarily sluggish home sales and slowly declining home prices are preventing Maine housing markets from making a full-fledged recovery, but cities and towns throughout the state are hardly experiencing a major drop in home values either.

Maine is turning out to be one of the safest bets so far in the fallout of the U.S. real estate collapse. A slim volume of sales is hand-cuffing the markets and are expected to chill the region’s home sales at a slow pace through 2012.

National headlines over the foreclosure crisis and falling home values have hurt Maine housing markets more than anything else. Housing sales in most of the state have been sluggish but have remained consistent through the U.S. downturn – just not many sales compared to most other regions of the country. Less than 1,000 homes sell in an average month statewide.

While sales move at a snails pace, the number of homes being sold monthly are creeping up as prices decline only marginally. However, home sales are projected to increase in Portland as new home buyers take advantage of record low mortgage interest rates. The influx of retirees to the region is also helping to boost the market. But home values are forecast to drop slight during the year averaging 2.6% less.”

On the other hand, CNN Money, which tracks 384 markets throughout the US, predicts a 4.5% increase in home prices for the Greater Portland market.

My own opinion is that 2012 will be much like 2011. Sales will continue to be sluggish until the end of the year. Distress sales will keep prices from gaining real traction although I predict they will appreciate slightly as buyers seize the opportunity of low interest rates and sense an end to the bottom of the market. Low interest rates will continue to fuel buyer interest although mortgages will remain bridled by strict lending practices.

Unless we hit a snag (i.e. consumer confidence lags, employment rate stalls, or we experience an environmental disaster), 2012 will remain slow but steady. However, with continued stabilization, we will start to see appreciable change in late 2012 or 2013.

3rd Quarter 2011 Maine Housing Results.

View the full Maine Association of  Realtors press release here

July was marked by sluggish sales and a sharp rise in new listings. This created the greatest imbalance in July figures for the 14 year period I observe.

227 properties sold in the Greater Portland real estate market in July 2011, compared with:
186 in 2010 (skewed by the tax credit incentive)
245 in 2009
236 in 2008
267 in 2007
229 in 2006.

There were 1.37 new listings for every property sold in July 2011, well above the monthly average of .92. However, the ratio was also down significantly from previous months this year.

The average sale price rose in greater Portland rose slightly and the average Days on Market (DOM) fell slightly.

The advantage is clearly on the buyer’s side with low interest rates, low prices, and a large inventory.

In national real estate news:
Interest rates have fallen to historically low levels once again, dipping below 4%.

Realty Trac has reported that foreclosure activity has fallen to its lowest level since November of 2007 although the Wall Street Journal reported on 8/23 that the number of households falling behind on their mortgages increased slightly in the second quarter or 2011.

Despite the sluggish Maine sales.. the Portland home and Portland Maine condo markets continue to fare quite well.  We here at the Herrigel Group also just created a sweet new web page to provide in depth analysis on condominium associations in Portland Maine thus please do check it out or feel free to look at one of our great neighborhood pages on either homes for sale on the West End or check our East End Real Estate overview.

May – 2011 vs 2010

As of 2/23/2011… 62 total foreclosure properties in Maine are for sale and listed at a median sales price of $129,000. Of these 62 properties… 41 are bank owned, 10 are owned by the government and there are 11 shadow listings, meaning they are not being actively listed.

Luckily Maine has fared significantly better than other parts of the county and although foreclosures due exist they are definitely not the norm!

Mid Coastal Maine is still struggling to see activity, yet my sense is that once we thaw.. there is going to some serious real estate action in Maine.  Many buyers are looking and are simply having a hard time finding something given the lower inventories around, but this should change as Maine sellers will begin relisting as early as March 1st I suspect.

To read the complete January 2011 Maine real estate housing report please click here.

Thanks for stopping by and thanks to the Maine Association of Realtors for their statistics.
John

Below are detailed housing statistics on all the communities within the region.

For the month ending November  2010  housing markets in Southern Maine including greater Portland and mid coastal regions posted similar results to what we have been seeing since the expiration of the tax credit.   Transaction volume was down  in all 4 counties  year over year whilst  month over month volume has continued to stabilize.  Median pricing throughout the region year over year was up  whilst month over month pricing remained quite stable and even began to show a few signs of  price appreciation dare I say!   With inventories very low and many buyers sensing a bottom…watch for improving conditions in the New Year.  Below are the raw results and read the full December real estate report here.

Once again we want to wish everybody a Merry Holiday Season and a thanks to the Maine Association or Realtors for helping supply these statistics

For the month ending November 2010 most regional housing markets saw improved transaction volume on both a month over month and year over year basis.  Ironically statistical median in Portland for November did drop of  sharply clocking in at 169K compared to 210K in October, but I believe this to be an anomaly and watch for this to rebound in future month’s.

The holiday season is always a slow time of year, but pent up demand and a lower overall supply of homes and condos for sale have set the stage for a very strong start to the new year.

Maine Housing Results for October 2010

Click here for the complete Maine real estate report.

Overall I feel there is a lot of pent up demand in the marketplace and if rates continue to creep up  I think we are going to see a significant pop in transaction volume which will further help to stabilize the regional marketplace.

Thanks for reading,

John