This time last year, Jordan Stolt would have had no problem finding an eager buyer for her $310,000 listing in central Maine.
It’s a solid starter home on Winslow’s Roy Street with three bedrooms, one bathroom and a one-car garage. The 1,000-square-foot home is well below Maine’s average value, making the cost no barrier to a sale in the hot housing market of the past few years.
Things are still hot, but today’s market is different. Inflation is expected to push mortgage rates over 7 percent in the coming weeks. While Maine’s housing inventory remains critically low, demand for homes has waned since a wave of migration during the COVID-19 pandemic.
As a result, there are seemingly conflicting trends in the market. Maine’s sale prices have dropped in all but one of the months between October and February, according to Redfin. Only 29 percent of homes here sold above list price in February, a significant drop from that time last year. Yet home values themselves are still rising steadily, Zillow data shows.
It all adds up to a market that seems to be leveling off, although those looking at homes in pricey areas of southern Maine are unlikely to see much relief. It looks to be due to broader economic factors rather than any fundamental change in Maine, but it’s unclear whether it represents any sort of trend.
“The inventory issue is definitely still there, but I think there’s less demand and of course it’s coupled with interest rates,” Michelle Labonte, a senior residential lender at Kennebec Savings Bank, said. “The bidding wars aren’t happening that are bracing the prices.”
Stolt, a designated broker-owner with Summit Real Estate, has not seen the bidding war she expected over her Winslow listing, which hit the market on March 11. She recently cut the price by $10,000 to keep the property competitive.
“The feedback from buyers was that they couldn’t afford the monthly payments with interest rates,” Stolt said. “A lot of people just can’t afford what people are asking for their homes.”
Because of prohibitive mortgage rates and cooling demand, properties are staying on the market for about 10 days longer than they were last year, Trish Rose, head of retail and mortgage banking at Camden National Bank, said of the homes.
Both she and Labonte said that while the market might be leveling off, that’s in line with typical fluctuations, and by no means is it yet a buyer’s market. Year-over-year prices continue to climb month to month and are a world away from where they were before the COVID-19 pandemic.
“It’s still a pretty robust market,” Rose said.
Interest rates are expected to decrease by the end of the year, Labonte said. But it’s hard to predict whether that will hit home prices. Mike Roddy, a Farmingdale-based real estate agent with Your Home Sold Guaranteed Realty, said it might not necessarily mean a reprieve for homebuyers.
“Prices will go up more,” Roddy predicted. “Because more people will enter the market.”