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Housing Market Update

Trends and Opportunities

Article written by Jack Carr, P.E., R.S., LEED AP, Criterium Engineers
Published in Condo Media, April 2013

The license plate states Maine is "Vacationland."Ofcourse that is truc, but things arc changing. Maine still holds the title of having the most vacation homes in America, but the reduced availability of coastal property is shifting seasonal and year-round living inland. 
The state's population has not budged by more than a hundred people in the last four years, but the demographics are in flux. Portland currently has the youngest population in Maine. Young professionals are relocating to Maine despite the lack of corporate headquarters, while the retiring boomers are being lured to the greater Portland area as a result of world-class restaurants, an expanding arts scene, and favorable magazine reviews. This is having an impact on the residential housing market, particularly the apartment and condominium sector.

By the Numbers

According to the National Association of Realtors, 2012 saw New England single family unit sales slip 14.8 percent, only slightly higher than the national average, but Maine was up 18.6 percent. In 2012, Maine's secondary cities saw significant increases in median sales prices over 2011, with the top three being Auburn (17 percent); Bath (17 percent); and Saco (11 percent).
Part of this increase is due to the low-priced properties of the past disappearing from the market, as 2011 had 500 foreclosures but 2012 experienced only 100 foreclosures. But most of this price increase is due to supply and demand. I call it the FUD factor: Fear, Uncertainty, and Doubt. Though lending money is available, the concern of the economic future is still pervasive, holding back developers from speculative building, resulting in Maine being well behind the national and regional averages for new single family residential building permits.
Since 2000, 90 percent of Maine's population growth and movement has gravitated to the urban and service areas, with the largest sector growth being non-family and single male-only households. This is starting to put pressure on the apartment market in these urban areas, resulting in a lack of apartment stock, vacancy rates below 2 percent, rising rent averages, and reduced pressure to convert apartments to condos.
Condominiums are often the alternative to apartment living or, in a youth-driven market, are the entry level for home ownership. This market can be seen in the Portland statistics of condo sales. Of the 207 units sold in 2012, the breakdown of sales to price range is as follows:
149 units <$250,000
38 units $251,000 - $350,000
20 units $351,000 - $545,000
Currently, the largest inventory of condo units fulls in the $351,000 - $545,000 bracket. Developers are taking notice with six major condo projects under construction in the Portland area alone to match this market need.
If there is one common denominator in the new urban condos coming on line, it is that they meet the new desire for a "Walkable Neighborhood." This has been defined at the Maine Real Estate and Development Association's January forecast conference as:
  • Has a center
  • Has people
  • Promotes mixed income and mixed use
  • Has parks and public spaces
  • Has good pedestrian design
  • Close to schools and workplaces
  • Has complete streets

Cashing In

With, better times coming to the Maine condo market, sellers should be considering how they should present their properties. It goes beyond just pricing the property properly and getting good real estate advice. In tlle condo world, you have to consider not just the appearance of your unit but the entire complex.
Whereas unit owner's investment in a bathroom or kitchen upgrade can realize a return in the selling price in the 60 to 65 percent range, improving the exterior building envelope components can show greater returns in both real terms and the leveraging factor due to that fact that the funds used are allocated to the entire community.
Experts in real estate pricing estimate vinyl window and deck replacements can produce a 76 percent return, while siding upgrades can also produce significant returns (vinyl, 76 percent; fiber-cement, 80 percent). A wise future condo unit seller should be the first one to raise his or her hand at the owners' general assembly meeting to approve the capital budget to enhance their curb appeal. It just makes cents.