Maines housing market experienced dramatic shifts between 2018 and 2023, affecting most households earning under $250,000.
Sales activity also swung widely.
In 20182019, Maine had around 17,00018,000 home sales annually, reflecting a healthy market.
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By 2022 and 2023, conditions shifted dramatically.
By late 2023, Maines for-sale inventory inched up from record lows as the market eased slightly.
However, even condo prices rose significantly.
Condos appealed especially to downsizers and some first-time buyers willing to trade space for location or affordability.
The median price of those mobile homes was around $130,500 (far below the median single-family price).
Industry sources noted that Maine mobile home dealers sold out of inventory in 2022 due to high demand.
This house hacking strategy grew in appeal as rents climbed.
A first-time buyer with under $250k income could leverage rental income to qualify for a bit more house.
Market Dynamics: Upsizing vs.
Downsizing
Changes in housing needs and life stages played out differently before and after the pandemic housing boom.
Upsizing Trends
Many Maine households used the favorable conditions of 20182021 to trade up to larger homes.
This trend accelerated in 20202021 when mortgage rates plunged under 3%.
Young families and professionals suddenly found that lower interest rates expanded their buying power.
However, by 20222023, upsizing became much more difficult.
Rapid price increases meant that the next tier of homes moved further out of reach.
This led to what analysts call the lock-in effect.
Downsizing Patterns
Maines large population of baby boomers and retirees has long contributed to downsizing trends.
Between 2018 and 2023, downsizing continued but was also influenced by market conditions.
But downsizers then faced the challenge of finding an affordable smaller home.
By 20222023, downsizing was also constrained by the interest rate environment.
From 2020 to 2021 alone, net in-migration nearly doubled to an average of 16,100 people per year.
Many newcomers hailed from more expensive markets (Boston, New York, etc.)
or took advantage of remote work to move to Maine.
Southern Maine, with its proximity to Boston and Portlands amenities, saw the fastest population growth.
This influx of new residents added housing demand pressure, particularly on starter homes and mid-range properties.
Vacation Home Market Impact
Maine has long been a vacation home havenfrom coastal cottages to lakefront cabins.
20182023 saw a boom in second-home purchases, which impacted the market for locals.
This made it harder for year-round residents to buy there.
For middle-income buyers, Southern Maine was challenging.
A $250,000 budget might only buy a very small condo or fixer-upper in this region.
Starter homes often fetched $350k or more.
Many local buyers expanded their search radius or considered condos/mobile homes due to the scarcity of affordable single-families.
They remained the relative bargain in this timeframe.
Other interior counties (Somerset, Piscataquis) also stayed well under $250k median prices.
These areas are rural, with population declines or minimal growth, which kept demand softer.
However, they did not escape the trend of price appreciation.
But homeownership in both regions has ticked down since 2010 as young people struggle to buy.
They saw some of the largest percentage increases in sales and prices during 20202022 as buyers sought affordability.
Kennebec County became a hotspot for new home construction.
That said, local incomes in these areas are also lower, so affordability challenges emerged nonetheless.
However, rates turned sharply in 2022.
In November 2023, rates in Maine peaked around 7.8%, the highest in over 20 years.
This spike was game-changing for affordability.
Many buyers had to lower their price targets or pause their search.
Affordability Crisis
The collision of high prices and high rates caused Maines affordability index to plummet.
One challenge in 20202021 was that competitive market conditions made financed offers less attractive.
These increases meant that renting took a bigger bite out of income.
Part of the issue was low rental vacancy and limited inventory.
This implied that apartments were being snapped up quickly, and landlords had the upper hand to raise rents.
Buy vs.
In 20202021 especially, record-low rates meant buying was often cheaper than renting on a monthly basis.
This incentivized first-time buyers to stretch to purchase if they could secure the down payment.
The pandemic underlined the value of home as a safe haven.
On the other hand, not everyone could make the leap.
The same high home prices and limited inventory that frustrated buyers kept some renters renting by necessity.
Many younger Mainers (20s and early 30s) delayed homeownership, either by circumstance or choice.
First-Time vs. Repeat Buyers
Middle-income homebuyers in Maine included both first-timers and repeat buyers.
That ~20% increase over 6 years is modest compared to the ~67% increase from 2018 to 2023.
There was also less urgency; one could take time to shop, perhaps negotiate price down in 2012.
By the early 2020s, the psychology flipped to fear of missing out on low rates and rising prices.
Buying a home became a race against the clock.
Maines market had never seen the level of frenzy that occurred in 20202021.
