2022 Review & 2023 Market Report

2022 Review & 2023 Market Forecast

DECELERATION is one of the popular buzzwords to describe the 2022 housing market, especially in Maine. Prices rose, but at less of a breakneck pace. The increase in home prices from the spring of 2020 through the summer of 2022 was truly staggering. The double-digit year-over-year growth often reached beyond 20%. Looking at the chart below, the median home price in Cumberland County slipped back below 10% growth, with the three other southern counties just above that. This change feels like a return to normalcy.

The word deceleration is helpful as it calls to mind the vision of applying the brakes to slow something down. In 2022 the Federal Reserve became determined to slow the pace of inflation, and one of the most apparent runaway trains was the housing market. Last January, the interest rate in Maine hovered around 2.5%, and statewide inventory was the lowest in years. Combining extremely low inventory with extremely low mortgage rates, created a pricing firestorm to the sellers’ benefit. Multiple offers were common at every price point, and many disappointed buyers were left in the wake.

Flash forward to 2023, and the national market has flipped again. However, the Southern Maine real estate market is NOT following national trends so far. A recent national study suggests that Portland housing prices could increase at the second fastest pace in the country this year. It is forecasted that the housing market in Southern Maine may slow down from its previous reckless growth and return to a more normal pace of 4% annual price increases.

$100,000

Based on information from Maine Real Estate Information Systems, Inc. (d/b/a Maine Listings) figures pulled on January 4, 2023 for the period of January 1, 2021 through December 31, 2021 and January 1, 2022 through December 31, 2022.

So what will the market do in 2023? What trends can we expect to continue? For the past two years, the number of out-of-state buyers has hovered at 34% after many years in the 27% range. In fact, Maine stands out with the third highest in/out migration ratio in the country –meaning people moved here and Mainers stayed here as well. While Vermont and New Hampshire also showed positive gains, Maine led the pack. Other New England states, especially Massachusetts, saw their population drop. Portland appeared on many “Top 10 Small Cities to Live in” lists, ranking at #2 in one study.

Unlike other popular places to move to, Maine has nowhere near the new construction supply to satisfy housing demand. Additionally, the new construction we do have is very expensive. In Cumberland, the lowest-priced new construction home sold for $850,000, while Kennebunk’s lowest-priced new build sold for $453,000.

Affordability issues are driving prices up in areas outside Maine’s more popular towns as well. Lewiston saw home prices rise 18% year-over-year, and Westbrook and Kennebunk both saw 20% price jumps. Based on Maine’s median income of roughly $63,000, an affordable home would cost $236,000. The problem for buyers is, finding a home in Southern Maine for under $300,000 is nearly impossible.

Median Home Prices 2021 vs 2022

2021 vs 2022

Greater Portland

Southern Maine

2021 2022 % Change 2021 2022 % Change

Portland $463,000 $476,500 2% Saco $370,000 $429,000 15% South Portland $385,000 $450,000 16% Biddeford $355,000 $400,000 12%

Westbrook $340,000 $410,000 20% Buxton $339,750 $355,000 4%

Windham $375,000 $425,000 13% Standish $340,500 $375,000 10%

Gorham $396,500 $450,000 13% Kennebunk $474,950 $570,000 20%

Gray $352,000 $430,000 22% Kennebunkport $851,000 $850,000 0%

Cape Elizabeth $687,500 $720,000 4% Wells $410,000 $435,916 6%

Scarborough $500,000 $585,000 17% York $575,000 $635,000 10%

Falmouth $649,000 $736,500 13% Sanford $264,750 $295,500 11%

Cumberland $545,000 $703,500 29% Waterboro $285,000 $338,450 18%

North Yarmouth $600,000 $574,500 -4% Yarmouth $624,000 $730,000 16%

Freeport $494,900 $576,000 16%

Midcoast

Central Maine

2021 2022 % Change 2021 2022 % Change

Brunswick $335,000 $375,000 11% Augusta $200,000 $237,750 18%

Topsham $340,000 $400,000 17% Hallowell $257,527 $325,000 26%

Harpswell $609,250 $625,000 2% Gardiner $213,000 $251,500 18%

Bath $275,000 $320,000 16% Belgrade $334,000 $380,000 13%

Phippsburg $372,000 $525,000 41% Manchester $322,000 $365,000 13%

Georgetown $515,000 $530,300 2% Winthrop $250,000 $255,000 2%

Wiscasset $287,000 $300,000 4% Readfield $325,000 $317,000 -2%

Boothbay $430,000 $497,500 15% Vassalboro $232,000 $283,750 22%

Waldoboro $230,000 $260,000 13% Dresden $245,000 $330,000 34%

Thomaston $221,500 $300,250 35% Whitefield $250,000 $283,000 13% Rockland $225,000 $317,000 40%

Lakes Region and Lewiston-Auburn

2021 2022 % Change

Raymond $425,000 $395,000 -7%

Casco $315,000 $372,500 18%

Naples $312,500 $350,000 12%

Bridgton $290,000 $331,550 14%

Harrison $351,250 $350,000 0%

Sebago $357,050 $350,000 -2%

Oxford $235,000 $239,000 1%

Poland $300,000 $319,500 6%

Lewiston $220,250 $260,000 18%

Auburn $229,000 $250,000 9%

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