2022 SPRING UPDATE
UNHINGED - that was the word used in a recent report by Fed Analysts to describe the real estate market during the pandemic. Prices throughout Maine accelerated over 19% from February 2021 to February 2022, and in certain towns the price jumps were even higher. This month’s report takes a deeper dive into that phenomenon by putting these numbers in context. One interesting way to look at the way values have changed is to look in 5 year chunks at the median price shifts in Portland. For example, if you bought a home in 2001, the median price was $151,000 and five years later in 2006, the median price was $232,500. On paper your equity and wealth increased $81,500. Conversely, if you bought a house in 2006 at the median value of $232,500 and then sold in 2011 when the market was at a low point, your home could have been worth $219,000. At that time some sellers had to bring money to closing! After 2011 and up to the present day, the market rebounded. From 2011 to 2016 the median price went from $232,500 to $262,000 – an equity gain of $43,000. But then from 2016 to 2021, the curve turned up sharply and a home purchased for $262,000 in 2016 could have sold for $460,000 in 2021. The rapid escalation in home prices fuels the sense of a feeding frenzy. Buyers who miss out on multiple offers also believe they are missing out on opportunities to grow their wealth through homeownership and low interest rates. The goal post keeps moving on them. Sellers are reaping the rewards. Imagine if you bought a home in 2011 in Portland and then sold it in 2021 – in addition to any money you put down, and money you paid toward the principal, your check at closing could be in excess of $240,000 in profit. Based on information from Maine Real Estate Information Systems, Inc. (d/b/a Maine Listings) figures pulled on April 4, 2022 for the period of January 1, 2001 through December 31, 2021.