MAINE, USA — For the past few years, becoming a homeowner hasn't been an easy feat. When interest rates plummeted at the height of the pandemic, more people decided to buy. That demand, brought on by people both in Maine and from out of state, drove up prices because of a lack of supply.
In its latest report from the end of December, the Maine Association of REALTORS said 1,289 homes sold in November of 2022, a decline of 28.7 percent compared to November of 2021. The report cited "Maine’s tight for-sale inventory, increased mortgage interest rates, coupled with the typical holiday slowdown" as reasons for that decline.
Carmen McPhail, the 2023 president of the Maine Association of REALTORS, said the current environment, combined with higher interest rates and living costs, could impact the housing market positively in the coming year. She said home values are decelerating, rising by single digits now compared to double digits like they were for more than two years.
"The acceleration that we had going on just couldn’t sustain itself," McPhail said.
She said she thinks we're moving toward a balanced housing market that favors both buyers and sellers. She also said people shouldn't let the current higher interest rates dictate their decision-making.
"Historically, [the rates] are still relatively low," McPhail said. "Your parents, your grandparents bought homes with a much higher interest rate and much lower income. We need to look at that perspective and know that buying a home is of good value."
Sales manager at Caliber Home Loans Cynthia Veroneau said she thinks interest rates have hit their peak and should go down by a couple of points by the end of the year.
"I absolutely am very optimistic about where we’re heading," Veroneau said.
She said to address the current situation, some lenders are taking special steps to help their clients.
"What a lot of lenders, including ourselves, are doing is to say, 'We’re going to offer no-fee or reduced-fee refinances in the future because we understand that this is a unique time, and we’re going to try to support you in the future as well,'" Veroneau said.
One of the primary concerns right now in Maine is a lack of housing stock. The latest Maine Association of REALTORS report said for-sale inventory is historically low. It's an issue South Portland couple Michele and Dave Thorne know all too well.
"We’re very disenchanted right now looking at homes and the stock that’s available," Michele said.
She and Dave have been looking to buy since 2019. Back then, they thought they could be picky with what they selected, but then the market changed. She said now they're having a hard time finding houses that don't need a lot of renovations; and at the same time, they're paying rent for an apartment that has gone up in price.
"Saving is a challenge because we’re paying top-dollar for rent, which includes no utilities," Dave said. "At the end of the day, saving for a substantial down payment without a flip is very hard."
Realtor Corey Lee works primarily in the central Maine area. He started real estate work in 2019 and said when the housing market exploded, it was "hectic." Now, he said the playing field feels more stable, so it should take pressure away from buyers to over-pay for a home and set more realistic expectations for sellers.
"We’re starting to see it get to pre-pandemic levels like 2018 and 2019," Lee said.
Veroneau said our state offers a program through the Maine State Housing Authority for first-time homebuyers or people who haven't owned a home in three or more years. It allows them to get 5.5 percent interest with no points and potentially receive a $5,000 grant. You can read more here.