Learn more about the housing market in Maine

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life. In this article, we’ll provide key data and insights about the Maine housing market, including median sales prices, market trends, and housing inventory. 

Maine Housing Market Overview 

Home to stunning coastlines, national parks, and lighthouses, the Pine Tree State is celebrated for its natural beauty. Recreation is popular here, with hiking, camping, and skiing being popular activities for both locals and visitors. Maine is also attractive for its relatively lower cost of living and high quality of life. 

Both Maine’s economy and culture are based on cultivation of the state’s many natural resources, like fishing, farming, logging, and shipbuilding. Maine’s economy has relied on forest products for centuries, and its aquaculture (lobster!) is famously robust. The state is also investing in newer opportunities and markets, including mass timber, packaging, and biobased manufacturing (including biotech, medical research, and life sciences companies). These new industries will increase sustainability and responsible use of Maine’s natural resources. 

When it comes to the housing market, there’s a similar story of strength, stability, and resilience. Real Estate, Rental, and Leasing was the highest contributing sector to Maine’s GDP in 2023. This spring, Maine’s housing market has seen renewed inventory and increased buyer demand, and like the rest of the U.S., Maine is currently experiencing a competitive seller’s market. Interest rates are still at record highs, and although new homes are on the way, inventory is still not sufficient for the many people who want to buy a home. The surge in demand from home buyers, driven by out-of-state buyers and residents shifting to remote work, has intensified the market’s competitiveness. 

Despite these challenges for buyers, however, the current housing market Maine maintains is a promising one for homeowners and investors in the future. Appreciation, home prices, and property values in Maine are rising. Maine is also a fantastic state for short-term rentals and vacation properties, especially near the state’s many resorts, coasts, and national or state parks. The housing supply impacts buyer options and market dynamics, with the number of homes for sale affecting how quickly properties are sold. Real estate has a promising path in Maine, even among nationwide housing market uncertainties. 

Maine Housing Market Trends 

To understand the Maine real estate market, it’s important to keep up with trends. Let’s look at some key ones in Maine: 

Note: These statistics are based on Redfin’s monthly housing data from April 2024. 

Median Home Price 

The median home sale price in Maine as of April 2024 is $391,000, according to Redfin’s monthly housing data. This is an increase of 1.8% compared to April of last year. However, keep in mind that Maine’s housing inventory is diverse, including both more affordable and luxury options. Homes in Cumberland Center, for example, sell for a median price of $660,000, up more than 35% since last year. There is no indication of home prices dropping in the Maine housing market. 

Number of Homes Sold in April 2024 

1,140 homes sold in Maine in April of 2024. This represents an increase of over 13%, demonstrating an increase in sales volume in Maine this year. 

However, keep in mind that this number might be inflated compared to other months since nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market (DOM) 

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage. 

The current median days on market (DOM) in Maine is 34 days. This means on average, homes in Maine sell in a little over a month, indicating movement toward a more balanced market. 

New Supply Statistics 

On average, there were about 4.76 new residential construction permits per 1,000 people in Maine in 2021. Maine’s housing inventory is increasing, with construction projects resuming post-pandemic and expecting completion this year. More housing availability could lead to an ease in prices to break up the seller’s market.  

Property Tax Rate 

The average property tax rate in Maine is 1.24%, according to Rocket Mortgage. This places Maine’s average property tax rate as the 16th highest in the U.S. However, keep in mind that property taxes vary widely depending on the specific county of Maine and the value of the home. 

Foreclosure Rate in Q1 of 2024 

In the first quarter of 2024, 1 in every 2,234 homes experienced a foreclosure filing (according to recent data from ATTOM). Based on this data, Maine’s foreclosure rate is on the lower side compared to other states. 

Hottest Local Markets in Maine 

The top cities in Maine with the fastest growing sales price according to Redfin are Augusta, South Portland, and Portland. 

1. Augusta

Located on the banks of the Kennebec River, the capital of Maine offers many opportunities for homeowners and real estate investors. The city’s downtown has been the target of many revitalization efforts over the last decade. The median sale price in Augusta as of April 2024 is $285,000, up more than 8% since April of last year. Additionally, 60% of homes in Augusta are sold above list price, demonstrating strong demand for homes and a dynamic, competitive market. 

2. South Portland

Redfin ranks South Portland, Maine, as “Most Competitive,” with homes selling in an average of just seven days. The median sale price in South Portland is equally high, at $505,000 as of April 2024. The town is known and visited for the scenic Portland Harbor and the historic Greenbelt Walkway. It’s also a center of retail and industry in Maine. 

3. Portland

Portland, ME has emerged as one of the top luxury markets in the U.S. Homes here sell at a whopping median price of $712,750, making Portland home to countless high-end properties and luxury living. 

Situated in a coastal pocket in the Northeast, Portland’s proximity and easy transit to Boston makes it highly influenced by other areas of the New England economy. Its diverse industries make it a trade and culture hub in the Northeast as well. But homes in Portland sell in an average of nine days, so interested investors will need to act quickly to carve out space in this highly competitive market. 

Economic Factors Impacting the Maine Housing Market 

A holistic view of Maine’s housing market requires a basic understanding of the main economic drivers affecting the market, including the challenges posed by mortgage interest rates for would-be homeowners. Additionally, fluctuations in property prices significantly impact market dynamics, influencing both buyer behavior and overall housing demand. Let’s look at a few critical drivers below: 

Mortgage Rates 

High mortgage rates are a continuing challenge for would-be homeowners in the U.S. Maine’s average rates for 30-year mortgages in June of 2024 are 6.94%, slightly lower than the current national average. Higher interest rates deter borrowing and discourage those who already own homes from putting their homes on the market. Many homeowners report feeling “locked in” to their current homes, as it is unlikely they will secure a mortgage rate as low as their current one on their next property. Prospective buyers in Maine should monitor mortgage rates in the coming months for a better understanding of how they impact the housing market. 

Inflation and Cost of Living 

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Maine. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income. 

Population Changes and Demographics 

Population, migration, employment, and other demographic factors can each influence the housing market. Increased migration can lead to inflated prices and rents as demand increases, while slowing population growth can lead to more affordability for residents. 

Maine Housing Market Forecast 

Real estate experts in Maine predict that home prices and values will continue to rise throughout the remainder of the year. Lack of inventory remains a critical factor as in many states. The longer it takes for new homes to be constructed, the more pressure will build as more and more buyers await affordable opportunities to secure their first homes. Real estate agents have been crucial in facilitating quick sales and handling the high demand in the Maine housing market. While hopeful buyers await rate cuts, sellers and real estate investors will likely continue to benefit from increased appreciation and the state’s healthy economy. 

Likelihood of Maine Housing Market Crash  

A Maine housing market crash is unlikely. Most experts and analysts believe that Main’s strong industries, booming luxury housing market, and vibrant attractions will keep both the state’s economy and housing market stable this year.  

Forecast for The U.S. Housing Market 

Now that we’ve looked at Maine’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States’s current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9. 

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.  

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get. 

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth. 

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.  

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.  

Maine Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.  

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.  

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year. 

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.  

This short summary leads directly into Maine’s current rental market, with current trends from Zillow:

Maine Rental Market Key Trends 

• Median rent: $2,000 

• Month-over-month rent change: $0

• Year-over-year rent change: $0

• Available rentals: 1098

Conclusion 

The Maine housing market in 2024 is marked by strong demand and development, making it crucial for potential buyers and sellers to stay informed about market trends. Whether you’re looking to purchase a home soon or sell your property in Maine, the macro- and micro- economic trends outlined above will affect your decision-making. Market dynamics like changes in home prices, inventory levels, and interest rates will continue to be critical for stakeholders in Maine real estate.