Featured image: East Bay, Islesboro, 4.2 acres with 390 feet of shorefront. Available. Joseph Sortwell. Listed for $4,850,000.
Spring arrives in Maine slowly in fits and starts. Looking over Camden Harbor today, the floats at the public landing are being installed, about half of the schooners have removed their winter covers, and Lyman Morse Wayfarer is launching yachts for eager owners.
Lyman Morse is completing a major construction project which will enhance the harbor and the village. This project was precipitated by a fire in June 2020 which severely damaged the buildings on the wharf. The reconstruction will include two restaurants: The Salt Wharf (raw bar and seafood with roof deck) and the Blue Barren Distillery (tasting room and pub food) along with several retail and office spaces.
As we enter the third year of the Covid era, the real estate market appears to be reaching new price plateaus and inventory at all levels remains very tight. We believe we are seeing a substantial reset of value based on appreciation since the end of 2019. While the Midcoast market under $1,000,000 is still settling out, demand is strong and we are still seeing some new price points in the villages. However, above $2,000,000 we are seeing more instances of a misalignment between buyers’ price ranges and sellers’ expectations. All our rural New England markets are experiencing a similar dynamic as it appears that the run-up in value at the upper end of the market is reaching a peak.
The following charts show the market activity to date:
The year-to-date numbers are for the first third of the year. It appears we are on track to meet, or come close to, last year’s record-breaking numbers. However, this goal could become problematic as currently there are only 30 listings available over $1,000,000 in the Midcoast, and just under 200 listings available over $1,000,000 in the entire state. These numbers are approximately 50% of the inventory available in recent years. It looks to be an interesting year!
Pricing remains a huge challenge for buyers, sellers, and brokers. Given that the initial listing price is perceived as the first step in a negotiation, it’s a decision that needs to be analyzed with care. This requires an appreciation of how a particular property “fits” with the demand in each market; does it have the attributes that today’s buyers are looking for: location, design, privacy, condition etc.
We’re seeing two distinct strategies being utilized when setting offering prices. 1)The traditional method of looking at recent sales and competitive listings and then setting an asking price at the top of this perceived range. And 2) In rapidly moving markets, with a large imbalance between a few available properties and many anxious buyers, we are seeing brokers setting prices to attract as much interest and offers as possible with the goal of driving the final contract price well over the asking price.
We are seeing this second method as an effective strategy in primary home markets and the lower end of the second home markets. In the upper end, this can be a risky strategy as there are generally fewer motivated buyers to produce multiple offers. The key driver in either scenario is the perception of “fear of loss” in the potential buyers’ minds.
Overall, we are optimistic about the ongoing strength and stability of the Midcoast residential market given the following:
- Remote / hybrid work is here to stay
- Portland and the southern Maine primary home market remains very strong
- Demographics point to an ongoing housing shortage nationally
- New England is an attractive destination for those relocating due to climate concerns
- Construction costs are projected to remain at a high level
- Inventory remains very constrained
We have some exciting new properties coming to the market and are in conversation with a number of owners who are considering selling although they are not ready to place their property on the open market.
As always, we look forward to hearing from you if we can be of assistance.
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