Are Maine Real Estate Prices sliding?

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.