Barbara and Frank Galardo decided to sell their Portland home – a 2003 colonial in a “fantastic” neighborhood – in April.
The market was hot and it was the perfect time to sell. They just had a few projects to complete and then they would list the house.
The house hit the market on June 1, Galardo said, “but by then the cooling process due to rising interest rates and gasoline prices had already begun.”
Their home sold, and sold quickly, but it wasn’t the dozen or so offers above asking that characterized the Maine real estate market over the past two years.
Real estate professionals say this is becoming the norm.
June home sales figures released Wednesday by the Maine Association of Realtors show a familiar pattern of falling sales and rising prices. Real estate agents say rising interest rates are giving potential buyers pause.
Sales in Maine fell 9.8% last month from a year earlier, while the median selling price rose 16.4%. June marked a full year of consecutive year-over-year monthly sales declines.
The statewide median price of homes sold last month was $360,825, meaning half the homes sold for more than that and the other half for less.
Maine real estate agents said they were experiencing a downturn in their market areas, said Madeleine Hill, a broker with Roxanne York Real Estate in Harpswell and president of the state’s real estate association.
“We’re starting to see homes stay on the market for weeks instead of days, price adjustments and fewer buyers competing for new listings for sale, as rising mortgage interest rates have cooled off some segments. buyer demand,” she said.
While the market is showing signs of normalizing, demand is still not there, said Holly Mitchell, agent at Keller Williams.
The pace is changing, but Mitchell still regularly sees homes selling within 72 hours and with multiple offers.
According to Maine Listings, the average Maine single-family home is on the market for a week. In Cumberland County, it’s only five days.
In June 2019, before the pandemic, the national average was 14 days. If a house has been on the market for two weeks now, someone assumes it has a defect, Mitchell said.
Galardo brought a potential buyer to her house before she was even listed.
His agent, Laura Sosnowski, co-owner of Maine Home Connection, sent a “coming soon” notice that the home would be listed in three days. Four hours later, two people showed up at the door, interested in buying that afternoon.
In the end, Galardo declined and decided to go to the scheduled open house.
“Our big fish may have run away,” she said, but the house still sold in five days.
He went to the asking price, with a single bid, which Galardo attributes to rising interest rates and gas prices.
RISE IN INTEREST RATES IS A DISSUASIIVE
According to Freddie Mac, the average rate included in buyer contracts for a conventional 30-year fixed-rate mortgage was 5.52% in June, down from 5.23% in May. Rates peaked at 5.81% on June 23 but have since declined, and as of July 14 the average mortgage rate for a 30-year fixed rate mortgage was 5.51%.
The average rate in 2021 was 2.96%, the organization said.
These rising interest rates are especially difficult for first-time home buyers, said Michael Sosnowski, co-owner of Maine Home Connection.
“When rates go up, people can afford less housing,” he said. “If you’re buying your third house and you have a ton of equity it doesn’t matter as much, but when you’re already borrowing from Granny to pay a down payment” it can completely exclude someone from the market. .
Michael Meserve breathes a sigh of relief.
After seven months of searching and four rejected offers, he and his wife signed a contract for a house in Falmouth last week.
They had wanted to move into a bigger house, their forever home, for some time, Meserve said, and when they started looking the interest rates were really low.
They focused their search in the Cumberland, Falmouth and Scarborough areas, wanting to be in a good school district for their growing family, but homes were selling quickly, for cash, well above the asking price.
“We were also making big offers, by our standards, and they were just getting crushed,” he said.
But as their search dragged on, the market began to change.
Meserve attributes the rise in interest rates to their ability to land the new home.
It had been on the market for 12 days and their offer, below the asking price, was the only one.
He declined to disclose the sale price while the house is still under contract.
Now Meserve fears the high interest rates that helped him buy his new home in Falmouth will work against him when they list their home in South Portland.
“We’re going to rush to get our house on the market as quickly as possible,” he said.
They’ve been keeping tabs on comparable home sales prices in the area, and he hopes that window of opportunity hasn’t closed.
A NATIONAL ISSUE
Nationally, low housing stock and high interest rates continue to weigh on potential buyers, said Lawrence Yun, chief economist of the National Association of Realtors.
“Mortgage rates and house prices have risen too steeply in a short time,” he said.
Nationally, single-family home sales in June were down 5.4% from May and 14.2% from June 2021.
While sales have fallen over the past five months, prices are still on the rise.
The median sale price for single-family homes in the United States in June was $416,000, up 13.4% from a year ago. This is the second month in a row that the median price of existing homes has exceeded $400,000 and it is the highest median price on record.
In the North East, sales remained essentially unchanged from the previous month, but were 11.8% lower than in June last year. The median home price was $453,300, up 10.1% from a year ago.
Yun said if inflation continues to rise, mortgage rates will follow.
Rates will only stabilize when signs of peak inflation appear, he said.
There are positive signs that some of the national inventory crisis may be easing, and while that is helping to lower prices in some cases, it also means homes are selling faster.
According to the national association, the total inventory of available homes increased by 9.6% compared to May and 2.4% compared to the previous year.
At the same time, the properties have remained on the market for the shortest time since the organization began tracking them in 2011: an average of 14 days last month, compared to 16 in May and 17 in June 2021. Nearly 90% of homes sold in June had been on the market for less than a month.
“Finally, there are more houses on the market,” Yun said. “Interestingly, the record pace of days on the market implies a blurrier picture for house prices. Homes that are priced right sell very quickly, but homes that are overpriced deter potential buyers. »
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