On a national basis there is little denying that home sales and market values declined in 2007. The national picture, however, is more of a mosaic of many neighborhoods and communities, each with its own unique characteristics. The adage that real estate is local has never been more true as it is in Maine.
Home sales in southern Maine did see a decline in 2007. Unit sales in Cumberland and York counties declined 7.6% and 9.3% respectively. Yet within that aggregate some cities and town remained stable or even recorded modest growth.
In 2007 Maine real estate defied national trends for several important reasons. First and foremost homes prices did not rise dramatically during the boom period of 2005 and as a result have had less to drop. Secondly, Maine has experienced comparatively little overbuilding and speculative buying, thus the glut of unsold homes has been minimized. Thirdly, the area has not been as hard hit by foreclosures due to poor lending practices or dramatic unemployment rates.
According to government data, home prices peaked nationally in the second quarter of 2005. The rate of appreciation began slowly dropping until it turned negative in the summer of 2007 for the first time in 13 years. Home prices in southern Maine, as the graph below demonstrates, have remained relatively stable in most local communities.