The local Greater Portland real estate market is experiencing improvement as we enter March 2013. Demand is strong and not surprisingly inventory is low – especially homes priced to reflect current market conditions.
This lack of inventory may turn out to be an on-going situation as we approach the spring market in Maine – as well as nationally. At the end of February there were 1,518 homes available for sale – the lowest level since April 2005! That is surprising!
Yet, there is a lot of variability by town and in price ranges. For example, the inventory of single family homes in Portland is down 9.5% in February vs the previous month. Falmouth inventory is down only 1.3%. The inventory of homes priced at $500,000 and above is unchanged from last month – albeit down considerably from 2012.
According to a report in the Wall Street Journal, some reasons for the decline in inventory include:
- Homeowners who purchased during the height of the market have little or no equity and cannot sell without taking a loss, and therefore unwilling to put their homes on the market.
- More investors are in the market.
- Banks are slower at foreclosing. There are more efforts being made to encourage loan modifications instead.
- New construction is still low.
Yet with the reduction in inventory, home prices are not increasing in any significant way, as the results in 2012 indicated. Across the state of Maine the median selling price only increased 3% and this was in comparison to 2011, which actually declined from the year before.
Our prediction, however, is still a modest increase in pricing by year end, especially in the middle market.
In these market conditions, if you are selling and don’t have an offer within a few weeks, it is clear that you are priced too high.