Recently Maine Biz featured an article on condos – which Maine Home Connection participated in. The overall position being put forward was that the condo market in Portland was poised for an increase – after several years of stagnant sales volume and declining prices.
Long Road to Recovery
At the height of the housing bubble in 2005, Portland condo sales peaked at 368, with a median selling price of $232,558. During the next six years sales steadily declined, reaching their lowest level in 2011 at 189 and a median price of $215,000. In 2009 the price had dropped to $185,000.
Yes, sales volume did increase significantly in 2012, as 228 properties were sold – yet pricing continued to be pressured as the median price decreased to $199,600. At year-end, inventory was still relatively high and buyers had many choices.
Sense of Optimism
Changing demographics is influencing codons buyers in Maine and across the country. There is a growing sense of optimism that 2013 will see an overall improvement in condo sales, especially in urban areas. Some of the key points made include:
- The desire for downsizing, especially among the baby boomers, without sacrificing their quality of life.
- The interest of Gen X and Gen Y in more sophisticated urban living, which cities like Portland can provide.
- Historic low interest rates and the overall lower price point afforded by condos in general.
- The increasing appeal of condos as investment properties
What Happens Next
At this time, there are 84 condos currently on the market with a median list price of $219,000 – interestingly above the median point for all sales in 2012. The mix of properties is also revealing. 51% are priced below $225,000; 32% are priced between $225,000 and $400,000 and only one property is priced above $700,000.
Although this inventory level may appear high, many of the units have been on the market for a long time and buyers today are often frustrated by the lack of “quality” units available.
Which leads us to the next point: During 2013 developments under construction are expected to add almost an incremental 100 units to the market – virtually at prices above current selling prices. On top of that, the second phase of the Bay House is planned at 52 more units.
Given this expansion and expected higher listings prices, it really leads to questions about whether Portland can absorb this increased inventory in the short term – let alone the intermediate term. Or, will the overall quality and desirably of the properties available meet the needs of the more discerning buyers entering the market?
Additionally, is Portland truly a market for multi-level, multi-unit developments? Historically it has not been, but with changes in the demographics indicated above things might be changing.