A Maine housing market report issued Tuesday showing a modest home sales increase and strong price growth for March is like looking in a rear-view mirror – it provides a picture of what was.

The immediate road ahead is much harder to discern right now, as buyers and sellers react to the impacts of the coronavirus on the economy and social behavior.

The median price of existing single-family homes in March rose by 8.6 percent from a year earlier to $227,950, according to Maine Listings. A total of 1,124 homes were sold in March, an increase of roughly one-third of a percent compared with March 2019.

 

“The March 2020 and first-quarter statistics show that Maine’s real estate industry has been robust prior to the coronavirus pandemic,” said Tom Cole, president of the Maine Association of Realtors and Managing Broker of Better Homes and Gardens Real Estate The Masiello Group in Brunswick.

The March sales figures are of heightened interest, because they offer a first, monthly glimpse of how job losses, stay-at-home orders and related fallout from the pandemic are affecting the residential real estate market during what’s normally its busiest period.

But it’s tricky to draw firm conclusions from the March data.

Most notably, much of the sales activity reflects homes that were put under contract earlier in the winter. Add to that the unprecedented speed of the economic and social shutdown. The month began with mostly normal market activity. It ended with Maine enacting stay-at-home orders, record unemployment filings and Realtors pivoting to virtual tours and online showings.

“Real estate is an essential business, and essential transactions are happening,” Cole said. “We anticipate that the second-quarter statistics will reflect this current pandemic pause.”

Cole added, however, that he expected the ongoing need for housing to help drive an economic recovery.

April figures won’t be released until the third week of May. But so far, based on Multiple Listing Service tallies through Monday, April home sales in Maine are down 22 percent compared with the same period last year. The median sales price – indicating that half of homes sold for more money and half sold for less – is up nearly 14 percent, however, to $238,000.

The number of sales is expected to keep dropping in April, some brokers said.

“Our inventory is going to be way down in April and contracts will be down,” said Ed Gardner of the Gardner Real Estate Group in Portland.

At the same time, some are expressing optimism that the market will rebound as restrictions ease.

“I think there will be some pent-up demand from people who really need to buy now,” Gardner said. “It won’t be our typical spring market, as we know it. The pent-up demand will resurface late, into the summer.”

Tom Landry, owner of Benchmark Real Estate in Portland, shares a similar view.

“I suspect summer and fall will be very, very busy,” Landry said. “When stay-in-place is significantly lifted, we suspect a record number of homeowners will list. This could lead to a listing glut and likely an oversupply and price declines in the fall.”

But at the moment, countervailing forces are pushing incentives for home sales in different directions.

On one side, near-record low interest rates are a draw for many potential buyers. The 30-year fixed rate had fallen last week to a national average of 3.31 percent.

But on the other side, lenders concerned with mounting job losses and the ability of buyers to pay their mortgages are tightening credit requirements, such as raising required credit scores. The Mortgage Bankers Association, which posts a Mortgage Credit Availability Index, said earlier this month that credit supply in March fell to its lowest level since June of 2015 for all types of loan.

Nationally, sales of existing homes were down 8.5 percent in March compared with February, according to the National Association of Realtors, although year-over-year sales edged up by 0.8 percent.

“Unfortunately, we knew home sales would wane in March due to the coronavirus outbreak,” said Lawrence Yun, the association’s chief economist. “More temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise.”

Housing inventories nationwide also experienced a steep drop of 10.2 percent over the previous March, as some sellers pulled back amid fears of job losses and letting people into their homes.

Maine’s housing market is in flux at a very dynamic time.

Last year was a record-breaker for residential real estate, with statewide sales up over 1 percent from 2018 and the median price up more than 4 percent, to $225,000.

With historically low interest rates and unemployment in January and February, a rising stock market and a mild winter, everything was in place for a robust 2020 spring home-selling season.

Today, real estate professionals are dealing with a new reality.

The Realtor trade group has issued guidelines asking agents to wear face and shoe coverings and gloves when entering a building. Purchases and sales are done electronically. And closings take place according to social distancing protocols.

Leo Bourgeault, a longtime broker with Coldwell Banker Realty in Saco, said he participated in a “drive-thru” closing recently. The title company had the buyer and seller come to their parking lot to sign the paperwork at different times.

Bourgeault also noted that some transactions include a COVID-19 addendum, in which the buyer and seller agree to postpone the sale for a certain number of days due to “unforeseen circumstances.”

He concurred with Cole’s outlook for a real estate recovery later in the year, although its strength will depend on the employment picture.

“I believe you’ll see the effect of COVID-19 throughout the second quarter as a lagging indicator and then (the market) coming back throughout the third and fourth quarters of 2020,” he said.

The Maine Association of Realtors also suggests agents and buyers narrow down the number of homes they plan to visit, through live streaming and other online tools. It recommends selecting one house for a walk-through.

“We’re not going to show you 10 houses,” Gardner said.

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