Presenting Our March 2023 Real Estate Spotlight: “Maine Real Estate’s Three-Legged Stool”
Read the newest volume of Real Estate Spotlight to see Chris Lynch’s current market analysis using Maine real estate’s “Three-Legged Stool” approach and browse the latest extraordinary homes for sale in Maine.
Maine Real Estate’s “Three-Legged Stool”
The most consuming question from home buyers in today’s market focuses on inventory, or more specifically, the number of active residential homes for sale in Maine. As I write this, there are 1,914 active single family homes and condos currently available for sale. Is 1,914 homes for sale in Maine a large number? The answer: Absolutely not!
To put this into perspective, the chart below shows that there were over 14,000 homes for sale in 2016. Even then, we had a backdrop of very strong buyer demand. And while it is impossible to statistically measure how many active home buyers are currently looking to purchase in Maine, it is fair to say that it is a significant multiple of the number of available homes.
It is also important to recognize that while a home may be active and ready to sell, nearly 80% of them have been available to the public for more than 30 days, while 56% of these have spent 90 or more days on the market. Backing into what may be considered “fresh” inventory (less than 30 days on the market), there are 406 fresh homes for sale at the moment, spanning all price points and all counties, cities, towns, and townships in the whole state.
It is widely assumed that these homes still for sale must largely be in the higher price ranges or in towns and counties that are more difficult to access by car. Although that may have been the case in the past, it is certainly not the case in early 2023, with 73% of available homes for sale listed below $500,000 and active listings being largely proportionate to the size of each of their respective regional markets. Given the extraordinary demand for the relatively few homes, one is probably asking why there is any inventory at all.
With all properties coming up for sale, we counsel that there is a “Three-Legged Stool” approach to success when presenting any home.
The first leg is the location of the property. We have all heard “Location, Location, Location” when it comes to value, and that continues to be a strong driving factor. The better the location, the larger the audience of buyers, and the better the potential for a higher price. The second leg is the home itself with respect to all of the infrastructure’s characteristics, layout, amenities, and condition. Lastly, and arguably the most important leg of the stool, is proper pricing reflecting market conditions, the location, and the home itself.
Simply put, a good home in a good location at a good price should sell very quickly in this market. If a home is not selling, there are typically one or more legs of the stool that need to be addressed. The location is obviously the most difficult to address because it is fixed. The solution to location is time, meaning that some locations simply take longer to attract the appropriate buyer while others do not. The home and its characteristics can be modified to meet the needs and expectations of the buyers, such as with a new roof, heating system, or appliances, to reflect the desired financial outcome. However, the list price is the variable for all homes that is most important in attracting the best buyer to begin negotiations. When it comes to a successful home sale, the list price is frequently the stumbling block. It is my opinion that all homes can and should be sold at a fair market price, and while “fair” is a relative term, that is how it has always been done. A good home should sell at a good price and a great home at a great price.
The good news is that as the spring market heats up, there will be more new listings for sale. Although we do not anticipate a large spike in available inventory, we are cautiously optimistic that there will be more properties for buyers to consider. Of course, the best ones, with three solid legs, will sell quickly. Maine has yet to experience the inventory and pricing weakness that has come to other parts of the country, and we think it is unlikely for as far as the eye can see given the aforementioned supply and demand dynamics.
What our buyer friends and clients really need to focus on at the moment is the importance of having an agent that is in the information flow with the types of homes that they seek. There continue to be abundant pre-market opportunities available to our clients throughout the state. There was a time when a buyer could come to Maine and have a fighting chance of finding the right home that met all of their needs, but that is not as likely in this very tight inventory environment. My analysis shows that there are only 406 fresh active listings in our great state for buyers at all price points seeking single-family homes or condos.
In closing, I ask you to consider another “Three-Legged Stool” to apply to the selection of your buyer’s agent, characterized as a strong agent with a strong company and the experience and tenacity to help you achieve your Maine real estate goals. Should you be looking for one, please do not hesitate to contact me directly for assistance in finding the perfect fit for you.
See you soon,
Chris Lynch
