Mainebiz

W W W. M A I N E B I Z . B I Z 31 F E B R UA R Y 7 , 2 0 2 2 C O M M E R C I A L D E V E L O P M E N T Demand and low rates still driving residential market B y J e s s i c a H a l l For southern Maine's residential real estate market, 2021 saw longstand- ing housing shortages fueled to new heights by COVID refugees from other states. "We already didn't have enough housing before the pandemic. ere's not enough rentals. ere's not enough homes," says Brit Vitalius, owner of the Vitalius Real Estate Group. Buyers saw bidding wars, closing dates set at sellers' preferences, sellers staying for free until they were ready to move, buyers putting down depos- its of 25% to 50%, and buyers bidding on homes they had never seen. Cash buyers had more leverage, but still faced fierce bidding wars. e influx of out-of-staters was real, representing 35% of buyers. Most of the transplants came from Massachusetts, New Hampshire, Florida and California. "Some are commuting back to Boston and New York. Some are keeping their jobs" as they relocate to Maine with out-of-state salaries, Vitalius says. Portland's rent control rules, which Vitalius says were the strictest in the country, kept rents stagnant in 2021. But towns such as Westbrook, Biddeford and Gorham saw rent increases of 25% and more in the last year. Among Portland's smaller multi family homes, with two to four units, prices increased and all the proper- ties were owner-occupied, rather than being just investments. For homes with more than five units, rent con- trol reduced their value because any improvements couldn't be spread over higher rental rates. Portland's small multifamily build- ings will continue to be attractive for owner-occupied buyers, but investors will look elsewhere, Vitalius says. "Everyone is looking outside" of Portland for investment proper- ties. "Other locations are getting all the attention," Vitalius says, cit- ing Lewiston-Auburn, Brunswick, Gorham and Windham as increas- ingly hot markets. Prices of single-family homes surged in 2021, with the statewide median sale price hitting $299,000 C O N T I N U E D O N F O L L OW I N G PA G E » 2020: $674,000 2021: $710,450 3-Units Median Price Portland Median Price 2-4 Units Highlight 2020: $460,000 2021: $596,500 2-Units Median Price 4-Units Median Price 2020: $646,450 2021: $751,000 $596,500 $710,450 $751,000 0 100000 200000 300000 400000 500000 600000 700000 800000 2-Units 3-Units 4-Units 2016 2017 2018 2019 2020 2021 +30% +16% +5% 2-unit price increase is related to the single family buyer valuation more than the multi-family Price Per SqFt: $161/ft 2 Portland Commercial (5+) Price Per Unit & SqFt Highlights 2020 2021 $98,000 $103,000 $124,000 $145,000 $166,000 $176,000 $- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 2016 2017 2018 2019 2020 2021 Price/Unit Price/Unit $97 $120 $133 $156 $161 $214 $- $50 $100 $150 $200 $250 2016 2017 2018 2019 2020 2021 Price/SqFt Price/SqFt +6% +33% Price Per Unit: $166,500 Price Per SqFt: $214/ft 2 Price Per Unit: $176,000 • Rent Control reduced the value of many multi-family properties by ellimating prior value-add opportunities • Cap Rate: 6-6.5% Average Price/Unit – $176,000 G R A P H I C / V I TA L I U S R E A L E S TAT E G RO U P G R A P H I C / V I TA L I U S R E A L E S TAT E G RO U P G R A P H I C / P O R T S I D E R E A L E S TAT E MULTIFAMILY MEDIAN PRICES 2–4 UNITS MAINE MEDIAN SINGLE FAMILY HOME PRICE SACO & BIDDEFORD PORTLAND F I L E P H O T O / T I M G R E E N WAY F I L E P H O T O / T I M G R E E N WAY Brit Vitalius, owner of Vitalius Real Estate Group in Portland, said more investors are actually living in the multifamily buildings they're buying F O C U S $139,000 $170,000 $299,000 Maine Median Single Family Home Price Over Time Dava Davin, principal at Portside Real Estate, says she expects demand from out-of-state buyers to level off this year.

• Cover