Out-of-state buyers boost home sales

ELLSWORTH — “Absolutely nuts.” That’s how Dan Sargent, president of Sargent Real Estate, describes property sales this summer season.

“High building costs, low interest rates, low inventory and the COVID situation,” said Sargent, have made 2020, which started out slow, looking to be “one of our best years ever.”

Roughly 40 percent of buyers are from out of state, said Sargent, around double what the company sees in a normal year. Properties are selling within days, some for over the asking price, and a number selling to buyers who’ve never set foot in the building (and, in at least one case, had never been to the area, said Sargent).

State rules allow prospective buyers to see a limited number of homes as long as they wear masks and gloves and take other precautions, but many are still choosing to see properties via the teleconferencing app Zoom or in photos.

“A lot of it is second homes, waterfront homes, whether it be lakefront or oceanfront,” said Sargent. “A lot of times they will not see the property until after they’ve closed.”

Statewide, according to a report released on Friday, Maine Listings reported sales of single-family homes up 12.43 percent in July 2020 compared to the same month last year. Values rose 10.83 percent to a median sales price (MSP) of $254,900, which means half of the homes sold for less and half for more.

Washington County saw the biggest jump of all counties in the number of homes sold when comparing the period of May 1 through July 31, 2019, to the same timeframe this year. Sales were up 23 percent, with 132 single-family homes sold in Washington County, compared to 107 last year. The MSP, however, dropped from $130,000 last year to $127,100 this year.

“I’ve never seen it so busy,” said Al Rummel, owner of Due East Real Estate, which has offices in Lubec, Eastport and Calais.

“I used to live in Key West and we had the boom down there, but this is even more.”

Rummel estimates that just under half of the company’s buyers are from out of state.

“It’s a lot of people from away, it’s a lot of cash,” he said, recalling a buyer from California who recently paid $350,000 in cash for a property, sight unseen. “That’s pretty wild.”

The stellar season reported by local Realtors isn’t yet reflected in Hancock County’s figures, however. According to the report, 213 single-family homes were sold in Hancock County from May through July, compared to 245 last year, with the MSP holding steady at $235,000, the only county in the state not to see a change in the sales price.

“For-sale inventory levels are very tight, nearly 40 percent below a year ago,” said Tom Cole, 2020 President of the Maine Association of Realtors, in a press release. “Prospective buyers who sat out for the past few months are feeling more confident financially and comfortable with the safety protocols. They have become active again. With July’s sales rebound, the number of single-family homes sold from January through July 2020 is only 1.1 percent below 2019, Maine’s best year ever.”

Statewide data indicate a 5.5 percent increase in sales to buyers from out-of-state comparing July 2019 to this July.

“If it’s a good property, it’s not lasting; it’s lasting a day or two and then it’s under contract,” said Sargent.

According to the National Association of Realtors, sales nationwide were up 9.8 percent in the past year. The national MSP rose 8.5 percent to $307,800. Regionally, single-family home sales in the Northeast eased 5.9 percent while the regional MSP increased 4.0 percent to $317,800 comparing July 2020 to July 2019.

Sargent said much of the activity is also local residents who “look into building and they realize it’s going to cost a lot of money.”

It’s “kind of the perfect storm,” said Sargent, with very few houses on the market, interest rates hovering around 3 percent or below (which gives buyers more purchasing power) and “extremely high” building costs.

“I think it’s going to remain strong, maybe through the first part of November,” said Sargent. “And we’ll still see out-of-state traffic.”

Erica Brooks of the Swan Agency in Bar Harbor said the agency has long catered to a mix of local and out-of-state buyers, but “this year we are seeing an increase of out-of-town buyers that are looking for a reprieve from their home base since working from home or helping their kids with remote learning. A change of scenery is top on their list.”

“We have seen a dramatic uptick in sales and new, pending-to-sell properties in the last 4-6 weeks,” Brooks said. “Generally, July and August are always busy months for our local market but with the pent-up demand from the lockdown earlier in the spring, this has created a spike in sales and properties going under contract quickly.”

Rummel said he’s not complaining about the boom, but wondered what will happen to the properties in a year or two.

“I think what’s going to happen is everyone’s going to buy and then a year from now, two years from now they’re going to put them back on the market,” he said. “They come up here and it’s beautiful, but one guy came in and said, ‘There’s just too much of nothing.’”

Rummel, who spent decades in Florida and Manhattan, said buyers often aren’t as ready as they think they might be to commit to life in rural Maine.

“You really have to be ready to be here,” said Rummel. “Then you have the folks that come here and they want to change things to the way it is back home and that doesn’t work. It’s a different lifestyle.”

Kate Cough

Kate Cough

Digital Media Strategist
Kate is the paper's Digital Media Strategist, responsible for all things social, and the occasional story too! She's a former reporter for the paper and can be reached at: [email protected]
Kate Cough

Latest posts by Kate Cough (see all)

Leave a Reply

Your email address will not be published.