As real estate activity hovers near 2006 levels, industry experts in Maine say there’s not a bubble… yet.
Real estate activity in Maine dipped in the first three months of the year but remains generally higher than any point since the deep recession that hit almost a decade ago.
The index the Maine Real Estate and Developers Association uses to track the state’s real estate activity dipped at the start of 2017, but hit the highest points since the recession during 2016.
A variety of economic indicators creates those residential, commercial and construction measures, including vacancy rates, prices and industry employment. Those three measures make up the group’s overall index.
But the association doesn’t think prices are surging out of control as before, when lenders freely originated mortgages to qualified and unqualified borrowers alike, which contributed to real estate prices soaring in many markets.
While indicators of real estate activity trend upward, industry observers say they expect continued growth in Maine, driven in part by low interest rates and high rents they expect will drive some to consider buying property.
Paul Peck, president of the association, said that marijuana legalization is also boosting demand for warehouse space, a market that has otherwise been stagnant.
“Legalizing marijuana has changed the landscape with warehousing,” Peck said.
They also see real estate activity increasing in Maine as people in other larger cities look for more affordable options.
They project adults will move from places like Brooklyn and Baltimore to Portland and its suburbs but that new construction will be limited by a shortage of skilled construction workers.
Peck said new construction remains a challenge, partly because the tight labor market has pushed up construction costs.
A new tariff on softwood lumber from Canada also stands to raise construction costs.
And there remains unfilled demand for quality buildings, the association said. Oldest-in-the-nation Maine also has some of the country’s oldest housing stock.