Multifamily boom, huge demand mark Portland’s 2020 residential real estate market

Multifamily boom, huge demand mark Portland’s 2020 residential real estate market

While the story across Maine is record single-family home sales for 2020, the one in Portland is different, as buyers scooped up multifamily homes at record rates.

The city had a tougher real estate spring than most of the state with an extended nonessential designation for the industry. But that didn’t stop things from heating up once real estate got back on track in Portland during late spring and early summer. 

Time on the market shrank by more than half and prices for residential property skyrocketed, fueled by out-of-state buyers and bidding wars, in an unprecedented year for real estate that shows no sign of slowing down, said Tom Landry, owner of Benchmark Real Estate.

Single-family home sales in the city were down for the year, unlike the trend for the rest of the state, which set a record in 2020. That was partly because the city restricted real estate as nonessential long after the state had changed course on the designation. Even after real estate sales could begin again, sellers hesitated to list.

The city’s high home prices and lack of rural space, which wasn’t what pandemic-fleeing buyers were looking for, also kept single-family sales lower, Landry speculated.

But that didn’t stop what’s become a radical change in the multifamily market. Long the haven of out-of-state landlord investors, in 2020 the city’s smaller multi-family were bought by people both from in state and out of state who either intended to live in part of the home full- or part-time, or convert it into a multifamily, Landry said.

Despite the spring shutdown, Portland’s market ended the year with just 8{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} fewer residential sales overall than the year before, and a 2{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} increase in sales by volume. The the median sales price increased 12{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} and days on market decreased by 42{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb}. 

Single-family and condo sales picked up mid-year, fueled by a number of things, Landry said. The backlog of sellers who intended to sell during the spring shutdown finally listed and there was massive out-of-state buyer interest. Interest rates remained at record lows throughout the year.

And, to cap it off, low inventory for much of the year paired with high buyer demand created bidding wars, driving up sales prices. 

“One thing you can’t empirically show is demand,” Landry said. He said brokers have multiple times more buyers than available property to show them, and that’s made buyers think creatively.

Usually, too, the market slows down for winter, but the Portland residential market had a 44.44{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} increase in sales last December over December 2019 — 117 transactions compared to 81 for single-family homes, multifamily, condos and land. Property spent a median of eight days on the market in December compared to 2019’s 81.

“December and the fourth quarter numbers are just bonkers,” Landry said. “And I don’t see a slowdown.”

Broken down, the Portland statistics, which Benchmark compiled using Maine Listing data, are:

Overall residential sales for 2020

  • Median sales price $381,500 in 2020, compared to $339,900, a 12.24{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} increase;
  • Number of sales, 1,040 compared to 1,134, a 8.29{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} decrease;
  • Median days on the market, 7, compared to 12, a 41.67{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} decrease;
  • Total volume, $468,581,374 compared to $459,671,807, a 1.94{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} increase.

Portland multi-family sales in 2020

  • Median sales price $579,500, up from $511,500 in 2019, a 13.29{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} increase;
  • 132 sales, compared to 126 in 2019, a 4.76{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} increase;
  • Median days on the market 8, compared to 11 in 2019, a 27.27{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} decrease;
  • Total volume was $91,479,500, up from $69,566,630, a 31.5{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} increase.

Portland condo sales in 2020

  • Median sales price $365,000, compared to $320,000 in 2019, a 14.06{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} increase;
  • 333 sales compared to 389, a 14.4{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} decrease;
  • Median days on the market 11, compared to 22, a 50{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} decrease;
  • Total volume $141,025,240 compared to $150,939,789, a -6.57{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb}

Single family home sales in 2020

  • Median sales price, $362,500, compared to $329,000 in 2019, a 10.18{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} increase;
  • Number of sales, 548, compared to 595 in 2019, a 7.9{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} decrease;
  • Median days on the market, 6, compared to 9, a 33.33{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} decrease;
  • Total volume $232,223,734, compared to $236,067,270, a 1.63{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} decrease.

“Portland’s 2020 real estate market was unprecedented,” he said. “The year started as expected with the usual winter slowdown, then completely stopped as the world went into lockdown. Our usual spring rebound was delayed several months and then recovered to set new sales records every month.”

Landry expects the 2021 spring market to continue to set records with both a boost in inventory and continued growth in demand from out-of-state buyers. 
“For the past decade, Portland has appeared on so many ‘top lists’ for our food, our landscape, our family orientation, our culture, and our unique way of life. Now that more and more people can work from anywhere, I believe more of them will choose to live in Portland, Maine.”

He said that this trend, along with the worst surge of COVID-19 the country has seen yet, could accelerate the relocation of those from larger metropolitan areas to Maine’s largest city in 2021. 

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