Two things we can count on this time of year: Warmer days ahead and Elise Loschiavo's clear and concise condo report. The report is packed with insightful and in-depth information that includes Portland condo inventory, the pace of the marketplace, what’s selling, new development, and forecasts where condo sales are headed in the coming year. Below is brief overview. Click HERE to view the full report.
2022 Portland Condo Sales Market Review
- The number of condos sold is down considerably from the year before with fewer new condo construction projects completed during 2022.
- Citywide, existing condos saw a nearly 15% price increase per square foot, helped by low inventory and historically low interest rates through the first half of the year.
- Downtown condos only saw a modest 3% increase in the sales price per square foot, as new development inventory appears to have sufficiently supplied buyer demand over the past 12 months.
- Off peninsula, the sale price per square foot increased 7% over 2021, as many first-time homebuyers raced to lock down properties as interest rates began to rise.
- Interest in Portland living has not slowed, as the city continues to receive accolades for our recreational, cultural and culinary offerings. We still have strong buyer demand as inventory remains ultra-low.
2022 Condo Development Review
- The new development landscape in 2022 saw only a small handful of new condo projects come to completion. Two larger projects did break ground. Both projects were in the second phase of existing developments (Stevens Square and Hobson's Landing).
- We have a surplus of new construction condo units available in completed buildings in Portland. In the past 5 years, most developments have sold out prior to completion. Some buyers have terminated reservations and contracts, finding the premium pricing for new construction (on average over 20% more than an existing condo), coupled with a substantially higher interest rate too tight for their budgets.
- Developers continue to redirect their resources outside of Portland and sales have been brisk for townhouses in Scarborough at The Downs and Dunstan Crossing.
2023 Sales and Development Forecast
- Condo values may plateau or even continue to modestly increase due to low inventory. A recent economic report from TD Bank to the Maine Real Estate and Development Association (MEREDA) indicated that real estate prices appeared to have peaked in Maine in mid-2022. Consumer spending has been resilient and personal wealth is still significantly higher than it was pre-pandemic, so we expect demand for Portland condos to stay steady.
- We will see few new condo projects announced this year in the city of Portland, which will help maintain top of the market pricing for existing condo units. Buyers who would normally be seeking new construction units will be competing with buyers with lower budgets looking for condos in vintage buildings.
- Bidding wars will continue for the most attractive and well-priced properties. Sellers will avoid moving, which will continue to suppress inventory. A majority of homeowners have sub-4% mortgage rates and are not willing to give up that rate unless absolutely necessary due to job relocation, divorce, or other mitigating factors.
- More investors will seek to purchase condos as rental units, diverting funds that may have originally been invested in this fairly stagnant stock market.
- Distressed or otherwise unusual properties may spend significant time on the market instead of being snapped up in the first week of listing. Ongoing difficulties procuring contractors and supplies, coupled with hefty mortgage payments cutting into available renovation funds, may mean that buyers are no longer willing to pay a premium for condos that are not move-in ready.
- Most believe (or hope) the Fed will begin lowering rates toward the end of the year, which will fuel new buyer demand especially from first-time homebuyers.
