Buying a home in Maine with rising interest rates.

How does the increase in interest rates charged by Maine mortgage lenders affect the buying a home in Maine today?

This blog post is about the Maine real estate market.

maine real estate market
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What is hunt and pecked here is not for some other area of the country. It is not a blog post to try to generalize for the nation and is specific to rural Maine. Real estate news is part of the blog posting here on Me In Maine blog. Time to update that corner of the blogging platform. Underneath everything is the real estate right?

Maine has a handful of cities and over 400 small communities.

In small town Maine real estate housing markets, here is what is happening. Pre-COVID, the Maine real estate market was healthy and robust. During the COVID pandemic, the market in Maine for real estate only got hotter, faster, more intense.

Desperation to get to Maine, to high tail it out of the crowded city living became the mantra.

“Move to Maine”. “Gotta move to Maine NOW”. The urban real estate dwellers could cash in on high prices and shrinking housing inventory where they lived. And cross the big green bridge on the southern tip of Maine to relocate to Vacationland.

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Buying a new home in Maine, maybe build on a vacant piece of land and not even need a local bank mortgage. Heading in the direction of Maine means for many, “free and clear”. Look Mom, no mortgage.

Interest rates if you needed a home bank mortgage were at historic lows in Maine, everywhere.

The cost of housing in Maine was still so so far below the market the out of state buyer put in their rear view mirror.

So with interest rates increasing a few notches, what has that done today to the Maine real estate housing market? It did not slow down house sales, it increased the panic to get a Maine home before rates climb higher.

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The increase in interest rates for bank financing home buyers only caused greater pressure and stress to get a house under contract. To entice a seller to enter into a signed purchase and sale agreement.

And remember, Maine real estate values as you get away from the coastal and population centers goes down down down.

To match the local pay scale and distance away from major markets that you enjoy the deeper up into Maine you travel. We don’t like debt, avoid mortgages that drag on forever. Debt is like a cancer to most true Mainers.

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Equity loans are through the roof in my smaller Northern Maine real estate market.

Talk to any of the local six lenders and they all say the same thing. Struggling to get home mortgage loans in the pipeline processed and issued a clear to close memo for the local attorneys. Scrambling at the same time to write home equity loans to get their home owner’s the best interest rate available today.

Add to it the pressure for a seller who has way way too big a house and who worries about the cost to heat it this winter. That seller wants to cash in on the brisk real estate market in Maine and get this oversized property sold.

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When a real estate home buyer has less to select from, the pressure to buy whatever is available increases.

There is competition from other home buyers, not from too many house listings to pick from today. Multiple offers, buyers upping the ante to make their purchase and sale contracts the most attractive possible is the only course of action.

How do you make sure your offer to buy a home in Maine has the best chance possible of being accepted by the owner?

Think like a seller. What would you do if you were the house owner and had lots of written offers to buy your home spread out before you? This offer has a dollar deposit, that one wants to negotiate the price by half. When not much for sale in the housing supply and demand, forget trying to wheel and deal and get a lower price.

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What’s that I heard in a loud whisper from the back of the Maine blogging room?

You said you have never paid list price for anything in your life and are not about to today? Bow out, take a break, wait for a different real estate market that is tilted to favor a buyer not the seller.

As Linda Gifford, our legal beagle who used to head up our Maine Association of REALTORS hot line told us at an annual meeting a couple years ago.

“Put on your big girl and big boy pants”. It was advice for her own adult children who wanted to buy a home in a hot market with little supply and too big a demand.

maine realtors convention
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Linda’s sage advice for buying a home in a hot real estate market was don’t try to nickel and dime.

Don’t have a slew of contingencies that no home seller in their right mind would accept today. Wasting time for you, your seller, their agents and no listing home sale the result. That’s what happens in today’s real estate market where you have to go above and beyond.

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Bigger deposits, heck put the whole purchase price in escrow if you are sure you are going to buy a home in Maine.

That’s send the strongest signal possible to help a home seller know who to pick from many offers. A purchase price higher than list and no delays, zip for contingencies other than clear title. Those cash purchases look pretty attractive to a Maine home seller. Make his or her eenie meenie miney moe task quick and easy.

If you don’t have the stomach for that kind of multiple offer bidding war mentality to buy a home in Maine, bow out and wait.

I remember interest rates to buy a Maine home when they were 16.5% adjustable. Commercial rates even higher than that.

maine realtor conventions
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Heck, my first home was an attractive at the time 12.25% fixed Maine state housing mortgage rate.

She was a cute as a button 3 bedroom, 1.5 bath cape with fireplace, hardwood floors and garage. When interest rates are high, the inventory begins to pile up as the real estate market cools off and slows down.

When there are more buyers, as interest rates climb, the shift to a buyer’s market with more selection and less chance of a bidding war happens.

Today in Maine, the housing market is still tight. More than ever if the out of state buyer can sell their home and cash in the chips, they are heading to Maine. Especially if the new home they buy in Maine is served by high speed Internet connectivity. Working remotely, telecommuting to their online job from Maine is the dream of many employed home buyers.

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They don’t need a job in Maine, they have one they pack up and bring along if the wireless, copper or fiber Internet signal is long and strong. Or some retired, going to start a business in Maine to create a job or two.

The retired Maine home buyer from out of state is ready for less crime, no traffic and the friendlier help each other out neighborly feeling.

That’s what living in rural Maine real estate markets with less people and cheaper housing prices is like. The emphasis is off money, needing lots of it to fuel the day to day. More hands on, DIY and prepared for a recession around the next corner kinda thinking. Common sense, simple approach to living and making the most of any situation life throws at you.

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When the out of state real estate market slows because rising interest rates start to erode the buying power of the pool of purchasers, the Maine housing market will cool off. Inventory supplies will increase, building material costs will come down. The days on market (DOM) number will increase and new home listings will not go under contract within hours after going on the market.

But as long as the supply of homes for sale in Maine is about 1.3 months worth if nothing new was listed, sellers are looking forward to a favorable market.

And buyers are still under the gun to find an affordable home to buy in rural Maine.

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Do the best you can with the market that is. Owning not renting is your best course of action. You can always remortgage or pay ahead on whatever mortgage rate you secure in a Maine home loan. And in time, the higher cost of lending if interest rates go up up up will only cause a better selection, lower house prices to reflect higher mortgage rates.

Too often the news you get about the real estate market is from a west coast new source or some area that does not look anything like the Maine property listing landscape. Thinking about buying or selling a home in Maine? Wondered how interest rates increasing affecting the local Maine real estate market? Hope this blog post on Maine real estate, the local markets around the state and how interest rates fan the flames is helpful.

I’m Maine REALTOR Andrew Mooers, ME Broker

207.532.6573 |  |  MOOERS REALTY 69 North ST Houlton ME 04730 USA