the highlights
- 2021 shattered all records.
- The seller’s market of 2020 continued and accelerated in 2021.
- Single-family homes saw the largest increase in sales price, especially those in less urban areas.
- Demand and prices for luxury, urban condos soared, setting all time price records.
- Portland’s rent control ordinance seemed to impact larger multi-unit buildings, while 2-4 unit buildings continued to sell well and for high prices.
the details
Portland’s real estate market was bleak in the winter and early spring of 2020. But as the first wave of the pandemic eased, it went from 0 to 60 in a few weeks. Throughout the remainder of the year, demand and sales prices soared. Some sellers saw their values increase up to 50% over 2019. Then as we started 2021, the usual winter slowdown didn’t happen. Demand continued to exceed inventory fueled by both buyers who’d missed out in 2020 as well as a continued exodus from larger metropolitan areas. Winter and spring of 2021 was a sellers’ market with bidding wars and no softening in sales prices. This started to change come summer.
Looking back, the numbers reflect what buyers, sellers, and those in the real estate industry felt as the year went on. After the first quarter of 2021, there was no measurable increase in the median sales prices for the remainder of the year. The pandemic, the catalyst for the rise in demand, was seemingly under control and after being mostly homebound, people were excited to travel and enjoy the summer.
After the fourth of the July, the red-hot market, typified by multiple offers, bidding wars, cash closings, and more, began to cool down for the first time in over a year. Sellers and real estate agents that didn’t anticipate this change were caught off guard, and Portland saw some homes linger on the market. Savvy buyers and agents keyed in quickly, irrationally high offers declined, and sellers no longer assumed they could sell for 10% more than their neighbor did a few weeks earlier.
In the last quarter of 2021, there were more prices drops in the Portland area than the previous nine months combined. Is this due to the typical seasonal slowdown? Maybe. Is this a l reaction to an overheated market and buyer frustration? Maybe. Is this a sign the market has stabilized and equally balanced between buyers and sellers? Yes, for now. Is this a sign that a correction or ‘bubble burst’ is looming? All signs point to no. Instead, we predict history repeating.
So, to help forecast the future, we took a deep dive into the past. Below is a comprehensive look at the residential Portland market in 2021 and how it compares to 2020, including each subsegment. The numbers are a combination of remarkable, unprecedented, and even shocking. We have never seen a market like this, where values rose so quickly and to such highs. And while we don’t have a crystal ball, we feel that Portland will continue to be on everyone’s short list and that the spring market could be very busy.
2020 vs. 2021 Portland Overall Sales
(Single families, condos, multi units and lots/land)
takeaways
Census Bureau data shows Maine has seen a significant in-migration for the first time in decades. Accelerated by the pandemic, so many can work from anywhere and bring their large city salaries with them. This coupled with low inventory in early 2021 was the perfect recipe for rapid price appreciation. Many of these buyers had reverse sticker shock, coming from markets where similar homes would sell for much more, and these buyers were willing to pay more.
2020 vs. 2021 portland single-family sales
- Total sales volume increased by 24.38% from $232,935,734 to $289,724,753
- Sales volume on the peninsula increased by .72% from $40,186,113 to $40,475,137
- Sales volume off peninsula increased by 26% from $177,635,946 to $223,851,193
- Median sale prices increased 42.21% from $362,500 to $515,524
- Median sale price off peninsula increased 13% from $632,500 to $715,000
- Median sale price on peninsula increased by 29% from $345,000 to $445,000
- Median price per/sqft increased by 21.43% from $238.00 to $289.00
- Median price per/sqft on peninsula increased 15.33% from $300 to $346
- Median price per/sqft off peninsula increased 23.68% from $228 to $282
Highest priced single-family homes
- 60 Nancy Lane $1,700,000
- 102 Park St $1,575,000
- 265 Western Prom $1,550,000
Highest price per/sqft single family sales
- 55 Oaklawn Rd $1,365.19
- 180 Island Ave $810.63
- 38 Centennial St $804.36
takeaways
Of all residential segments, single families saw the largest increase in value this past year. And, according to MREIS data, it was the largest 12-month increase ever in recorded history. This was driven by significant price appreciation in homes off Portland’s peninsula. In off-peninsula neighborhoods such as Back Cove, Deering Highlands, Deering Center, Stroudwater, and North Deering, some homes went for nearly twice the amount they might have the year before. For example, before 2021 there were only two off peninsula sales ever that crested $1,000,000. In 2021 there were four sales that crested a million. All sales metrics show that Portland’s more suburban areas increased significantly more than the city’s urban peninsula.
Why? First, these homes often started at a lower price point. But mostly, we heard from our clients, friends, and fellow agents, that buyers were simply looking for more space. This held true for Mainers and those moving from out of state, even those coming from major urban centers. They sought distance from neighbors and space for a patio, a fire pit, or a swing set. And since many of them would be working from home for the foreseeable future, they also wanted a little more space inside for an office, a home gym, and a family room. On the flipside, there are some major employers moving into downtown Portland. These companies are already and will continue to bring new people into the city.
Will these trends continue? We believe so. It’s challenging to build more single families in Portland due to expensive land and building costs, limited land and areas zoned for residential development, and costly planning and city permitting processes. And as already mentioned, Portland is popular, and more and more people are moving here every month.
2020 vs. 2021 portland condo sales
- Median sale price increased 10.86% from $423,548 to $469,530
- Number of sales increased 50.60% from 334 to 503
- Number of sales at $1 million or more increased 340% from 10 to 44
- Number of sales at $2 million or more increased by 800% from 0 to 8
- Median price/sqft increased by 18.68% from $364 to $432
takeaways
Condo numbers are tricky and it’s difficult to make global or overarching conclusions that would be relevant to a specific type, size, location or unit. The data can be significantly skewed year over year as the result of larger scale developments selling dozens of units that took 2-3 years to plan and build. However, one thing is for sure, for newer, more urban, high-end, high-rise buildings with views and amenities like elevators and garages, 2021 saw high demand and prices we’ve never seen before. The median sales price increase of only 10.86% doesn’t reflect this because the 503 sales represent a vast array of unit types and locations. The median price per/sqft increased by 18.68%, but that too poses challenges. Even if we adjust for size this leaves out the fit, finish, updates, amenities, and location. So, while the overall numbers aren’t that impressive, the fact that very expensive condos are being built and selling over two and now three million dollars, points to future high-end condos coming online.
2020 vs. 2021 portland multi-family sales
- Median sale price increased 15% from $585,000 to $670,500
- Median sale price per unit increased 20% from $215,000 to $257,500
- Median price per/sqft increased by 15% from $199.58 to $229.26
- Number of sales increased by 33% from 135 to 179
- By size
- 2-4 units increased 45% from 110 to 159
- 5+ units decreased by 20% from 25 to 20
- Properties over $1 million
- All increased 80% from 20 to 36
- 2-4 units increased 425% from 4 to 21
- 5+ decreased 6% from 16-15
- By size
- Total Volume increased by 54% from $96,949,500 to $149,622,586
- 2-4 units increased 85% from $62,864,000 to $116,401,586
- 5+ units decreased 3% from $34,085,500 to $33,221,000
Highest Priced Multis: 2-4 Units
- 170 Eastern Prom, 2 units, $2,625,000
- 2 Atlantic St, 2 units, $1,900,000
- 50 Morning St, 3 units, $1,800,000
Highest Priced Multis: 5+ units
- 119 Morning St & 246 Eastern Prom, 40 units, $7,600,000
- 25 Granite St, 12 units, $2,680,000
- 17-21 Grant St, 12 units, $2,050,000
takeaways
2021 was a tale of two multis in Portland. Rent control clearly had an impact, especially on buildings with five or more unitsand those with long term owners charging below market rents. Many of these sold for less per unit then they would have in previous years. Projecting ahead, with several large apartment buildings in the planning stages, Portland could soon have a rental surplus. For example, Redfern's new 260 unit in-town building and Port Property's 171 unit building on Bayside are game changers and reflect the largest increase in market rate units in a long time. More projects could be on the way as developers of new buildings aren’t restricted by rent control when they set their initial rental prices. Another impact has been condo conversions. Many owners decided to convert their apartments and sell as condos instead of taking lower rents.
While larger Portland multis showed somewhat disappointing numbers, the opposite was true for smaller sized buildings. Buildings with four or fewer units sold well in 2021 and set new price per unit records. This seems to have been fueled by owner occupants looking for a single-family home or condo alternative. These smaller buildings garnered sales prices that would have been inconceivable just a few years ago. One of the best examples of this is 172-174 Eastern Promenade. This fully renovated two-family was listed for sale on and off for the past decade for $2,495,000 without success. This year the owners tried again and raised the price to $2.8 million and sold 72 days later at $2,625,000. In fact, there were more sales of 2 to 4 unit buildings priced over a million dollars last year than ever in recorded history. Before 2021, only 11 have sold for that amount. In 2021 there were 21.
With no rent control and lower starting prices, surrounding cities from Biddeford to Gorham and Lewiston to Brunswick, enjoyed significant price appreciation across the entire multi-unit spectrum. For example, in 2020, there were 48 multi-unit buildings sold in Westbrook for a total sales volume of $17,195,850. In 2021 there were 58 sold and the sales volume was $28,885,900. This represents a 21% increase in the number of sales and a 68% increase in sales volume.
Note: Based on information from the Maine Real Estate Information System, Inc. (d/b/a Maine Listings) for the periodJan. 2020 through Dec. 2021. ©2021 Maine Listings. Multi-Unit numbers based on information from the New England Commercial Property Exchange.
