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If it seems like a real estate For Sale sign near you has been planted on the lawn for an especially long time, it probably isn’t your imagination.
Homes in the Bangor area are selling more slowly than they did a year ago, but the prices haven’t fallen. In fact, they still seem to be increasing.
National statistics show that prices have stopped their rapid upward trend of recent years but are not generally dropping. In some markets that had been experiencing rapid price increases, certain segments of those markets are seeing declines. For example, the Associated Press recently reported that a condominium developer in San Diego was dropping the price of some condo units by $1,000 a day until they sell. These units were put on the market with a $200,000 price tag.
Scott Footman of Singleton Appraisal Co. in Bangor has seen no evidence of falling prices.
“The Bangor area is particularly stable,” Footman said. “We don’t get big spikes or declines.” Facing a slower market, Footman said he sensed that some people have lowered their asking price from what it might have been last year. But it is still relatively high, he said.
Barbara True, an agent with ERA Dawson in Bangor, says she sees prices stopping their upward mobility but not dropping. True studies the market for potential sellers and calculates the average times homes are on the market in particular towns. For example, last year the typical home in Hermon took 83 days to sell. This year it is taking 110 days. In Bangor Gardens, the sale time has increased from 36 days to 86 days. Glenburn has seen selling times increase from 65 days to 103 days. But despite the slower sale times, home prices have increased modestly in each of those towns.
Homes priced above $300,000 are definitely the slowest to sell, True said. On the other end of the spectrum, it’s almost impossible to find a quality home for less than $100,000.
While interest rates have increased in the past year or two, they are still solidly less than 7 percent for fixed-rate loans, which is still low by historical standards.
Jane Irving, head of mortgage lending at Bangor Savings Bank, says interest rates don’t seem to be stopping people from buying. But the anticipation of higher rates has more people looking at fixed rates that won’t go up if rates increase.
The slower sales find people “doing more inquiring and taking longer to make a decision” about buying, Irving said. “There’s more to look at, and there’s no race to get a bid in.”
Gil Weber at Weber Mortgage in Bangor says the market is a little soft, which he attributes to wars in Iraq and the Middle East and general uncertainty. “Once these things settle down, the market will come back,” Weber said. He says the somewhat higher interest rates are having no effect. In fact, he has seen increased buying in August, compared with the earlier part of the summer.
At Bangor’s office of the huge Wells Fargo Home Mortgage company, local manager Carolyn Campbell is quick to note that interest rates are still at about 30- to 40-year lows and certainly not high enough to scare people away. She said the summer has been slow, but she expects activity to pick up in the fall.
Dave Giroux at Pro Realty in Bangor says the market is softening, but “people see what their neighbors got when they sold and they don’t want to sell for less.” Giroux thinks prices may drop a few percentage points next year, but says the Bangor market isn’t especially volatile and people shouldn’t expect any big declines.
“We get only modest adjustments, and it has been that way for the last 30 years,” he said.
Relatively new to the Bangor market is Assist 2 Sell 1st Choice Realty, the local branch of the large discount brokerage chain. Local Assist 2 Sell owner Jim Rivers says his company charges $2,995 to sell a home, no matter what the selling price. Typical brokers get 6 percent of the price, or $12,000 for a $200,000 house.
Rivers says his company has flourished and won an award as the best franchise in a small market in 2005.
According to Rivers, his company does everything for sellers that the others do except he does not conduct open houses. He says owners can do that if they choose.
Rivers says the lower brokerage fee gives sellers more room to negotiate with buyers.
With the real estate market more unpredictable than in recent years, buyers have more to think about. Marc Minker, a personal financial specialist for the American Institute of Certified Public Accountants, offers eight tips that would-be buyers should consider.
. Buying offers consumers leverage, or magnifies their purchasing power. Most buyers use some of their own funds, but most of the price comes from a relatively large mortgage. That use of borrowed money allows consumers to benefit from price increases on property they have yet to pay for.
. Buyers can benefit from appreciation if they sell for more than they paid. This can be used to acquire a better house, or the equity can be used for a number of purposes, from paying college tuition to buying a vacation home.
. There are significant tax breaks with buying, including deducting mortgage interest and property taxes and keeping up to $500,000 in tax-free gains when they sell.
. On the down side, there is always the possibility of declining values. This hasn’t been true in most areas during this century. But in some areas, especially small towns with one industry that goes bad, declines can be substantial.
. Economists also talk about lost opportunity. That happens when a consumer buys a home but could have earned more appreciation from stocks, bonds or some other investment.
. Homes can be costly to maintain, especially the replacement of big-ticket items that can be vital to keeping investment value.
. Real estate is not a liquid asset, meaning it often can’t quickly be turned into cash. This makes it harder to pick up and move for a new job or change of scenery. A hefty mortgage also can make it difficult to invest in other areas.
. The American Institute of Certified Public Accountants has a Web site offering strategies for home buyers. It can be accessed at www.360FinancialLiteracy.org.
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