Slow and Steady While Maine’s real estate market has declined, only a moderate correction is in the forecast

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After years of robust sales and escalating prices, the real estate market in Maine has suddenly slowed.

While this has created uncertainty for many, local industry leaders say buyers and sellers can be relatively certain of two things:

. Houses that aren’t reasonably priced will sell very slowly.

. Buyers who are patient and look around can find some good deals.

“The market is returning to normal, not bursting,” says Jon Dawson of Dawson Bradford Co. Realtors of Bangor. For generations, the Bangor-area market has been characterized by slow but steady gains in real estate prices. The huge spikes were for places such as Boston and Southern California. But between 2004 and 2005, home prices increased by more than 20 percent in many Maine counties.

That hasn’t been the normal expectation in the state.

And it isn’t again.

Jim Stoneton of Coldwell Banker real estate in Bangor says the fundamentals just aren’t in place for a big drop in prices. First of all, by historical standards, interest rates are still very low at around 6 percent. Those old enough to remember 1980 will recall rates in the high teens that peaked at 21 percent in 1981, Stoneton said. Those rates will slow sales. But 6 percent won’t. And no one is expecting the rates to go much higher, if any higher, for a while.

Unemployment is relatively low and energy prices are subsiding, at least for the time being. Incomes are also recording average increases. These factors should feed demand.

Real estate agents do talk about a correction, a relatively modest decline in prices to overcome uncertainty in buyers. But 10 percent is about the biggest correction estimate you’ll hear, and most think it will be less than that.

Heather Pece of Century 21 Queen City Real Estate in Bangor says that homes priced between $150,000 and $175,000 are selling relatively quickly. Higher-end homes always sell slower, and especially now, Pece said.

Jammie Pearson of Sun Mortgage in Bangor says the slowdown in sales is really noticeable in houses priced above $280,000 or $300,000. Pearson is expecting strong sales in 2007, but with prices that are reasonable.

Dawson also says that agents can be helpful to buyers who are in the process of ferreting out the good deals, given that the inventory of homes for sale is relatively large.

Stoneton would agree, saying that clients who used to look at four to six homes are now investigating 10 or 12.

Agents are having to try harder to sell homes, a fact that is reflected in an increase in the number of open houses this fall.

Sales and price figures reported by Maine’s multiple listing services for the first 10 months of 2006 show the number of sales declining from 15,891 to 14,497, a drop of 8.7 percent. The median sales price actually increased from $230,300 to $232,400, or 1 percent.

Not much of a correction there.

But prices have softened late in the year. For example, the median sales price in October 2006 compared with October 2005 declined by 3.1 percent. This would indicate that a correction has started only recently.

In the Bangor area, there has yet to be any sign of a price correction. Sales declined by 6.2 percent during the first 10 months of 2006, but prices increased by 7.5 percent.

And unlike the statewide comparison, the October-to-October sales figures showed a price increase from $152,900 to $159,700, or more than 4 percent.

Those in real estate measure the speed of sales with “days on market” statistics. This figure has increased with the slower market. For example, in the Bangor area, days on market for homes sold increased from 43 in October 2005 to 66 in October 2006.

Dawson says the current market is characterized by a “flight to quality,” or buyers getting more for their money.

Jim Trimble, a Bangor-based agent who sells high-end properties in Maine and elsewhere, says the state is experiencing “more of a normal market. We’ve been used to abnormal.”

As far as his high-end coastal properties, Trimble says he has seen little change. The most expensive homes always are slower to sell because there are many fewer people who can afford them. But they are selling at a normal pace for the price range.

“People who have money have money,” Trimble says.

Although Maine probably can expect a relatively stable market, albeit a bit slow, the Boston area is facing serious downward price pressures.

Earlier this week the New England Economic Partnership forecast that housing in the Boston area wouldn’t hit bottom until 2008, would stay flat through 2009 and then climb only gradually.

Most Mainers likely can rest somewhat comfortably with their relatively stable prices and temperate sales climate.

But in some areas of the country, home builders are trying all kinds of new tactics to sell houses. Some entice buyers with free granite countertops or a couple of rooms of hardwood floors.

Earlier this week, CNN reported a sales device called a buy-down feature whereby home builders pay the interest part of mortgage payments for the first few years of the mortgage.

This lets the sellers keep the sales price from declining and setting a new benchmark which they would have to live with in the future.

But the real sales prices would become very hard to calculate. So much for sales price statistics.