Maine awaits U.S. real estate revival

PORTLAND – Maine has experienced a real estate “bubble,” although not as serious as the nation’s. Still, experts say the state’s market will have to wait a year or so for the nation’s problems to sort themselves out.

A bubble occurs when real estate prices outpace inflation. Experts told Maine Public Radio that this happened in Maine, but on a much smaller scale than nationally.

Dean Baker of the Center for Economic and Policy Research in Washington warned early of a real estate bubble. He said that nationally, inflated prices stood to fall 20 percent to 25 percent, and up to 35 percent where the prices rose most sharply.

Charles Colgan of the Muskie School of Public Service at the University of Southern Maine said Maine’s housing market didn’t see the dramatic rises and free-falling prices other regions saw. He said Maine did see prices outpace inflation, but no major bubble.

Colgan said the state will have to wait for the nation’s real estate problems to ease before its own little bubble goes away, and that could take 12 to 18 months.