News

2011 shapes up for Maine building industry

Apr 9, 2011
Posted In: General

Housing experts cite two factors leading a recovery in the U.S. residential real estate market, according to a recent article in Fortune magazine. One is the steady decrease in new construction over the past few years. The second is a sharp drop in home prices, which have fallen nearly a third since 2006.

Leaders in the field say this combination will entice those who have been to renting to start buying again, now that home prices are lower. This, they say, could create a surge in home buying, which will then cause prices to rise in several markets.

Experts also predict that in some markets across the country, reports Fortune, single-family housing “starts” may increase from 470,000 last year to as many as 700,000 in 2011. This may indeed be the year the housing market rebounds.

Nick Sherman, of Hallmark Homes in Topsham, agrees. He said the more dramatic improvements in Maine's housing industry will occur later this year, and beyond.

The factors most indicating improvement to Sherman are the quantities of homes sold, the quality of the average home buying prospect, and the low quality of existing inventory. Hallmark Homes has signed more contracts in 2011 than in the same period last year.

“And we expect more contracts in the weeks ahead,” Sherman said. “More customers are contacting us compared to 2010 and 2009.”

In relation to other New England states, Maine is currently ranked third in the number of residential building permits pulled this year – ahead of New Hampshire, Vermont and Rhode Island, according to the U.S. Census Bureau.

Those in the Maine modular home industry have picked up on this trend. Traffic is up at their sales centers, and more and more homeowners are listing their homes for sale.

“The recurring refrain of 'I want to build but I need to sell my house first,' is more often replaced by 'I just sold my house and I need to plan my next home,'” Sherman said.

Popular projects include commercial buildings and retirement communities, but also less obvious ones.

“Our strongest demographic right now are those retiring or near-retiring, looking for first floor living that will meet their future lifestyle,” Sherman noted. “But first-time home buyers and affluent second home buyers represent strong percentages of our market.”

While some in the Maine building industry say many customers still want to rent than own due to the overall costs, that mentality seems to be shifting.

In 28 out of 54 major markets, it is actually cheaper to make a monthly mortgage payment and cover the other major costs of owning a home than it is to rent the very same home, according to Fortune. Rents are starting to rise again, as the high demand for apartments in the past fours years has caused the supply to dwindle.

Although other important factors, such as a strong U.S. economy buoyed by new jobs and consumer spending will ultimately affect the housing industry's future, experts forecast a huge surge in home buying this year. The demand, they say, will drive new home prices skyward. Their best advice? Be ready.