Midcoast Maine Market Perspective
First Quarter 2010
The new year has begun with subtle signs of encouragement and indications of renewed activity, although the upper end of the Maine waterfront real estate market remains quiet.

As we look back at sales of properties priced at $1,000,000 and up over the last 5 years, it’s clear that the market peaked in 2007. The next year brought a steep decline in the number of sales (2008 sales down 36% from 2007) and still another drop (down 20%) in 2009.

Sales in this market are still primarily price-driven, with buyers expecting deep discounts from list price, though truly exceptional properties in the very best locations are selling at lesser discounts. We have not had enough sales at the top of the market for anyone to know exactly what impact the slump has had on values, but it’s safe to say that the expectations generated by the market in 2006 are now unrealistic. The biggest challenge now at all levels of the market, but most emphatically at the upper reaches, is a distinct lack of demand. Even though there has not been a huge buildup of inventory (far less than many would expect, in fact), there are still very few buyers. We do expect demand to start picking up as buyers get restless. There is a point at which their impatience and their desire to be in Maine overrides any concerns that the market hasn’t yet reached bottom.

The paucity of sales since the Fall 2008 market crash has buyers and sellers still locked in a stalemate, with both sides holding on to perceptions of value that have yet to be definitively confirmed. We’re starting to see indications that the stalemate between buyers and sellers will slowly begin to give way, with sellers holding on to the most value for the best properties in the most sought after locations and having to cede more ground on those that are less distinctive.

We believe that 2010 will be a year of transition as this impasse breaks. We expect a slow but steady shift into a stronger market with more buyers and sellers seeing eye to eye.

While we’ll probably see some adjustments and corrections in pricing over the next year, we believe that values at the top of the market will recover well. Historically, the value of real estate along the Maine coast has weathered economic slowdowns well, holding relatively steady and appreciating again once the climate shifts. We are more certain than ever that the future for Maine coastal real estate is bright, and here’s why:

• Baby boomers are just beginning to retire in great numbers. Many have a connection to Maine, or an interest in Maine, and a desire to spend a significant amount of time here, and they’ll buy vacation homes here.
• As other parts of the country suffer increasing burdens of pollution, overcrowding, traffic, homogenization, and crime, Maine’s quality of life only gets more appealing. The Maine coast offers a combination of privacy, quiet, natural beauty, a down-to-earth character and sense of community that’s increasingly hard to find.
• Maine is dynamic. The availability of cultural, educational, recreational and arts opportunities continues to grow and improve, as does our technological infrastructure. As Internet and cell phone connectivity improves, so too does the possibility of working here, opening doors to a large and quickly growing cohort of still-working adults of significant means.
• Real estate values here are still extremely reasonable to those in other parts of the country, even in areas where a bubble has burst. The space, seclusion and natural beauty available here (combined with proximity to great amenities) is rare in other places—and even rarer at the Maine’s prices.

In the long term, and even in the relatively near term, Maine real estate clearly represents a tremendous investment. Most people agree that the market has reached the bottom, and it seems likely that we’re beginning a very slow climb back up to higher levels of activity and pricing.

So what to do in the meantime? For sellers, gaining an advantage in this market means doing everything they can to position themselves competitively in the market. In part, this means anticipating—and addressing—issues that might arise when a buyer starts due diligence on a property. When sellers deal with such issues as maintenance and repairs (providing information, reports and estimates if not actually doing the work), title and legal issues in advance, they can maintain more control of the process and pre-empt 11th hour surprises—and pursuant negotiations—that can be costly. Most importantly, it means pricing competitively for this market.

For buyers, it’s simply a great time to make an investment in Maine coastal real estate.

LandVest has weathered the downturn well, thanks in part to the diversified nature of our company. Our Timberland Division (which provides brokerage and management services throughout the country) has had its best years ever, and our Consulting Group (providing land management, appraisal, and real estate advisory services nationwide) is also thriving. Our real estate marketing division, which focuses on New England (with ten offices in Maine, Massachusetts, New Hampshire, and Vermont), has maintained an exclusive focus on distinctive properties at the top of the market without diluting our brand or straying from our mission. Our Camden office serves coastal communities and islands from Boothbay to the Blue Hill peninsula. We had some significant sales last year, including a historic property on the Fox Islands Thorofare, and the sale of a private island in its entirety. Our inventory of available listings is diverse and of exceptionally high quality. We are well positioned to provide our advice and expertise to buyers and sellers now and when the economy rebounds, bringing renewed activity back to the Maine coastal real estate market.

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