Maine Real Estate Update - December: Inventory, Pricing, and Emerging Trends

Episode Summary

In this month’s market update, I take you through what I am seeing nationally, regionally, and here in Maine—and what these trends may mean for all of us as we head into 2026. Instead of charts and long economic analysis, I offer a clear, narrative look at the shifts underway: why buyers remain cautious despite relatively stable interest rates, why home prices continue to hold near record highs, and how inventory is finally showing signs of loosening.

I also dig into some of the most interesting demographic trends shaping today’s real estate landscape—including the rising average age of first-time homebuyers and the growing number of young adults living at home longer than ever before. These generational patterns influence who is entering the market, when they enter, and how they make decisions.

As always, Maine tells its own story.  I break down which markets what is happening with inventory, price appreciation and recently enacted and proposed policy changes that could impact the market going forward.  And, I share my perspective on how thoughtful buyers and sellers can position themselves strategically in the months ahead.

Key Insights & Market Themes

National Market Trends

• Buyers across the country remain hesitant, even though mortgage rates have settled in the low to mid 6% range. Confidence — is fluctuating and driving many decisions.
• The median U.S. home price is now around $415,000.
• Affordability remains the central challenge, especially for first-time buyers who continue to face elevated monthly payments.
• Homeowners have gained, on average, $140,000 in equity over the last five years, an important factor in seller's incentives and stability.

Who’s Buying Now

• The average first-time homebuyer is older than ever (40), a reflection of affordability pressures and delayed entry into the market.
• Roughly one third of young adults nationally are living at home—many waiting for stronger financial footing or more favorable mortgage rates.
• This creates pent-up demand, which I expect to begin re-entering the market as rates soften in 2026.

Regional & Maine Trends

• Maine remains what I often call the place where national trends come to take a breath. We feel shifts later, and differently, than many parts of the country.
• Statewide, inventory is finally improving, reaching levels we haven’t seen since 2020.
• Cumberland County
  • Homes sold increased by over 8% on a rolling quarterly basis.
  • Median sales price climbed to over $600,000—a healthy,

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Transcript

The number of the day is 32. 32 is the percentage of 18 to 24 year olds currently living with family in the United States. That is a really interesting statistic, and we are going to get to that kind of information and more exciting information about the real estate trends across the country, the New England region, and our beloved Maine, in this exciting episode of Elegant Maine Living.

Well welcome friends to Elegant Maine Living where we explore the beauty, charm and sophistication of life in Maine. My name is Elise Kiely, your host, and a real estate advisor with Legacy Properties Sotheby's International Realty. On each episode, we [00:01:00] dive into Maine's residential real estate market sharing key trends, inventory insights and notable sales, while also highlighting the extraordinary lifestyle that makes Maine such a special place to live, work, and play. Whether you are seeking a coastal retreat, a vibrant community, or an escape into nature, Elegant Maine Living is your guide to the homes and experiences that define our great state.

Well, let's get started. Today's episode, we're going to start with the national market snapshot of real estate. We're going to unpack current real estate trends with a light and informative touch. We're not going to do a deep dive into the minutia of numbers and statistics, but it is important to have firsthand information of what is going on in the real estate market.

And this is true whether you are anticipating selling your home, looking for a home or simply always [00:02:00] curious about what is happening in the real estate market, either for yourself and the valuation of your current real estate holdings, or perhaps you have adult children, adult nieces, nephews, cousins, friends who are looking to buy their first home or maybe their second home.

National Snapshot of the Real Estate Market

Speaker: First up is a quick look at the national housing scene, the big picture trends, setting the context for Maine. Despite higher interest rates, US home prices have been remarkably resilient. The median existing home price is around $415,000. In fact, October marked roughly the 28th straight month of year over year price gains.

Illustrating how limited supply has kept prices from falling significantly. Buyer mood nationwide remains a bit cautious. The vast majority of Americans say it's a bad time to buy a home reflecting frustration with high prices and mortgage rates [00:03:00] either side of six and a half percent, that's a far cry from the 3% loans of during Covid.

Affordability is a real crunch. One study found that more than 75% of homes on the market are unaffordable for the typical household. And to put that in context, the income needed to buy a median priced home in the United States is around $113,000. That's the salary Someone needs to buy a medium price home, yet the median household income is less than a hundred thousand.

This gap has made home ownership feel out of reach for many first-time buyers. And why are prices so high? Well, I'm sure a lot of you have heard of what is called the lock-in effect. Homeowners who locked in an ultra low mortgage rate in the past few years are staying put. Frankly, even if they wanted to sell the interest rate that they'd be facing on their next purchase is dissuading them from making that move.[00:04:00] 

This locked in homeowner effect combined with a decade of underbuilding means housing inventory is near historic lows at the current pace. There's only about a four month supply of homes nationally, and the industry considers a balanced market to be about a six month supply. This tight inventory keeps competition alive and props up prices.

Regional Northeast Real Estate Market

All right. That's the 30,000 foot view of the US housing market. Well, let's zoom in to our corner of the country, what is happening in the northeast. Now, this is important because many of you, like myself, have adult children, adult nieces and nephews, and friends or coworkers who want to stay in New England and are trying to save for their first home.

The Northeast real estate market shares some national themes. We have low supply and we have firm prices. Homes in the Northeast can be among the priciest in the country. And this fall, they continued to command high [00:05:00] values. In fact, the median price in the New England region recently hit just over $500,000.

Buyers here haven't seen prices budge much downward. If anything, values are continuing to appreciate year over year. So let's look at the degree of sales activity, the churn of houses. Well, sales activity in the northeast is mixed. In some months it's roughly flat, and others it's a tad higher. Overall, sales are at a modest pace, held back, not by a lack of willing buyers, but by a lack of listings.

Now, inventory in the northeast. Is still quite tight. We have roughly a three to four month supply and in Maine and New England's hubs, especially any well-priced home, tends to get snapped up right away. And realtors are reporting that first time home buyers are having a hard time in the northeast due to the limited entry level inventory, higher price markets and scant [00:06:00] supply mean competition is still part of the game here, even as winter approaches.

Frankly, the New England market has been resilient. So, we've got the regional picture.

Maine's Real Estate Market Update

Now let's drill down deeper to our beloved state of Maine. How are things looking here, especially in those red, hot southern counties of Cumberland and York County? Well, here in Maine, the housing market has been active and frankly, evolving.

Statewide sales have picked up recently, for example, in October, which is the most recently released statistics from the Maine Association of Realtors, sales are up close to 11% and median sales price almost 8% from last year. We have a median sales price now in Maine of around $426,000. It's a little different story in our southernmost counties of Cumberland and York County.

Those are the heart of Southern Maine's market. Those [00:07:00] areas remain the most competitive and priciest in the state. As of October, the median single family home is over $600,000 in Cumberland County and over $550,000 in York County. what is happening to sales and inventory trends in Southern Maine? Sales and inventory remain strong.

Cumberland County saw over 8% more homes sold this October than last, and York County had a busy fall with sales up close to 11%. However, as we head into winter, things are just starting to cool and this happens seasonally every year, November and December. Typically, we see fewer deals as the temperatures drop.

But I am still seeing steady buyer demand. And on the inventory side, while people will take their homes off for the holidays, we still have a vibrant listing market. And don't forget, listeners, there's the public [00:08:00] market that you see on realtor.com or Zillow or on the Sotheby's site, and there's the private market that experienced brokers know sellers that are willing to sell their homes.

They just don't want to put them on the public market, at least not yet. So there are these two markets. There's the public and the private market, and I can tell you that buyer demand is strong. And if you are looking to move to Maine, make sure you connect with an experienced broker who has access to that private market.

However, Southern Maine is still a seller's market. Perhaps slightly less frenzied than it was a year ago. It is still a seller's market. Buyers may have a little bit more breathing room, but properly priced homes might take a couple of weeks to sell, but they're going to sell at or close to the list price.

Now that we've explored Maine's data and trends, let's chat about what is driving some of these patterns. And I want to share [00:09:00] some anecdotal insights from buyer hesitations to creative strategies that paint a human picture of the market. Well, let's talk about rates and buyer hesitation.

Impact of Interest Rates

Speaker: A key trend everywhere is the impact of interest rates with 30 year mortgages, oscillating either side of six and a half.

In recent months, many buyers have felt a squeeze. Higher rates can add hundreds, if not thousands of dollars to a monthly payment, and that really tests and challenges what buyers can afford. As a result, some would be buyers are hesitant either pausing their search or lowering their price range. In surveys only about one in four consumers think it's a good time to buy a home.

The flip side, as I discussed with Chris Lynch on episodes 32 and 33 of this podcast, whenever rates dip slightly say from 6.75 down to 6.25 or 6.15, we see a mini surge of activity. A reminder that [00:10:00] buyers are watching rates closely. The mood is cautiously optimistic. Buyers are out there and many are taking their time, not wanting to overpay at high rates.

Seller Pricing Strategies

Now let's turn to pricing strategies. No more overzealous pricing. Unlike the frenzy days where any asking price would get five offers, today's market rewards realistic pricing. Buyers are price sensitive and they're attuned to value. We are starting to see some price reductions on some listings that started off too high with aspirational pricing.

An uptick in price reductions is often a sign that a seller overshot the market initially, and sellers are learning that overpricing can backfire. Homes may sit longer and ultimately sell for less. The sweet spot, the smart strategic move, is to price right at the market value to attract interest early.

Buyer Trends

Speaker: Now, let's flip back to buyer trends. [00:11:00] Today's buyers are a little bit more discerning. Many are hesitant to rush in given economic headlines and perhaps distant memories of the housing bubble. We hear anecdotes of buyers taking longer to house hunt or including contingencies that before would not have been acceptable.

As I discussed with Greg Dauphinee from Androscoggin Bank on episodes seven and eight, there was this trend to marry the house and date the rate, where buyers will proceed with a purchase they can afford now and then plan to refinance if and when rates dropped. Creativity is also on the rise. Some first- time home buyers are considering what I call house hacking, buying a duplex or a multifamily living in one unit and renting the other to help with the mortgage.

This is exactly what my husband and I did when we bought our first home. We were scraping together every penny bought a two family, put a lot of sweat equity into it, and that purchase allowed [00:12:00] us to have tenants, which helped with the financing of the property.

Other buyers are expanding their search radius. If prices in Portland or Kennebunk are too steep, maybe they look out towns 30 to 40 minutes away where budgets stretch further. On the financing side, buyers can look at rate buy downs or adjustable rate mortgages. Tactics that underscore the theme. Buyers still want homes, but they're strategizing carefully in this higher rate environment.

Interest Rate Predictions

Well, what are some predictions on interest rates? It's worth noting where rates might head. Economists have forecasting that if inflation continues to cool, mortgage rates could gradually ease in '26. Already, there's hope and many experts are predicting the 30 year fixed could dip to at or slightly below six by late next year.

However, I have not seen any credible predictions of interest rates going below five and a half, 5.75 if [00:13:00] even that low. This anticipation actually contributes to some current hesitation. A few buyers might be thinking, should I wait for a lower rate? However, as financial planners will tell you, it's impossible to perfectly time the market.

It's super tricky. Remember, if rates do drop, we could see a surge of buyer demand, and paradoxically, that means that prices will rise further due to competition. It's a classic catch 22. My advice is buy when you're ready, because you can't perfectly predict rates or prices. In Maine, a lot of folks choose to move based on life needs.

Real Estate Timing Based on Life Events

I've heard some people call them the five Ds: Diamonds, Diapers, Death, Divorce, and Downsizing. Life happens and you often need to purchase a home or sell a home based on these life events, and that's when you should make a real estate decision, not trying [00:14:00] to time the market perfectly. And that is usually the best guide.

So what is the reflection based on this information? Look Mainers know the value of patience. We wait for the right ski conditions. We wait for the conditions to take a hike on a trail, or take that wave at the ocean or to set the hook for a striper. In real estate patience and preparation go hand in hand.

Whether you're a buyer holding out for the right home or a seller timing your move, staying level headed and a bit creative is key in today's market.

Demographic Trends And Wealth Generation in Real Estate

Speaker: Now let's shine a light on a couple of demographic nuggets shaping the real estate market. Who's buying homes these days and how is home ownership tied into personal wealth?

These trends are really interesting. First time home buyers have hit an all time high in terms of their age. The profile of the typical home buyer is changing, and the most striking shift is that the average [00:15:00] age of the first time home buyer has climbed to an all time high of 40. That is extraordinary and that goes hand in hand with my percentage at the start of this podcast of 32 being the percent of young people currently living with family.

That 40 year age of a first time home buyer is up sharply. Just a decade ago, the typical first-time home buyer was in their early thirties. Well, what is driving this? Well, affordability challenges are a big part. Young adults are renting longer. They're struggling to save for down payments amid student loans and rising home prices.

In fact, the share of sales going to first time home buyers is at a record low. It's only 21% of the transactions are now to first time home buyers. That's down from around 40%. Historically, this means fewer young people are managing to break into the market. Many are waiting until they are a [00:16:00] bit older more financially established to buy their first home, and when they wait longer to buy their first home, the type of property that will work for them is very different in their forties than it would've been in their late twenties or even early thirties. It's a double-edged sword. While older first timers often have higher incomes or maybe even dual earners, they've also spent more years building wealth for somebody else, their landlord.

One expert noted that delaying home ownership until 40 can mean missing out on roughly $150,000 in equity that you might have built in your thirties if you had purchased a home in your thirties. Now, this is a trend I'm going to be watching closely as it has long-term implications for wealth building and even family formation.

The phrase of the day could have been generation rent referring to those who've rented much longer than previous generations before buying a home. And what this [00:17:00] also means is that this could be an opportunity for young investors, perhaps those first-time home buyers looking to house hack buy a two family or perhaps a first-time home buyer after they bought their initial home looks to buy an investment property to provide a rental opportunity for people in their twenties and thirties looking to rent before they end up purchasing their first home.

Well, let's look at the difference between homeowners and renters and this wealth gap. Owning a home has long been called the American Dream, and part of that dream is financial stability.

A recent statistic that I heard really drives this home. The typical US homeowner net worth is about $430,000. That's extraordinary. And then when you compare that to the typical renter's, net worth is only around $10,000. That's a huge wealth gap. Now, let that sink in. That [00:18:00] means that homeowners are roughly 40 times wealthier than renters on median.

And there are lots of exceptions to this, but that's, that's an incredible gap and it's widening every day. Even in uncertain times, home ownership tends to build equity. Since 2019, homeowners wealth has gone up 45%. While renter's net worth hasn't grown much. Now recognize that was during the COVID years when we had a surge of appreciation.

And correlation isn't causation. It's not that owning a house automatically makes you rich, but rather ownership forces savings, you pay down a mortgage, it lets you benefit from appreciation and a growth of equity every month when you pay down your mortgage, renters meanwhile don't get those benefits and may find it harder to save.

Now, there are other benefits to renting. There's flexibility, there's mobility. The type of [00:19:00] property you might be able to rent might be superior in fit and finish than you could afford to buy. There's lots of factors that go into this, but those who are renting and trying to buy face this daunting wealth gap.

It's one reason there's a big push for first time home buyer assistance, helping people get that first foot on the property ladder and start building equity. From a community perspective, boosting home ownership can help close this wealth disparities.

It's not about saying owning is always better than renting. That's not what I'm saying. Renting can definitely be right for some life stages, but over the long run, the financial payoff of owning is huge. It's a reminder of why programs to support first time home buyers down payment programs, mortgage credit certificates matter for gaining this economic opportunity.

Current and Potential Policy Changes Impacting Real Estate Transactions

And now I want to touch on some of the policy changes and [00:20:00] proposals in the real estate world. Look, taxes aren't the most fun topic to talk about, but there's some important shifts that have already been passed in Maine and some really interesting proposals coming out of Washington that are worth keeping in mind.

All of these can impact homeowners and buyers. Well, let's look at capital gains tax proposals. When you sell your home ever since the late nineties when you sell your home, especially one that's gone up in value, taxes are a consideration. Currently, homeowners get a nice break. A married couple can exclude up to $500,000 in profit, or if you're single up to $250,000 on the sale of a primary residence.

Now look, this is not accounting or investment advice. This podcast, as I say regularly, is for entertainment and information purposes. Please double check all of this information with your financial advisors, but these exemptions on capital [00:21:00] gains haven't changed since 1997. Even as home prices have soared. So, we've got capital exemptions that were in place over 25 years ago.

Well, policymakers have started to notice this, and there have been some discussions and proposals in congress. To adjust the capital gains rules for home sales. One bill that's under consideration, nothing of has been passed, but one bill that's under consideration would double the exclusion to a million dollars for couples, 500,000 for singles, and again, that would exempt that gain from capital gains taxes.

I think policymakers are recognizing that a $500,000 gain today isn't what it was 25 years ago. In fact, there's even been some talk of more radical ideas. For instance, eliminating capital gains tax on primary home sales entirely. Now, nothing has been passed again, so [00:22:00] for now the 250 for singles, 500,000 exclusion for married couples remains.

But it's something to keep an eye on, and I find this very interesting. If the exemption were raised or removed, it could, for example, enable longtime homeowners in high appreciation markets, think coastal Maine, Boston suburbs, or even Florida, Texas, California to sell without a tax hit on their big gains.

This could potentially encourage more listings to come to market. On the flip side, if laws were tightened, say, reducing the exclusion, that could discourage turnover. I'm going to keep an eye on Washington and some of the legislation that's currently being discussed, but for anyone with significant home equity, it's good to be aware of these discussions.

Well, let's go closer and see what is happening in Maine, as I discussed on earlier episodes of this podcast, Maine recently enacted a [00:23:00] significant change to our real estate transfer tax starting in November of this year the state raised the transfer tax on high value sales. The transfer tax usually is split between buyers and sellers, and it's $2 and 20 cents per $500 of value.

Under the new law, the rate stays the same for the first million dollars of a sale, but any value above a million dollars is taxed at $6 per 500. That's almost three times as much, but any value above a million dollars is taxed at $6 per $500 of value. That's almost a three time increase on that tax.

If you're selling a high-end home or buying one, you just want to budget for higher closing costs due to this tax, there was a surge of closings that happened the last week in October by a lot of high price point closings to avoid this tax.

Well, now let's turn to first time home buyers again. In the same [00:24:00] breath, Maine applied this new sort of luxury tax on million plus properties, but they also did something to help new buyers.

It created a transfer tax exemption for first time home buyers who use Maine Housings first time home buyer mortgage program as of November 1st if you qualify as a first time home buyer under the state program, neither you nor the seller, will pay a transfer tax on that sale. Now that's a nice incentive.

On a $300,000 starter home, which is probably well below a starter home in the greater Portland area, it would save you over $2,500 in taxes. It's a small boost, but every bit helps when you're scraping together a down payment and closing costs. This exemption is aimed at lowering the barrier to entry for young Mainers.

So in summary, Maine's message to the market was ask a bit more from luxury transactions and give a break to first time home buyers. It's an interesting balancing act and something real estate professionals are [00:25:00] now factoring into deals. If you are a first-time buyer, you're definitely worth a look at the main housing program.

Well, let's look at some other policy tidbits. Nationally, there's always chatter about housing policy and it becomes a bit of a political football. You may have heard recently a proposal to establish a 50 year mortgage with the idea that this would improve affordability by stretching out payments. This could lower monthly payments for buyers, but it's at the expense of slower equity buildup.

It hasn't materialized yet, but it shows how the industry and politicians are brainstorming solutions to affordability. Here in Maine, we had a law passed several years ago called LD 2003, and that was pushing towns to allow more accessory dwelling units and denser housing in some zones to increase supply.

You know, policy changes often take years to play out in the market, but they [00:26:00] do shape the landscape in which buyers and sellers operate. And I will continue to keep you updated on these fronts and future episodes.

Well, we've covered a lot, national trends, local insights, the human side of real estate, and even taxes and laws.

To round out today's discussion, I'm going close with some strategic takeaways, whether you're a potential buyer or a seller in Maine, or you have a loved one that is a buyer or seller in Maine. Here are some smart moves in today's market.

For buyers, despite challenges, opportunity knocks for prepared buyers. Get pre-approved. Be ready. Don't try to time the market perfectly. When you find the right property and it's affordable in your budget, strongly consider striking on that property.

For sellers, it's still a favorable market for sellers. Frankly, we have more buyers than we do inventory, and inventory is well below the six month [00:27:00] balance number for a balanced market.

Gone are the times when you can just name your price and get 10 offers. Today's buyers are savvy. They are working with experienced advisors. As a seller, you want to set your price strategically. Proper pricing is key. Well priced homes in Cumberland, in York, counties are still getting multiple interested buyers and can sell at or even above list price.

Remember, the first price is your best chance to make a statement. Present your property well. Presentation matters so much.

Let me give you some final Maine style reflections. Real estate in Maine is like our seasons. There are some warm bustling seasons when we have a lot of people coming to the state to enjoy all that Maine has to offer.

And then there's some quieter cooling off periods, and each has its own beauty and opportunities. Right now we're in a slightly cooling off season, but definitely [00:28:00] not a cold one. Don't misinterpret what I'm saying as that we've seen a significant market shift. We have not. The atmosphere is a bit more relaxed than the feverish pace of a year or two ago.

Prices are continuing to appreciate and transactions are still happening. And if you are waiting for a market crash, I think you'll be waiting for a very long time. None of the experts that I listen to or I read or I talk with, see any of that on the horizon. And just like planning a winter hike along the coast, a little preparation and the right gear or information make all the difference when you're navigating the housing landscape.

So thank you for listening to today's episode. I truly appreciate all of my listeners out there. If you have enjoyed today's discussion or it has given you some valuable information, please share it with a friend, a neighbor, or a coworker, and follow the conversation about real estate, design, lifestyle, and [00:29:00] community here in Maine.

As always, if I can be of assistance in your real estate journey, reach out and let me know how I can help. And remember, this podcast again is for informational and educational purposes only, and does not create a real estate advisory attorney, client or investor advisory relationship.

And friends as we approach the holiday season, I just want to thank everybody for listening to this podcast, your wonderful comments and feedback and engagement on social media. It means the world to me. I thoroughly love doing this podcast. And as we get into the holiday season as well, I have decided I'm going to take a couple of weeks off of releasing podcast episodes, and so this will be the last episode that gets released until Tuesday, January 6th. As you may know, I always release on [00:30:00] Tuesdays at noon, so I will not be releasing an episode on Tuesday, December 23rd, or Tuesday, December 30th, but I have lots of great episodes that I will be picking back up and starting January 6th.

I'll be excited to share those with you. I have some wonderful Maine designers, investors, visionaries and leaders who have given me the gift of their time and experience, and I really look forward to sharing those discussions with you next year. Happy holidays and a joyous new year to everybody. This is Elegant Maine Living, the way life should be, and until next time, keep living with elegance.