How Real Estate Markets Shift From Hot To Cool To Cold

maine real estate market

How real estate markets shift from hot to cool to cold.

When Maine real estate inventory is low and the supply of available property listings is slim, energy to buy in the market builds. Like a kinked garden hose, water wants to escape as the pressure increases.

supply and demand
How Many Other Properties Are For Sale Effects The Maine Real Estate Market Values. Simply Supply And Demand.

If a couple wants to move out of the rent rut and start owning, to stop leasing, buying a house dominates their thoughts.

The desire for home ownership influences their spending habits and like dieting, they consume less, save more. The couple with the goal to stop renting begins the search for financing, to browse what’s for sale in their price range. The Maine land buyer looking for property acreage thinks the same way. If they want a vacation location up in Maine, when retirement is all they think about, what’s for sale gets studied hard.

reak estate market
The Pulse Of The Current Maine Real Estate Market. Right Now The Temperature Is Hot, The Listing Sales Happen Fast.

Some real estate markets have too many sellers, not enough buyers and currently in Maine it is just the other way around. Less inventory, more property buyers and listings don’t linger on the market.

This blog post covers how real estate markets shift from hot to cool to cold.

Values in a local real estate market go up as what’s available swings downward. Simple economics of supply and demand. People will settle for less and pay more when the pickings are slim in a local real estate market. Same with the car lot inventory. If you are heading out on a family vacation road with the trip in just a few days and suddenly need transportation. Don’t want to hitch hike to the destination.

properties for sale maine market
Waterfront Property In Maine Always Rare. More So In A Hot Limited Supply Market. The Real Estate Market Is Not Just Local Either If The Marketing Is Strong.

Whatever is on the local car lot you trust suddenly becomes more valuable. Your selection on what color and style is not so important because there is pressure to replace the junker that just needs too many repairs. There’s no time to perform them economically and stranded without transportation is not an option. You do the best with what you have to pick from today.

Same thing as when interest rates to get a mortgage on a Maine home were 16.5% adjustable.

House sales still happened but the prices dropped to offset the higher cost of financing them. Stop renting, start owning and get the best interest rate available. Refinance when you can, pay ahead on the principle to knock down the mortgage balance and tough it out. My first home loan was 12.25% fixed mortgage rate which was a lot better than the 16.5% adjustable market norm in the early 1980’s.

Real estate is fixed based, location location location good or bad.

And your local real estate property buyer is tied to the area market for listings to consider purchasing. Can’t go out of town and bring back the property acreage. Not able to buy more for a cheaper price elsewhere and drag it home. And a close second to the three locations in a row is timing times three. Are you in a position to buy today? Got to sell a home before buying another one first? Lots of factors make the timing to buy perfect or not so hot.

homes in maine
The Color Of A Maine Home Less Important When A Shortage Of Inventory Happens During A Hot Real Estate Market.

In small town rural Maine, affordable housing is not as hard to secure compared to higher cost urban areas.

Another real estate economic axiom is the higher the price, the thinner the buyers. But the shorter the supply of what’s on the current real estate market, the higher existing buyers will dig into their wallets.

So while real estate buyers are thinking about saving money to purchase and meanwhile, property listing prices increase, sellers take it all in. Someone not thinking of selling suddenly does.. for a price. Sellers hear the buzz about now is a great market to list your property for sale and learn about property like theirs is fetching for price today.

But what happens when you were not thinking of selling but would consider it if it was made to be worth your while?

A seller who says “Someone will come along, I want a big price and would let the place go if I could double my money. If I could sell for twice what the property is really worth in a normal real estate market, I would let the place go”.

So inflated property price inventory enter the current market when an agent or broker does not walk away from the over priced real estate listing. While property needing lots of work that would usually linger on the market is scooped up because that’s all that is available within a person’s budget.

WARNING: The Mr Fix It Homes are harder to get through the bank financing mortgage underwriting hurdles though.

Cash buyers are needed for the DIY project homes. And when multiple buyers pile up like a game of musical chairs when there is only one seat available, pushing and shoving and high emotion happens. Buy low and sell high is not always possible because of a shortage of property listings which describes the Maine real estate market today.

So back to how real estate markets shift from hot to cool to cold.

real estate market
Maine Has 16 Counties And The Real Estate Market In Each Behave So Differently!

In small town rural Maine, our low property seem like legal stealing for higher priced urban real estate buyers. Folks coming to small town Maine from big city, bright lights population centers where the cost of living is much higher possess greater spending power.

Maine is the right direction for the low cost real estate and the quality of life small towns provide their community members.

But a couple things happen given a little time mixed with a lot of greed and a too fast and furious real estate market. The out of state buyers who have a pocket of cash suddenly are having problems with bank appraisals. Both on the house they are selling and if financing, the one they are buying because everything is over priced due to short supply and the frenzy to get it while you can.

maine property sales
The Numbers Don’t Lie. The Listing Sales Show The Maine Real Estate Market Is Red Hot!

The stock market going up up up and then crash during the Great Depression was the same kind of desperate but delicious for awhile if your played your cards right atmosphere of the roaring twenties.

How real estate markets shift from hot to cool to cold. The hot hot hot nothing for sale and what is is over priced supply and demand real estate market temperature suddenly drops a few degrees. When nothing for sale and it’s gold plated expensive happens, a market stall happens. Especially when a home buyer needs to use a bank that depends on an appraisal valuation report to justify the collateral.

If the property price is too high, the bank mortgage loan is denied unless the buyer has cash reserves to tap to cover the gap.

Or the sale pending, under contract property listing goes back to current and what was sold suddenly hops back onto the real estate marketing carousel. The property that goes from pending to current makes buyers in the MLS audience think what’s wrong with the

real estate? While the home buyer who wanted the listing goes off to find a better priced one to give it another go.

Often with multiple buyers, the higher bidder with the best terms that the seller links up is not out of the woods yet. The buyer won the bid, but is still are under the scrutiny of a Maine bank loan arranger who may learn the property does not appraise sufficiently.

maine rural farm land
Maine, One Of The Attractions Is Good Solid Family Values, Work Ethic. Kids Learn That Early On.

When a property owner hears how swift the Maine real estate listing sales are moving and for higher prices, many start thinking I want to take advantage of that market.

And when they list for more than market value, that’s when the real estate sales activity starts to cool off. Still a shortage of properties and demand is strong but the price too high for buyers causes a pile up of inventory. More places for sale, an increase of property listings but priced too high is a great way to signal the shift. From hot to cool and to cold if everything for sale is higher than the market will stomach. Or bank appraisers will allow when the collateral value comes in too low.

The current economy, the local news, supply and demand and inventory size all impact what’s selling and for how much in the Maine real estate market.

COVID helped make so many folks size up where they are living and Maine became popular for a new location consideration. Every real estate market behaves differently and that’s why you can not make sweeping statements that apply to the temperature of any in a state as large and diverse as Maine.

Thinking of buying or selling Maine real estate?

Here to help buyers and sellers no matter which way the real estate market winds are blowing. Hope this blog post on how Maine real estate markets go from hot to cool to cold is helpful.

I’m Maine REALTOR Andrew Mooers, ME Broker

207.532.6573 |  |

MOOERS REALTY 69 North ST Houlton ME 04730 USA


Compare listings