SOUTHWEST HARBOR, Oct. 23. 2020 – When was the last time every important data point was above double-digit percentage increase for homes sales on MDI towns?
In the above chart compiled for QSJ by broker Carol Schaefer of the Davis Agency in Southwest Harbor, the number of homes under contract for the first 10 months of 2020 increased 51 percent over 2019. Tremont led the way with a 93 percent increase, albeit on a smaller base.
Of course, the supply side of the market just couldn’t keep up with the demand as the following chart indicates the pressure on inventory. When you go to the market at the end of the day, everything’s been picked over.
Real estate agents and lawyers on MDI described the current market as “insane.” Buyers from big metros like New York and Boston are gobbling properties, some “sight unseen.”
“They like having more room in a home and they have learned they can work remotely,” said broker Carol Schaefer. “The internet is a must.”
The average price for a home sold on MDI this year was $671,578. Insane!
The average price for a home sold in the town of Mount Desert is approaching $1 million. Insane!
Total cost of homes sold in Tremont up by 124 percent. Insane!
The town of Mount Desert is a good proxy for home sale activity across the island because of its diverse inventory of affordable, mid-range and high-end homes from Hall Quarry to Seal Harbor.
Last year the town reported a record number of 55 homes sold, and assessor Kyle Avila expects this year will eclipse last year’s record. With more than two months to go in 2020, there have already been 53 homes under contract. See chart below for the last 10 years of sales in Mount Desert.
But the word on every real estate professional’s lips is “crash,” as they fully expect a bust in a year or two. The last time such a downtown occurred in 2008, the decline was marginal, said Kyle Avila. It took several years for the market to recover until it hit a boom in 2012. Except for a brief cooling off in 2013, the town has seen a steady rise since 2014, In 2009, the record of 55 homes sold beat 2018’s 43 sales.
4 Oak Hill Road, Somesville, which had been on and off the market for five years, recently went under contract. Seller was askinhg $1,075,000
Then there are the collateral effects from this “monster” market as the buyers compete for builders and trades people to remodel or rebuild. Lawyers, banks are backed up for months. One lawyer told me she can’t take another new piece of real estate business until next year.
Some of the sales may be pushed into January for closing and will not reflect the actual amount of business in 2020. The market has cooled a bit the last two weeks but it’s anyone’s guess how long this bubble will last.
The biggest collateral damage is the hit to the island on affordable housing. Where do working people go to buy a house when the average sales price is $671,758? Of course some of that is the effect of homes sold at the high end.
The highest priced home for sale on MDI during this extreme sellers’ market is 79 Peabody Drive in Northeast Harbor, just steps from Thuya Gardens. Seller is asking $8.3 million, which is more than double the latest assessment in the town of Mount Desert which values properties at 100 percent of “market value.”