Dear Friends, 

It is fair to say we have endured a lot together during the past several months.  The tumult following the financial meltdown from October 2008 through March of 2009 has had a lasting impact on the Global economy as well as Maine Real Estate.  It does not seem possible that just a bit over one year ago, the Dow Jones Index traded below 6,500.  The stock market had to rally more than 60% from the March 2009 lows to finish the year (2009) near 20% below all time highs.  Maine Real Estate did not share in the wild swings of the stock market, and it seems to be settling to a more comfortable and stable dynamic, consistent with the net returns of the stock market.  Whether that is simply a coincidence, or the efficiencies of the "invisible hand" adjusting to the new economic conditions is a topic for lively discussion.  At the moment, we welcome the stability. 

In recent months, we have met with many of you in person to discuss the state of the real estate market.  We have been saying for some time that the market volumes hit the lows of this downward cycle about a year ago.  Maine Association of Realtors reports that "January (2010) marks the eighth month of positive gains in Maine's existing home sales market." Despite significant double digit increases in Volume, home prices continued to fall for most all of 2009.  The December numbers revealed a small reversal in this trend, with the median home sale price improving 1.5%.  The January median sales price increased more than 5% from January 2009 levels.  Although the sales price improvements are measured against very weak market conditions last year, it seems prices have ceased their persistent decline. 

Spring 2010 has a very different look and feel than just a year ago.  The table below highlights a few of the changes:

I continue to be encouraged by virtually all of the positive signs for the spring market with low interest rates, government-led buyer incentives, re-priced inventory better reflecting current market conditions, mild weather and generally active buyer inquiry at most price points.  Unlike most of the Eastern seaboard, coastal Maine had a mild, nearly snow free winter which already has golf courses opening, spring skiing conditions, and daffodils popping.   There are renewed signs of buyer activity in the relatively quiet middle market real estate segment.  The chart below demonstrates a burst in Under Contract Activity which is a leading indicator for sales. 

We conclude that the financial markets have enjoyed an enormous recovery despite remaining well below the market's all time highs.  Although the 10-year Treasury interest rates have risen .75% in the past year, mortgage rates are stable and attractive near 5% +/-.  Oil prices, up 78%, are always a worry as it has such far reaching wealth and inflation implications, but are also a sign of expectations for economic vitality.  The dollars has weakened against most major currencies which has the effect of lowering the cost of real estate for a foreign buyer.  Particularly striking is the strength in the Canadian Dollar.  Canadian nationals have long been a well suited buyer for Maine Real Estate. 

In conclusion, we are experiencing a sense of relative calm which may be with us for a while to come.  The "NEW NORM" in Maine Real Estate is characterized by a gradual improvement in liquidity, confidence, supply/demand dynamics, unit volume and ultimately price stability.  When compared to the experience of the last several years, the "NEW NORM" is a welcome relief.  We are looking forward to a spring with more market sales data, more confident buyers and listing prices reflective of the current market conditions.