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De Carlo, the year’s top real estate agent in the Bangor area, with sales of $18.6 million in 2005, was a 20-something working at a New York City ad agency at the time. She recalls an endless run of stops at little real estate offices in tiny towns.
“We’d talk to a broker, get in the car, and drive to see a house,” she says. “Often, they didn’t even have any information on the house, so you had to go look at it. Then we’d drive to the next town and ask again. It was two weeks of that, over and over.” It took the de Carlos two years to find the house in Abbot that became their home.
Today, they’d likely use the Internet for much of their shopping, and they might find a house much faster. They could log on to www.realtor.com or another site, enter their preferences and constraints, and narrow the search down to a few homes in a matter of minutes. They might take a virtual tour (an online tool that allows the viewer to see 360° views of a room or house), and then schedule a visit to their favorites, armed with all sorts of information on the house, right down to downloaded copies of the owner’s disclosure forms.
Since the Internet came along, “it’s night and day,” de Carlo says. “Back then, there was no multiple listing service, no sharing of listings, and no place to access all that information. Now, anyone can do it, from anywhere.”
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Plenty are, and plenty have. The Internet has changed real estate, and changed it in eastern, central, and northern Maine as much as anywhere. That’s because, despite rapidly rising prices, housing in the area remains a bargain compared to most of the U.S. Compared to southern New England, to many metropolitan markets, and to nearly all of the East Coast, particularly along the waterfront, a house or land in Maine looks like a relative deal. Because of that, the Internet has, according to some real estate pros, changed the supply-and-demand equation for the area.
“If I can get more activity, more people looking at properties, more eyeballs, it’s going to drive the price up,” says Earl Black, the designated broker at Town & Country, REALTORS, with 10 area offices. “The Internet brings more people, gives them more information.”
Of course, the Web is far from the whole story. Economics, dem-ographics, world events, and tech-nology have conspired to build an unprecedented, nationwide boom in real estate prices. Maine is like everywhere else in many ways. Years of historically low interest rates, combined with the stock market fallout of the tech bubble, made real estate an attractive investment. Buying houses to sell them for a profit a few months later, or “flipping,” was the rage, and it even reached this area.
But it’s also different here. Different from Portland, Boston, and other more populated areas. For one, real estate is a lot cheaper. Also, the second-home market is huge. Maine has the highest percentage of second homes in the country at 15.6%, according to the U.S. Census Bureau, followed by Vermont (14.6%) and New Hampshire (10.3%). The market is going through a long surge that began in the 1990s and continues today, according to the National Association of Realtors (N.A.R.). While its study methods have changed over the years, the N.A.R. says 2.82 million second and investment homes changed hands in 2004, compared to a mere 377,000 in 1999.
While real estate in our region may be lower priced than property in southern Maine, in terms of return on investment, it’s performed even better. During the past five years, as the Internet grew into a broadband force at the tips of nearly everyone’s fingers, northern and central Maine have outpaced the state, Maine’s most populated and highest-priced markets, and even the country, in home price appreciation. [See sidebar.] The seven northern counties of Maine averaged a 17.3% increase in real estate ROI, better than Cumberland County, Maine, and the U.S.
Those last five years continued a trend that may be surprising to some. From 1983–2003, Penobscot County home values rose among the fastest in the nation, when compared to metropolitan areas, according to a study by the N.A.R. and economist.com. The Bangor county market area, or CMA, saw prices jump 94.4% over that time, placing it 21st in the country and 11th in the Northeast, outpacing even New York and New Jersey.
The heat of the market, many real estate pros say, comes from out-of-staters. They tell stories of buyers scooping up properties sight unseen, proof in itself of the Internet’s role in this market.
“All of Maine is benefiting from the Internet,” de Carlo says. “Before we were on the Internet, people had no way to access these lakefront properties in northern Maine, or oceanfront Down East. You had to just rely on somebody rolling into town and saying, ‘Hey, I want to buy something on the water.’”
And for most out-of-state Internet buyers, it starts with the water. Maine’s glorious coastline is a tremendous draw. There’s a mystique to it, from the sun rising over the horizon to the lobster boats bobbing in the waves. With all of its islands and inlets, the Maine coast is 3,478 miles long, more than three times the length of California’s. And it’s all within a day’s drive of the country’s largest population center, full of people who spend their lives—much as the de Carlos did—dreaming of owning their own little piece of it.
Today, those dreams are becoming reality for the baby boomer generation, many of whom reached or passed their peak earning years during a time when the long economic expansion of the late 20th century filled their wallets, while the stock market crash and low interest rates of the early 21st century drove them to real estate. The laws of supply and demand have turned that dream—a place on the Maine coast—into something that is now out of reach for most native Mainers.
From the ocean, the sharply rising prices spread to Maine lakes, which number more than 2,000, all still within that figurative day’s drive from Boston or New York or Philly or Montreal. The rising prices also spread inland from the coast, and into the villages and towns that surround the lakes.
“The house a mile inland isn’t going to be at the same price level as one on the coast,” says Bob Norris, broker of record at Prudential Northeast, which has seven offices and sold more houses in Waldo and Washington Counties than anyone else in 2005. “But the value is going to be affected by the person who’d like to have it on the water but can’t. They still see the advantage of a rural setting, a small town that gives them the quality of life they’re seeking, with the water nearby.”
This increase in Maine’s perceived value has been true at all levels of the market. Norris lives on Sebas-ticook Lake in Newport, and re-members a time when spending $10,000 for a camp there was “outrageous.” Last year, he saw bare waterfront lots sell for $135,000. It’s true on Moosehead, where a $200,000 home five years ago might now be worth $600,000. And it’s even true in Millinocket, where property values sunk after the closing of Great Northern Paper.
“I’ve had people finding houses in Millinocket for $50,000 or $60,000 on the Internet and come up to buy them,” says Earl Black. “These are in-town houses, and they’re using it for a recreational property. They’re still near the lake, or the snowmobile trails.” Compared to real estate prices elsewhere, Maine prices seem like a steal—driving up values, from a percentage-wise basis, at one of the fastest rates in the nation.
It’s especially true of higher-end properties. Something that cost $600,000 a few years ago might fetch $2.5 million today, Black says. Even still, that can be viewed as a bargain, especially when combined with the mystique Maine carries across the country and the world.
“Even $2.5 million is an awful lot less than prices in Miami,” Black says.
Jim Trimble knows that reality. The owner of Trimble Private Brokerage in Bangor, he specializes in high-end and unusual properties in Maine and, more recently, all over the world, and works almost exclusively with out-of-state buyers. The Web, he says, “is a big part of the story here.”
The Internet, Trimble says, is a conduit to the outside world to everyone looking for that slice of Maine, whether they’re looking to spend $100,000 or $4 million. Trimble, with 30 years in the business, has seen those $4 million homes from when they first started reaching that price plateau, in Kennebunkport, move all the way up the coast.
“It just kept moving up, as more and more people with money were attracted to Maine,” Trimble says. “It’s been a pretty amazing thing to see.”
The price hikes started in the south, where Boston’s just an hour away without rush-hour traffic, and they oozed north and east, just as they have moved inland and further away from the water.
“[The price hikes] happened in Camden years ago, and on Mount Desert Island,” Robert Norris says. “The last few years, it’s happening in the Stockton Springs, and the Machiasports and the Winter Harbors.”
Prices are up, dramatically, in all of those towns, and virtually every town on the coast. And yet, to the out-of-staters, they remain a bargain.
Trimble says ”the hottest market now is Washington County,” because it represents the last of the big-time bargains to wealthy folks looking to buy homes on the ocean, whether for second (or fourth, or fifth) homes, for retirement, for summers, or for investments. Prices just keep climbing all the way up the coast, making Washington County the last U.S. oceanfront frontier. Similarly, they keep climbing up Interstate 95, and beyond, for lakefront properties.
“People see houses there for $500,000 that would cost $7 million in other areas of the eastern seaboard,” Trimble says. “They’re amazed. Sure, you could’ve bought that house for nothing in 1986, but they don’t care. Prices have just kept climbing, all the way up to Canada.”
“But,” he adds, “it’s still cheap in many people’s minds.”
The Internet, many believe, has played no small role in the high-price migration.
“It’s taken the little towns and places that were under the radar 10 years ago and put them right there, right in front of people,” Black says. The result? “It wasn’t that long ago that you could go north of Bar Harbor and come up with some fairly inexpensive properties. That’s getting tougher now.”
Norris, from Prudential Northeast, doesn’t subscribe to the theory of Internet as driver-of-demand. Price gains, he says, come from demographics of hundreds of thousands of baby boomers looking at second homes, retirement homes, and even a change of lifestyle. They come for Maine’s draw as a safe place, full of charming small towns and uncrowded two-lane streets without traffic lights.
But even he admits the Internet is a ubiquitous vehicle for potential buyers of all stripes.
“Years ago, these people might have said, ‘I like the hills of Tennessee,’ and look there,” Norris says. “Now, through the Internet, they’re more educated. They are going on there, looking at prices, and eliminating markets that are not within their financial plan. So maybe they do look at Maine.”
