Click here for the latest coronavirus news, which the BDN has made free for the public. You can support our critical reporting on the coronavirus by purchasing a digital subscription or donating directly to the newsroom.
Statewide, the number of sales contracts and home listings began dropping in mid-March, around the time schools began closing and Gov. Janet Mills declared a civil state of emergency related to the virus’ spread. Properties under sales contracts are a leading indicator of the real estate market’s strength, said Brit Vitalius, founder of the Vitalius Real Estate Group in Portland.
Between March 14 and April 14, some 1,328 single-family homes and condominiums were under contract throughout the state, down 59 percent compared to the same time period in 2019, according to the Vitalius group, which pulled data from the Multiple Listing Service, a nationwide database shared by realtors. The number of properties that were listed for sale also dropped by 32 percent to 1,651.
“People are selling houses, but not at the same pace,” said Tom Cole, president of the Maine Association of Realtors. “But we’re okay with that.”
The Maine Association of Realtors and the National Association of Realtors will release March figures on existing single-family home sales and median sales prices on April 21.
[iframe url=”https://flo.uri.sh/visualisation/1946037/embed” width=”600″ height=”800″]
The real estate slowdown puts a divot into an already-flagging state economy, which experts have said could experience a potentially long coronavirus-related recession. The real estate industry contributed $11.9 billion, or more than 18 percent, to the gross state product in 2018, according to the most recent data available from the National Association of Realtors. Each home sold contributes about $78,227 to the state’s economy. Some 6,656 Mainers are employed by the real estate industry, 82 percent of them in small businesses, according to the U.S. Small Business Administration.
“We were heading into the best spring of sales we’ve ever seen, with prices going up,” said Elise Loschiavo of Vitalius, who sells homes in the Portland area. “Everything looked good until everything ground to a halt on March 13, when schools began to close.”
While fear of the virus spreading and job losses are keeping real estate transactions down, another dampener is whether cities consider real estate an essential service. While it is considered essential statewide, cities including Portland have not deemed it essential. That means no open houses or showings of occupied properties have been happening, Loschiavo said.
The nonessential designation in Portland was a big factor in large declines in the number of homes under contract and the number of homes listed for sale in Cumberland County between March 14 and April 14, Loschiavo said.
The number of homes under contract in the county fell 46 percent in that period to 234, while the number of listings dropped 61 percent to 116.
The Portland City Council made some real estate activities essential during its meeting Tuesday night. However, under an order published Wednesday, real estate agent activities are not allowed in occupied multi-family properties with more than four units, in tenant-occupied units of properties with four or fewer units or on property where the owner is not a resident.
Still, for the last month realtors like Loschiavo couldn’t take prospective buyers into homes. Other realtors throughout the state have used virtual home tours and inspections to let buyers see the inside of properties.
Closings on homes have become venues for face masks, gloves and hand sanitizer. While the governor has authorized remote notarizing of paperwork, Cole said many title companies don’t allow that, so buyers such as Meghan Henry have encountered some unusual experiences.
Henry bought a house in Portland’s west end in a sale that closed April 3. When she went to the title company for the closing, she was asked to sign a health form saying she had no symptoms and was asked to use hand sanitizer. She was directed to a room where she and the title clerk sat at either end of a long table.
“She slid the documents down the table to me and I slid them back,” said Henry. She also sold the condominium where she and her daughter currently live and expects to close on that this Friday. She was told not to come early, because there is nowhere for her to wait.
Henry said she is more nervous about the upcoming closing, because so much has changed in the time since she closed on the house.
Many banks have deferred loan payments during the coronavirus, and that has caused some to be more strict with new loans. Some lenders are increasing the minimum credit score required for a purchase, and some are delaying employment checks on buyers until closer to the closing date.
“It’s stressful with the economy the way it is and not knowing much about your buyer,” Henry said. “If I knew what I know now about the coronavirus spread, I would have hesitated to sell my condominium.”
Watch: Janet Mills extends civil emergency in Maine