A real estate for sale sign sits outside 65 George St. in South Portland on Wednesday, Dec. 30, 2020. South Portland now ranks in the top 10 most competitive U.S. cities in which to buy a house. Credit: Troy R. Bennett / BDN

SOUTH PORTLAND, Maine — Prospective buyers offering much more than the asking price for houses in South Portland are still losing out as the southern Maine city has become one of the most competitive markets in the country for buying a home.

South Portland was the only east coast city to crack the top 10 list otherwise dominated by areas in Washington state and California, according to rankings released Monday by Seattle-based real estate brokerage Redfin.

Out-of-state buyers looking for a safe area to live and those wanting amenities and close proximity to Portland are driving up sales and prices in South Portland. Others have chosen to move to more rural areas of the state like Rangeley and Greenville.

“I have a handful of buyers who have been making offers in South Portland for six or seven months and are going $20,000 to $40,000 over the asking price,” realtor Jeff Walker of Bean Group Real Estate in South Portland, said. “And they’re losing out to cash buyers who seem to be coming from out-of-state.” One couple who had been looking at larger homes in their current South Portland neighborhood have almost given up trying, he said.

Almost 56 percent of homes in South Portland are selling above list price, Redfin said. The median sales price at which half the homes sold for more and half for less was $350,000, up almost 8 percent from Jan. 1 to Dec. 8 of this year compared to 2019. Inventory is tight, with more than 55 percent fewer active listings this year compared to last year. Homes on the market see multiple offers and get snapped up in an average of seven days, less than half the time for an offer last year.

The hot market comes at a time when buyers, sellers and real estate agents are observing pandemic safety precautions, including wearing face coverings and limiting the number of people viewing a home at one time.

Still, people are flocking to the area from more expensive cities because it’s one of the last affordable coastal areas in the country, Megan McShane, a Portland-area agent with Redfin, said.

“It’s hotter than ever this year with remote workers moving in from places like Boston and Los Angeles,” she said.

When she moved to the Portland area two years ago, McShane said one of the first houses she put under contract was in South Portland. It had been sitting on the market for a few weeks and she had to lower the price to sell it.

“That would never happen now,” she said. “Everything is getting scooped up with multiple offers, waived contingencies and waived appraisals.”

Most of the buyers are from Massachusetts, New York, Connecticut and New Jersey, Walker said, and tend to be looking only in South Portland for amenities like proximity to Willard Beach. In the past, buyers have asked to be within a 30-mile radius of Portland or a 20-minute drive from their work. And some had looked to South Portland as a less expensive alternative to Portland, but prices are high in both cities now.

“It’s one of those towns that has easy access to the interstate and Portland,” Lisa MacDonald, associate broker at Better Homes and Gardens, said. “It has pretty much everything that you need locally if you don’t want to go into Portland.”

Houses are close together in many of the neighborhoods, she said, lending the feel of a community where it is safe to walk. The Knightville neighborhood has small shops and older homes and Mill Creek has a skating pond and summer concerts. Crescent Beach and Higgins Beach are nearby.

Many of her buyers are young couples or young professionals relocating to the area. Clients have moved in from California, Florida, Illinois, Massachusetts, Pennsylvania, Tennessee and Texas.

“Since COVID-19 the market has gotten very tight,” MacDonald said. “It’s a stressful market for buyers.” Some homes are selling sight unseen, with some buyers even waiving home inspections and appraisals.

Local people looking to relocate to a different home in South Portland also are finding it difficult. Some sellers can’t really afford to put their homes on the market, MacDonald said.

“They can’t afford to sell because they can’t afford to buy another home,” she said.

Despite the hot market, home sales in Maine and across the country declined in November compared to October, even though they were higher than in November 2019, according to state and national data. Pending home sales were down for the third straight month in November, the National Association of Realtors on Wednesday said, declining 3.3 percent from October to November in the northeast,

The Maine Association of Realtors last week reported that existing home sales, at 1,965, were up 31 percent over last November, but down from the 2,341 units sold in October. The median sales price was $270,000 in November, up 20 percent over the previous year but down slightly from $280,000 in October.

Both MacDonald and Walker attributed the October to November declines to normal seasonal softness.

They also said they have not yet seen foreclosures related to job losses during the pandemic. Homeowners are not facing the same conditions as the Great Recession from 2007 to 2009, Walker said, when many homeowners borrowed more than their homes were worth. By contrast, current home prices have risen over this year.

Today’s hot market is expected to continue in South Portland through 2021, according to Walker, as out-of-state buyers remain interested, demand remains high and loan interest rates remain low.