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Best Places to Buy a House in Maine

The Pine Tree State is known for its fresh lobsters and more than 40,000 acres of wild blueberries. Still, in recent years it has also become an excellent opportunity for real estate investors to turn to realtors in Augusta, ME, for a profitable real estate investment. Maine’s average home sales price has risen sharply in recent years, reaching five-year national highs for single-family and multi-family homes. There are several reasons for this price increase. Above-average population growth over the past decade, combined with developed infrastructure, has made the demand for real estate in the state soar. Maine is a relatively small state, with only 1.34 million people, but it has grown by about 2% since 2010. Growth across the state is faster than the national average. The growth rate for the same decade is less than 1%.

Due to the state’s small overall population compared to other northeastern states, many large construction companies shy away from building homes here due to the inability to scale. However, independent developers who provide materials and labor can succeed in new construction projects in more desirable areas. Long-term investors looking for rental properties can also take advantage of Maine’s local real estate. 

Real estate agents can provide the best information on where to invest in real estate in Maine. Find experienced realtors in Maine to guide you on your real estate purchase and be your advocate. 

1. Portland

The Portland metropolitan area has seen incredible growth in the Maine real estate market for the same reasons as the rest of the state. The combination of demographic explosion and limited inventory has caused an increase in home values. The city of Portland, with a population of 65,645, is the largest in Maine. The median household income in Portland is $71,913, which is well above the state’s median household income, indicating higher purchasing power in the region compared to the rest of Maine. Such statistics are of interest to real estate investors, as average home sale prices and average rental prices largely depend on the strength of the local economy. 

By January 2022, the median home sale price in Portland will reach $432,500, down slightly from January 2021. This is a market correction based on the city’s extraordinary real estate growth in 2020-21 when the median home sales price hovered around $500,000. The current median home sales price in the region is well above what it was in 2020 when the buying frenzy began. The correction that the whole Nation is experiencing is also being felt in Maine. 

Yet, investors can be confident that projects will remain stable and continue to be highly rated. 

Check out: Guidelines For the Estate Planning For High Net Worth

Homes in Portland, Maine, consistently sell above their original list price, with more than half of the homes for sale exceeding the asking price. By comparison, only 2% of recently sold homes in Portland are priced below their asking price. External financing allows investors to tap into a strong market and find opportunities for profitable real estate transactions. On average, a home sells in just 3 days, with the most popular homes selling for around 9% above the list price and selling in just 6 days. The houses with the highest prices have basements, high ceilings, and incredible views. 

Builders have an advantage over other real estate investors because they can tailor their designs to the market. By financing your project with a new construction loan and incorporating these desired amenities into the building, you can maximize the sales potential of your property and generate the highest possible return. Real estate investors looking to purchase rental properties should consider Portland as one of the strongest rental markets in the entire state. 56% of residents rent their homes. Therefore, finding tenants for the properties you are looking for is easy. With an average rent of $1,577, this is currently slightly above the state average and one of the highest average rents. Portland real estate is famous for its affordability, safety, and proximity to major attractions and sites.

2. Lewiston

Lewiston is a much more affordable entry point for new real estate investors and those with less capital to invest in a project. With a population of just 36,501, Maine’s second-largest city, and a median income lower than Portland’s, Lewiston’s median home sale price is an essential consideration for fixed-income investors and renters looking for their next project. Investors can benefit financially from this. 

Median home sales prices in the area increased 27% year-over-year to $235,000, a significant and consistent increase typical of many Maine real estate markets. In January, 35 homes sold in Lewiston, a 40% increase over the previous year. It’s also important to note that homes only stay on the market for an average of five days, two days less than last year. This type of sales frequency benefits investors looking to flip a home, close projects quickly, and pay off their loans to maximize returns.

Additionally, 68% of homes sold above the asking price, demonstrating the financial strength of sellers in today’s market. The average rental price is now $900 per month, up 16% from last year, making it a financially attractive price for renters. An even more critical point for rental investors is that 77% of Lewiston residents are renters, not owners. The high value of investment properties makes Lewiston one of the best places in Maine to invest in rental properties.

3. Bangor

Slightly smaller than Lewiston, Bangor is Maine’s third-largest city and another great opportunity for real estate investors. The town of 32,403 residents is similar to Lewiston in that it is more affordable than Portland and has a similar growth trajectory. It is one of the strongest major real estate markets for developers looking to finance new construction projects. Thanks to continued demand, average sales prices continue to rise, and affordable land is easier to find than in the previous two cities on the list. The median home sales price is $217,000, up 32% from last year. There were 38 homes sold in January, a 23% increase from last year, underscoring the stability and strong growth of Bangor’s property market. About 48% of homes sold above the list price, averaging 21 days on the market. 

Bangor’s affordable entry point and fast pace of real estate offer clear benefits to investors looking to flip a home since they can put minimal capital into a project and quickly exit once the job is done. For builders and contractors planning their next project, it’s essential to know what Bangor home buyers are looking for. Homes with an outdoor patio, fenced yards, and a spacious basement sell faster and have a much higher average sales price than homes without these features. Building to meet market demand is an advantage new home builders have over all other real estate investors. 

The median rent in Bangor was $788, up 15% from last year. Rental investment opportunities are less stable than in Lewiston or Portland, where less than half of the population rents rather than owns. Still, investors use the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy to diversify their rental investment portfolios. If you want to invest profitably, find cheap real estate in Bangor.

4. Saco

Saco is a small but modern city in Maine with a population of 20,849 that has experienced 13% population growth over the past decade. This population growth is well above average and shows why the Saco real estate market has become so attractive to investors. The city is located on the shores of Saco Bay and the Saco River, so potential waterfront and beach properties quickly add value to the landlocked real estate market. 

Median home sales prices in the city are similar to those in Portland, as they have seen a very slight decline in recent months due to a market correction. Saco’s median home sale price is currently $362,500, down slightly from last year but hitting a five-year high for 2020. Homes sell in an average of 31 days, with 63% selling above the list price. This statistic is important for investors looking to flip the property because it helps highlight that investment opportunities are in the hands of the sellers. 

Homes with the highest demand can be sold for 10% more than the list price in an average of 5 days. Views, fireplaces, and high ceilings are some of the most popular elements of homes in this area today. The most popular homes sell very quickly and well above the asking price, so builders should consider incorporating these amenities into new construction projects, as it can increase the value of your projects by 10% or more. 

The median rent in Saco is $1,726, the highest in the state, but it’s important to note that only 34% of residents are renting. Although rents are still lower than in other cities, investors looking for an excellent rental property should consider beach properties for short-term rentals. These short-term rentals are financially beneficial and can increase your return on investment because they are in the best locations. Real estate investors should consider using short-term loans to finance their Saco real estate buying strategy.

5. Old Orchard Beach

Old Orchard Beach, a small beach town, is a hidden gem for Maine real estate investors. It’s the smallest city with just 8,862, but it has grown by 3% over the past decade. This tight-knit community features more expensive waterfront homes or more affordable homes in the interior, giving investors options based on starting capital and preferred real estate entry strategy. The median home sale price in the area reached $372,500, up 27% from last year. A house spends an average of 31 days on the market, which is incredibly short for such a small town. Desirable homes in the city can sell for approximately 7% above the list price in as little as 5 days from the original list price. This brings the real estate investment benefits needed to move projects forward quickly and move on to the next project as soon as possible. 

Based on listings and final sale prices, the most attractive property in town are homes in the local golf club. While a developer can’t bring the local golf club to other properties, it will help you understand the types of buyers who plan to become Old Orchard Beach residents and plan the project to their specifications. Understanding the types of home buyers in the area, you are investing in can help you strategize and maximize your final sale price. 

The average monthly rent in Old Orchard Beach is $990, which is lower than the renter average in other areas. However, short-term rentals are booming in coastal cities, and the typical starting prices can make them valuable for investors looking for an excellent rental property. As in Saco, beachfront real estate can be an excellent investment for traditional rental properties, but it can be incredibly profitable for short-term vacation rentals. Investors looking to build or expand their investment portfolio with short-term loans should consider Old Orchard Beach as a good location.

Maine currently has one of the most stable real estate markets, ranking among the top in the state. Some prices are lower than a year ago, but that’s the result of a market correction, not a market crash, as evidenced by average prices much higher than Maine thought possible five years ago. Despite these minor dips, much of the state continues to experience substantial growth spurts that have yet to slow down in five years, making it the ultimate opportunity for real estate investors.

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