Stable Maine Housing Market Keeps Home Equity In Play

By Richard Barrington
Local Lender Columnist
May 15, 2008
Bucking a national trend, the median price of home sold in Maine was stable in 2007, and actually increased slightly. This is important news to homeowners as it helps keep home equity available as a source of capital.

In some parts of the country, mortgage concerns have led to double-digit declines in housing prices, and the median price of homes sold nationally declined overall in 2007. Weakness in home prices is a key economic concern at both national and local levels Because home value is a component of home equity declining home values reduce the amount of capital available to the economy at large. At the individual level, declining home values can wipe out a source of borrowing that many homeowners have come to depend on.

For this reason, stable home values in Maine are an encouraging sign for the state's economy, and for individual homeowners contemplating a home equity loan.

Values in Maine Hold Firm

The median price of a home sold in Maine during 2007 was $194,000, an increase of 0.77% over 2006's figure of $192,519. An increase of less than one percent may seem like a modest achievement, but against a backdrop of declining home values nationally it is a positive sign.

Waldo County posted Maine's best price performance during 2007, with a 10.41% increase in the median price of homes sold during the year. Cumberland County boasts the state's most expensive homes with a median price of $251,000.

With home prices holding flat overall across the state, the typical homeowner should see home equity continue to accumulate. Home equity is the difference between a home's value and the remaining balance on the mortgage. Even if the home's value remains flat, home equity will accumulate over time as the mortgage is paid down.

No Time Like the Present

With home equity values intact for the typical Maine homeowner, anyone needing a home equity loan may consider this a good time to act. For one thing, interest rates are relatively low. For another thing, there is no guarantee that home prices will continue to hold fast.

Even while the overall values of homes held steady in 2007, the volume of homes sold declined by 10.07%. Perhaps even more troubling, this decline appeared to accelerate at the end of the year. Declining sales volume can be a sign of weakening demand, something that is likely to affect prices eventually. Thus, having a home appraised for a home equity loan now might be one way to avoid being affected by the possibility of future declines in price.

Source:
Maine Real Estate Information System

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.