Condo Media - April 2014 - 12

by Jack Carr, P.E., RS, LEED-AP

C A I

R e g i o n a l

N e w s

MAINE

Condo Market News
Encouraging Signs Ahead

t's about this time of year the
residential real estate industry in
Maine is looking over its shoulder
at the sales results of last year and
projecting their hopes for the new
year. Everyone is smiling. The news is
good. In 2013, overall sales increased
in volume by 18 percent compared to
2012, while prices increased 16 percent. This year looks even better.
The Real Estate Forecast Conference, sponsored by the Maine Real
Estate & Development Association,
was held in Portland in January where
the leaders of the industry revealed
a deluge of positive statistics and a
bright forecast of things to come. As
with population and average income
levels, real estate in the greater Portland area and Cumberland County set
the tone for the rest of the state.
Median prices for homes rose from
$226,000 in 2012 to $242,000 in 2013.
Price increase by towns such as Cumberland/North Yarmouth (60 percent);
Scarborough (40 percent); Yarmouth
(31 percent); Portland (27 percent);
Cape Elizabeth (25 percent); and Falmouth (23 percent) represent some of
the hottest real estate markets in Maine.
While the market has been relatively ﬂat
since 2010, the new market is being
driven by current home inventories as
new single-family construction continues
to stall. Interestingly enough, this is not
true for condo sales where new construction is leading the market.
Boomers have become empty nesters who do not want to deal with the
four bedroom suburban house. They
are migrating to the new high-end
condominiums in the urban areas such
as Portland to enjoy the ﬁne restaurants and cultural attractions the city

CONDO MEDIA * APRIL 2014

has to offer. Changing demographics
in the urban areas see condos being
purchased for vacation homes, investments, and a search for a new living
style. Condo sales are becoming more
than a third of the market. Comparing
the month of January 2013 with sales
of only 14 units to 2014's January
sales of 46 units in Portland provides
a good look at a very real trend. Even
better, the average unit price for
these two periods has increased from
$216,000 to $377,000 per unit.
Many factors are creating this
condo market environment. With the
economy improving, the inventory of
apartments in the cities is shrinking.
Multi-family buildings spend less than
30 days in the real estate market in
Portland due to a favorable cap rate of
8 percent for quality properties. Even
historically left-behind multi-family
markets, such as Lewiston and Biddeford, are seeing its inventory shrinking and cap rates of 11 percent. Meanwhile, apartment rents are steadily
rising to reﬂect the demand.
As condo units are being purchased
as investments for future vacation use
in areas such as Old Orchard Beach as
well as future retirement homes in the
city, these factors have placed condo
unit owners who rent their units into
the same property management issues
facing apartment building landlords.
One of the least understood of these
issues is the matter of radon air testing.

Radon

Maine has passed a new law requiring
mandatory radon air testing in apartments effective March 1, 2014. The
purpose of the law is to protect tenants from the long-term effect of the

carcinogenic radon gas, which is the
second largest cause of lung cancer in
the United States. Normally, rules and
protocols affecting apartment buildings
and their occupants are not transferrable
to condominium living, but for unit
owners renting their condo units, radon
testing may have added a new wrinkle.
For condo units being rented for
more than 100 days, the new radon
rules may treat unit owners as landlords
who are required to test for radon gas,
if the unit is adjacent to the ground or
over a basement or commercial space.
The law also is applicable to rented
condo units on the ﬁrst level; 10 percent of all units on upper ﬂoors, or a
minimum of one unit per ﬂoor.
For small unit quantities (less than
10), the landlord is allowed to perform
the radon sampling and tests following strict Department of Health and
Human Services' protocols. Landlords
or unit owners cannot delegate this
radon testing or potential mitigation
to employees or property managers
unless they are licensed by the state. If
radon testing reveals radon gas levels
of greater than 4.0 pCi/L, the tenant
is allowed to break the lease unless a
mitigation repair is performed.
As with any market, the current
condo market in Maine has its pluses
and minuses. While the prices for new
condos are increasing, the amenities
and quality of the new condo developments are improving, proving the old
adage, you get what you pay for.
Jack Carr, P.E., RS, LEED-AP, is
senior vice president with CriteriumEngineers in Portland, Maine. He is
a member of the Condo Media board
and a frequent author and speaker.

Condo Media - April 2014

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