Buyers eager to live on Maine’s coast are scooping up homes to tear down

A “tear-down” home that was never finished on less than a quarter of an acre hit the market this week for $1.3 million.

That’s because the 2,800-square-foot home, which was abandoned in a state of disrepair in the early 2000s, is in Biddeford Pool, one of Maine’s wealthiest neighborhoods. It is one of only two single-family homes for sale there. The other is listed at $4 million. That makes it attractive despite its need for a complete rehabilitation.

“It’s a very coveted community,” Yau, an associate broker with RE/MAX Shoreline, said. “I wouldn’t say everyone’s jumping to buy [properties in disrepair], but it’s getting harder to find land and the pricing is going up.”

It’s an extreme example of one of many homes on the market right now that demonstrate the price of admission to Maine’s desirable coastal enclaves, which has ballooned in recent years due to record low housing inventory coupled with sky-high demand for waterfront property.

Despite labor shortages and the climbing price of construction materials, Yau said that building new on the Third Street lot in Biddeford Pool would still be profitable for an investor.

His office just closed on a newly-built home on a similar-sized lot in Biddeford Pool that sold for $3.15 million. This “tear-down” property was listed on Monday. By Tuesday, Yau had already gotten several inquiries from interested buyers — mostly people looking to tear the home down and build new.

Much like in Biddeford Pool, living on Mount Desert Island has long been exclusive. But it is unattainable today to the point that a real estate agent operating there calls it “out of reach” for young people.

“It’s getting out of hand for people who are living here or for people who have been living here,” Ethan Merchant, a sales agent with Lynam Real Estate Agency, said.

One of his listings is a 923-square-foot cottage on the market for $720,000 in Northeast Harbor. It would have gone for much less just five years ago but is priced correctly for today, he said. As the cheapest of only three properties for sale in the village right now, Merchant has “no doubts” that it will sell soon. The others are selling for $1.1 million and $2.1 million.

But as prices continue to climb while demand peters out, sellers and realtors are beginning to have conversations about pricing homes more, even in these hot markets, Julie Williams, broker-owner at ERA Dawson-Bradford Co., said.

Midcoast properties were seeing price increases up to 40 and 50 percent each year, Williams said. That led many to assume, years on from the pandemic-related real estate boom, that their property will sell for well over its market value.

“Things have cooled off, we’re seeing increases in pricing closer to 3 to 6 percent, or even price decreases,” Williams, whose agency listed a $949,900 single-family home just off the water in Rockland, said.

If priced incorrectly, Williams said, properties that were selling in days years ago are now sitting on the market for weeks.

Home sale prices in Rockland have increased 15 percent in the last year alone. They stand at an average of $395,000, according to Redfin . But the properties range widely in price — from a $230,000 “tear-down” home inland to a condo going for nearly $1 million close to the ocean — and sit on the market for an average of 48 days.

Merchant thinks “scary interest rates” are behind that longer listing time, suggesting that some buyers are trying to wait out in case they drop. Williams thinks that though demand has cooled, things are still competitive.

“Buyers [here] will buy, despite the interest rate,” Williams said.