This home at 857-861 Kings Highway in Kennebunkport sold for $8.4 million last year and was one of the three most-expensive homes sold in Maine in 2024. Gregory Rec/Portland Press Herald

A Kennebunkport property made national headlines in January when it sold for $12 million just 90 minutes after hitting the market.

It was the third-most expensive property ever sold in the state, but it may not hold that title for long. Maine’s luxury real estate market had a record year in 2024, with more than 1,100 properties sold for more than $1 million and 21 properties for more than $5 million. Real estate experts say the luxury market boom is not expected to bust anytime soon.

Those records could be causing nonluxury prices to go up, too. 

“The luxury buyer is driving all segments of Maine’s residential real estate,” said Elise Kiely, a real estate agent at Legacy Properties Sotheby’s International Realty.

Last year, there was a three-way tie for the most-expensive home sold, with one property in Kennebunkport and two in York selling for $8.4 million, according to data from Maine Listings. The majority of Maine’s biggest sales were in York and Cumberland counties.

Not only were the 1,146 high-end properties sold last year a record, the number was roughly quadruple the 307 sold in 2019.

The trend held for homes over $2 million — increasing from 59 to 237 over five years — and $5 million, going from just five homes to 21.

Meanwhile, the average number of single-family home sales has been decreasing. In 2019, the state sold 18,140 homes for a sales volume of about $5 billion. After hitting a peak number of sales in 2021, with 20,401 homes changing hands, the market has been slowing down as the inventory shortage has worsened. Last year, the industry sold just 14,281 homes. But even with the decrease, the sales volume rose to $7 billion in 2024.

“I think that’s a combination of appreciation and what’s happening at the really high end of the market,” said Kiely, who was presenting at the Maine Real Estate and Development Association’s annual forecast conference.

REDEFINING THE MARKET 

Luxury properties are taking up a larger share of the market, jumping from about 1.5% of annual sales to 7% in just five years.

Chris Lynch, president of Legacy Properties Sotheby’s International Realty — the state’s top seller of multimillion-dollar homes — said in the company’s 2024 “significant sales” report that the rise means it’s time to redefine the “luxury property market” from the “somewhat arbitrary and fixed $1 million threshold” to the top 5% of all sales in Maine. In 2024, that reflected a sale price of $1.2 million.

“While redefining the luxury property market may seem bold, we believe this adjustment is an important and necessary distinction, given the unprecedented change in inventory and pricing trends,” he said.

These luxury buyers have a few things in common, Kiely said. They’re often older (clients she calls her luxury active baby boomers and luxury empty nesters), looking for their second home, usually as a “home base” for kids and grandkids, and while they’re not constrained by a budget, the condition of the home is important. And they’re paying in cash.

“They are not going to settle, but once they find what they’re looking for, they’re going to strike and they’re going to strike hard,” she said.

That access to cash is another reason the high-end market has stayed hot while other segments have wavered — cash buyers are not beholden to interest rates.

But these buyers could also be causing regular single-family home prices to spike, too.

Maine’s traditional single-family home market saw a substantial jump from a median sale price of $225,000 in 2019 to $390,000 last year. It’s not clear how much of that 73% increase was driven by luxury sales, but according to Kiely, in a small market like Maine’s, it only takes a few sales to make a big impact.

Plus, a few high-priced sales can artificially drive up an area’s value, raising prices for lower-priced homes and pricing young people out of the market.

The rapid price appreciation, coupled with the lack of inventory statewide, can also increase competition among buyers and drive the price of some properties — that might not otherwise be considered luxurious — into the next market tier.

For example, Kiely mentioned a property on Brackett Street in Portland that sold early last year for $1.06 million, more than $200,000 over the asking price. The renovated property previously sold for $335,000 in 2018. Luxury housing isn’t inherently bad — in fact, developers and researchers argue that adding a new supply of luxury housing, especially high-end apartments, is a good thing and can even help drive down prices in an area. But without the needed influx of new units, the existing single-family inventory runs the risk of a $1 million-or-higher price tag.

“Every year, it gets harder and harder for that buyer segment to get into the market, which is incredibly frustrating, incredibly scary, incredibly sad, because, as we all know, real estate is one of the ways you can achieve some financial independence and perhaps wealth,” Kiely said. “This entire group is being locked out for no fault of their own, blocked out of this real estate market.”

ENERGY WILL REMAIN HIGH

An increase in buzz around Portland and southern Maine could play a role in drumming up interest in the state’s luxury market.

Last year, Portland topped the list as the country’s top luxury real estate market, with a median luxury home sale price of about $1.7 million, according to a Wall Street Journal/Realtor.com housing market ranking. The ranking factored in sales figures as well as quality of life and the economic vitality of the area.

Pacaso, an online real estate marketplace for second homes, listed York and Cumberland counties third and fifth, respectively, in a roundup of the 10 U.S. markets that saw the biggest increases in second-home transactions from 2022-23. York County saw a 16% increase, with an average sale price of $2 million, and Cumberland County was up 14% to $1.7 million.

But the luxury market is booming nationwide.

A JP Morgan report in April found that between the end of 2019 and the end of 2023, luxury home prices increased 65%, while the non-luxury market grew by 40%. And real estate company Redfin reported that luxury prices rose almost twice as fast as non-luxury properties last year, and even grew in sales numbers as non-luxury home sales dropped.

While the outlook for the real estate market in 2025 is somewhat murky with the threat of tariffs and economic uncertainty, real estate experts expect the energy in the luxury market to stick around.

Lynch, at Sotheby’s, expects a “significant influx” of high-demand listings in early spring, when the market begins to thaw from its winter slowdown. And Kiely said the impact of natural disasters like California wildfires could have some people seeking refuge in Maine. Baby boomers are expected to transfer almost $85 trillion to younger generations over the next 20 years, contributing to additional luxury sales. Kiely said that transfer has already started.

“I think we will see a strong growth in the luxury high-end market,” she said.