Buyers and sellers benefit from home sales, but moving expenses, insurance fees, and furniture purchases contribute to additional economic impacts on businesses across Maine.
The total economic impact of a typical home sale in the state was $134,500 in 2021, well above the U.S. average of $113,200 but in the middle of New England states, according to a report by the National Association of Realtors last week.
The real estate industry accounted for $14.8 billion, or 19.5 percent, of Maine’s gross state product last year, making it the largest contributor to the state’s economic growth.
About one job is created for every second home sale, the association said. About 20,401 existing single-family homes were sold last year, according to the Maine Association of Realtors. Median retail price was $299,000.
Add to this the house construction costs, real estate brokerage fees, loan and property insurance, and other expenses that contribute to the economic effect.
Real estate commissions, fees and moving expenses generally account for about 9 percent of the median home price, the association said. In Maine, 28 percent of the total economic effect, or $38,153, comes from real estate industry revenues.
Nearly 5 percent, or $5,000, comes from furniture, remodeling, or other home-buying-related expenses. Some of that spending is a result of regrets from homebuyers who bought too quickly or bought homes that were too small, a recent national study found.
About 15 percent of the economic impact, or $20,713, comes from what is known as the multiplier effect, through which other sectors of the economy receive income from a home sale.
The largest contributor to the economic impact is new residential construction, which accounted for more than 52 percent, or $70,654, of the total. Existing home sales stimulate home production, the association said, with one new home being built for every six existing home sales.
Among the New England states, Massachusetts had the highest economic impact per home sale at $191,700. New Hampshire and Vermont followed, followed by Maine. Rhode Island and Connecticut had the least economic impact.
In all New England states and the national average, the real estate impact accounted for a large portion of gross government product, at least 16 percent.
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