AUGUSTA, Maine — A new report from a collaboration of Maine housing experts shows Maine is short more than 84,000 homes needed to account for current short supply and expected population growth.
The Maine State Housing Authority, the Governor’s Office of Policy Innovation and Future, and the Maine Department of Economic and Community Development led the study, with input from a variety of labor, real estate, contracting, and economic groups, which the team released Wednesday.
The key question the study seeks to answer is: how many and what kind of homes does Maine need to meet demand and improve affordability?
The authors define “homes” as any building type, including single family, attached housing, and multifamily housing, including rentals such as apartments.
The study found Maine faces several major roadblocks in housing supply, affordability, and creation. Here are the major points.
- Historic underproduction: creation of new homes dropped “precipitously” after the Great Recession, especially those at prices low- and moderate-income households can afford. The pandemic exacerbated the issue through supply chain and labor struggles, as well as an influx of people moving to Maine for remote work. Production did not keep up.
- Aging housing stock: more of the state’s existing homes are vacant and unavailable because they are in disrepair. True “availability” of housing stock means vacant units ready and available for move-in.
- Future Need: the number of homes needed to support Maine’s projected population and household change by 2030.
- Lack of affordability: low supply of homes led to more competition to purchase. That phenomenon, combined with the influx of out-of-state people who had (on average) higher incomes and could pay more for the available homes inflated the selling prices.
- Workforce decrease: the study says overall labor force participation has not recovered post-pandemic, and that older workers are retiring. The available jobs tend to offer lower incomes, creating a mismatch of what new workers could afford compared to the prices of Maine’s available homes.
- Seasonal homes: There is consistently high demand for these homes in Maine, leading to more homes than year-round residents. Essentially, no one is living in vacation homes that could be serving people who need one year-round.
The study estimates Maine needs roughly 38,500 homes to fix the historic underproduction, and an additional 37,900 to 45,800 homes to meet future need. The authors of the study said Maine can meet this goal through producing new homes and reinvesting in existing homes.
The study also found that households now need to make more than $100,000 per year to afford the median home price in Maine.
“As a result, buying a home in Maine now is not affordable for the majority of Mainers,” the authors wrote.
The study started in January 2023. LD 2003 requires cities and towns to adopt ordinances to lower the barriers for creating new housing: for municipalities that have a city council, that date is now Jan. 1, 2024. If they have a town meeting format, it’s July 1, 2024.
In 2021, Maine’s total housing inventory was about 737,800 homes, according to the study. To meet the goals outlined, the authors suggest Maine would need to permit more than 8,500 homes to be built each year, which is almost double the current rate new permits get granted in Maine. Permits do not necessarily translate to finished units.
The study breaks down the state into three regions: Coastal Region (Cumberland, Hancock, Knox, Lincoln, Sagadahoc, Waldo, and York Counties), the Central Western Region (Androscoggin, Franklin, Kennebec, Oxford, Piscataquis, and Somerset), and Northeastern Region (Aroostook, Penobscot, and Washington).
Of the three regions, the Coastal Region needs more than half of the necessary homes to meet current and future demand.
Senior Housing Advisor in the Governor's Office of Policy Innovation and Future, Greg Payne, said Maine invested $65 million in affordable housing from 2000 to 2018. Since 2019, the state has invested $285 million, he said, but admitted that money does not "go as far" amid economic conditions including lack of skilled laborers, and increased supply costs.
"Clearly, we have a challenge in front of us that's greater than anything that we've experienced before," Payne said. "So much of this work is going to have to be about changing the conditions on the ground that allow the private sector to build more of the housing that we so desperately need."
The study also reaffirms what Mainers have known for a long time: new homes at affordable prices will be essential to attracting workers to the areas and ensuring younger households can stay in Maine, thus replenishing the declining workforce.
One of the authors, Christiana Whitcomb, from HR&A Associates, said Mainers commute the farthest get to their jobs compared to any other state in the country. She said that is one of the many reasons why Maine needs more housing supply, in order to keep workers in the state by living close to where they work.
Here is what the study lists under "Next Steps and Implementation:"
In response to the requirements established in LD 2003, this Study measures the number of homes needed to meet the housing and economic development goals established by the State of Maine. The next step in the process will be to set housing production and reinvestment targets at the local level and to consider the different housing typologies that can support housing production across the income spectrum. To move from the regional level to the local level will involve consideration of local obstacles such as available infrastructure, development capacity and other factors. It will also involve dialogue among communities about where and how to accommodate growth within the region.
The assessment of regional housing need and the local targets will need to be updated periodically to reflect changing conditions. In particular, there is considerable uncertainty around whether recent in-migration is a longer-term trend or a short-term impact of the Covid-19 pandemic. The State and regional partners will need to establish a process to evaluate and modify production targets based on changing housing, labor force, demographic and population conditions and make those changes available to the public.
In order for stakeholders to monitor these changing conditions and track progress towards local housing production targets, the State will be providing an online data dashboard of baseline housing conditions at the state, county, and municipal level that will be updated on a periodic basis. Moving forward, improved collection of both building permitting and demolition data, as well as continuous tracking of vacancy trends, will also be critical for monitoring new development
Finally, there are a number of important issues in this report that deserve further study to ensure that housing policy in Maine reflects changing conditions. In particular, more data and information is needed to understand the specific housing needs of Maine’s aging population, asylum seekers and refugees, and those who are facing housing quality issues and energy insecurity.