Housing
This section of the BDN aims to help readers understand Maine’s housing crisis, the volatile real estate market and the public policy behind them. Read more Housing coverage here.
The typical home in Maine was unaffordable to 79 percent of households across the state last year, according to a Maine Development Foundation report released this week.
Homes are most expensive in the southernmost Cumberland and York counties. But the affordability issue is worst in Knox and Lincoln, two midcoast counties where only 12 percent of households were able to afford a mortgage and associated costs of such a home in 2023 without exceeding 30 percent of their income, the annual Measures of Growth report found.
“For folks that are young and haven’t become established yet, [a starter home] can be hard to finance with the interest rate, which then makes it unaffordable,” Melanie Trott, broker-owner of the Rockland-based Midcoast Realty Group, said.
Driving that unaffordability was the heightened demand for homes that surged during the COVID-19 pandemic and a lack of available housing inventory to meet that demand, the report found. The jump was stark. In 2020, only 56 percent of households couldn’t afford the median-priced home in Maine.
Maine’s coastal counties are the most squeezed, followed by Oxford County, which is home to ski areas and recreational attractions. Central and northern counties remain the most affordable in the state. Even in Aroostook County, incomes are lower and 66 percent of households aren’t able to afford the median-priced home.
The MDF says this 2023 data is the “continuation of a troubling trend,” but realtors say those figures don’t reflect the nuances in today’s market, which has since cooled significantly.
“You really started to see inventory coming online earlier this spring,” Trott said. “It’s bringing prices down, which is helping offset the higher interest rates. Is it affordable? It’s affordable to more, but I wouldn’t say affordable to most. It’s definitely improving.”
Tom Landry, a broker with Benchmark Real Estate of Portland, went as far as to say this winter will finally be a buyer’s market in Maine as more inventory comes online, offsetting a rise in interest rates that has come despite Federal Reserve rate cuts. He’s seen that homes across the state are sitting on the market for longer and sellers are slashing unreasonable prices.
“Right now, it is shifting to much more of a balanced market. The data always lags what we see with boots on the ground,” Landry said. “Buyers are patient. They don’t participate in that first week of bidding wars.”
A starter home that Landry listed in pricey Boothbay Harbor this month is still on the market, and even saw a $7,000 price reduction. He also listed a single-family home in Portland this month and cut its price by $60,000. At that price, it would have been snapped up quickly last year, he said. But Landry has only held one showing on it.
Though the MDF acknowledged their data “may be inflated due to an increase in sales of high-priced homes,” it’s clear that there’s a lack of affordable housing supply across Maine unlikely to be remedied by a slight cooling of the market.
“Obviously, we need to do more as more people move here. I do think there’s some additional inventory that’s needed,” Landry said. “But I think the affordability is going to take care of itself.”
