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Updated: September 4, 2019 Infrastructure / Distribution

Building permits on the rise, but can’t touch pre-recession numbers

Has Maine’s building boom already peaked? Maine issued 4,570 building permits last year, down slightly from 4,607 building permits issued in 2017, according to the U.S. Census.

Of those, most were for single-family homes.

With questions about the direction of the economy and interest rates, combined with rising construction costs, Maine’s building boom faces uncertainty. Combine that with Maine’s ongoing demographics challenge — an aging population along with slow population growth — and it’s unclear where the building market is headed, but there are plenty of speedbumps on the road.

Even at the recent peak in 2018, the pace is still far from matching pre-recession levels. In the past 15 years, the number peaked in 2005, with 8,747 building permits issued. The low point was 2011, with 2,299.

My sense is the demographics are different from before the bust … The nature of the demand is from empty nesters and smaller families

Chuck Lawton Economist

Why is the pace so dramatically off that of 2005?

Demographics are partly to blame, says Chuck Lawton, former chief economist for Planning Decisions Inc.

“My sense is the demographics are different from before the bust,” Lawton told Mainebiz late last year.

The population is older. Retirees are downsizing and going into condos. Lawton said a building boom that stretched from the 1990s into the early 2000s was driven primarily by families with young kids. It created suburban growth in Scarborough, Cape Elizabeth and Cumberland, among other Portland-area markets.

Photo / Courtesy Brunswick Landing Homes
The Brunswick Landing Homes development includes 400 units that went on the market this year.

There isn’t the volume of families seeking housing and many that are seeking housing cannot afford it. School enrollments have dropped off and there are fewer kids.

“The nature of the demand is from empty nesters and smaller families,” Lawton told Mainebiz.

Pricing and restrictions may also play a role. Even with a lack of housing, potential developers are facing resistance in certain areas, a sense that there’s been enough development, or NIMBY.

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