George Casey
Updated: January 13, 2020
Commentary
Here is what you can expect from Maine’s housing market this year
By George Casey
As we start a new decade, the national and local housing markets have undergone a significant transition from both 20 and 10 years ago. The new normal that has emerged will serve to inform housing markets over the next year and more here in Maine in ways that will have a profound effect on the lives of Mainers.
A look at some of the single-family new housing production data for Maine and the nation and illustrates the trend.
In the 1990s, Maine had an average of 4,095 single-family home starts per year. In the 2000s, the average was 5,578.
But in the past decade, the average dropped precipitously, to 2,994 single-family home starts per year. The national rate also dropped in the last decade. Maine’s housing starts represent about 0.4% of the national figure, proportionate with its population.
Even ending the decade on a high note, it looks like new single-family home production in Maine will be about 3,500 for 2019, which is still only 63% of what the average was for the 2000s.
On a national basis, we underbuilt housing — single family, multifamily, and modular/manufactured — by 6 million units for the past decade. For Maine over the same period this would be the equivalent of about 24,000 homes we underbuilt — roughly 15,600 single family, 6,700 multifamily, and 1,700 modular/manufactured.
So, what will the trajectory be for housing in Maine as we enter the new decade of the 2020s?
We will continue to see housing demand outpace housing supply for a good part of the decade. An aging and retiring construction trade labor base will be exacerbated by the relative unpopularity of tradecraft among current high school students leading to not enough labor to build the homes needed.
Additionally, there is little local desire to add more housing stock, so getting approvals for additional housing at the scale needed to satisfy normal demand, much less the unsatisfied supply from the past decade, will be very difficult. NIMBY has won.
The result will be prices continuing to rise faster than incomes and attainability of housing continuing to deteriorate.
There will be some movement, most likely, on the labor front, as production of homes will begin to move more toward modular homes built in factories. Automation and robotic technologies help to compensate for lack of labor. But this will probably take a decade to become a real change factor.
With an expectation that there will not be enough new housing built to accommodate housing demand, the other avenue that will be opened is taking existing housing and putting more people in the structures.
This will take the form of more adult children or senior parents moving in with relatives or taking in boarders or tenants. Sometimes, this will involve remodeling existing homes into a smaller “main” home and several apartments. At other times it will involve attempts to place accessory dwelling units, or “granny flats,” in the yard. Both will most likely run into the same local zoning and NIMBY constraints that new construction faces but expect the pressure to move in this direction anyway.
The result of these forces will be that, for those already owning homes, it will be good times financially. However, for those looking to upsize, downsize or move into the state, options at reasonable prices will be limited. All will have a negative impact on the state’s ability to grow to or operate at its full potential.
The ultimate solution to creating more and attainable housing in Maine actually resides with us as citizens.
Only when we begin to lose some of the NIMBY trends we have developed will there be an opportunity for both more housing and denser housing around existing services. Only though the addition of supply will there be some opportunity to open up a broder range of housing for all.
George Casey, chair of Vistage, can be reached at george.casey@vistagechair.com
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