The housing sector of the Maine economy has been a blessing and a curse, depending on the times. In the late 1980s, a development boom rolled up the coast. Banks financed what were known as “spec” or speculation houses, built without ready buyers. So confident were builder and banker in a quick sale that they both willingly stuck out their necks on $100,000-plus loans. When the economy crashed in 1991, both parties fell hard.
The same dizzying heights and dismal lows were revisited in the last decade. The “flip this house” mantra asserted that real estate values always grew, and so houses were purchased, renovated and sold at a profit. That is, until the music stopped in late 2007, early 2008. New terms then entered or reentered the lexicon—foreclosure, underwater and short sale among them.
Despite these booms and busts, residential construction is essential to the state’s economy.
“Housing is an integral part of Maine’s economy, supporting jobs not only in the real estate industry but also in construction, banking, insurance, and retail stores, among others,” said Amanda Rector, Maine’s state economist. “The real estate industry alone,” including both residential and commercial real estate, “has contributed about 13 percent, or around $7 billion, of Maine’s gross domestic product in recent years,” she said.
The state’s short construction season is an impediment, Rector noted. But when construction is in high gear, it generates work for carpenters, electricians, plumbers, painters, earth work contractors, well diggers, roofers, landscapers and more. It also bestows benefits on state coffers—building supply firms account for one of the largest chunks of the state sales tax.
But as important as moving those dollars through the economy is, the more pressing fact is that without housing construction, our families won’t have homes.
Maine has one of the oldest housing stocks in the nation, and we bump up against this fact every time the cold weather rolls around. These old houses don’t retain increasingly costly heat; too many children go to bed in their winter coats.
Maine has a higher rate of home ownership than many other states, but that fact is a corollary to the age and quality of its stock; drafty old farm houses in which their owners hole up in just a few rooms during the winter and low-quality manufactured housing such as older mobile homes do not provide the quality of life we deserve.
But there is good news.
Just as the “McMansion” and trophy house trend was in sway in the last decade, something new is happening which should be encouraged. As former “This Old House” TV show host Steve Thomas notes in our interview with him in this issue, men and women in their 20s and early 30s are realizing that a small, energy efficient house pays both financial and quality of life dividends. Baby boomers easing into retirement are drawing the same conclusion, Thomas said.
Are these trends or fads? Time will tell. But public policy can increase the odds that a more sensible approach to homebuilding will return.
Tax credits can be offered for such things as the purchase of efficient home heating equipment like heat pumps and the air-sealing of foundations and attics. Credits also can be offered for replacing old mobile homes and for renovating older houses that have aesthetic value in our towns.
On the land use front, zoning can encourage the creation of small, in-town lots for those young folks building small homes.
Another tweak to planning policy would be to push mixed-use development, so commercial activities like shops, pubs and restaurants can exist adjacent to residential neighborhoods. The Levittown social experiment of the 1950s and 1960s saw huge residential subdivisions built that ended up leaving stay-at-home moms, children and others trapped and isolated from the vitality of village centers. Young people today choose to live in our downtowns because of the availability of commercial activity.
Though Maine has that high home ownership rate, many affordable housing experts say the state needs more quality rental housing. If there are more safe, clean rental units, prices will drop a bit and allow young adults to transition into the workforce.
Habitat for Humanity, the organization Thomas now works with, is a stellar example of a people-powered institution filling a public need. Applicants for the houses the group builds must log 500 hours of work before being eligible to own. It’s a return to the old roof-raising tradition and it pays social dividends—homeowners have children and get involved in the community.
Let’s hope we can end the roller-coaster, boom-and-bust housing cycle. But Maine has to keep building and renovating.