Maine's housing woes are holding back a robust tourism economy
Category: News & Politics
Via: perrie-halpern • 2 months ago • 4 commentsBy: Donovan Lynch and Christine Romans
S E E D E D C O N T E N T
ROCKLAND, Maine — Noah Barnes can't sell bunks aboard his schooner fast enough. The ones unoccupied by his staff, anyway.
Barnes, the owner and captain of the 153-year-old Stephen Taber, said demand for multiday voyages off Rockland has been "as good as the Clinton years."
"Typically in election years and times of uncertainty, we see a little bit of a dip" as people hesitate to plan vacations, he said in late June as the turbulent presidential race ramped up. "We haven't seen any of that."
Even so, several bunks on the 115-foot-long ship, with room for 22 guests and up to six crew members, double as housing for employees like Grey Litaker. Litaker, 40, cooks in restaurants during the rest of the year but works and lives rent-free on the vessel in the summer because onshore rentals are "phenomenally expensive."
"Staying on the boat just made economic sense," Litaker said.
Barnes, who's putting up two other workers aboard the Stephen Taber full time this summer, said finding onshore housing for seasonal staff members used to be easier.
He'd love to keep his best employees on the payroll year-round for "continuity," but it feels out of reach: "A lot of that has to do with how difficult it is to find a place to live that you can afford in this 'Vacationland'" — the nickname emblazoned on state license plates.
A market squeezed at both ends
Maine's housing crunch isn't new, and it's hardly unique in the U.S. Affordable housing shortages are crimping hiring in South Florida and Nashville, Tennessee, Atlanta Fed researchers said this summer. And many outdoorsy travel spots have grown so popular that service workers and wealthy homebuyers alike have been priced out.
But Maine encapsulates a dilemma at the heart of the U.S. economy, months from an election that may hinge on it. A massive wave of consumer spending — especially on leisure — has powered the pandemic rebound, yet surging shelter costs continue to prop up inflation, weighing down growth along with households' economic outlooks.
"Even prior to the pandemic — where we've seen this influx of individuals coming to Maine and prices really, really driving up — we were on an upward trajectory of housing costs," said Kelsi Hobbs, an assistant professor of economics at the University of Maine.
State home values rose more slowly than in the rest of the country from 2017 to 2022, and Maine's nearly 74% homeownership rate outstrips the nation's at 65%, the latest Maine housing data show.
But the state's distinct challenges ramped up "really in the last decade," Hobbs said, as its residential market got squeezed from both ends, with strong demand vying for tight supply.
Just 1.6% of Maine homes were available to rent or buy as of 2022, lower than the 2.5% national average, and Vacationland is packed with vacation pads — both seasonal rentals and privately owned properties. The state data shows 16% of its homes sit empty for parts of the year, compared with 3.5% nationwide.
Maine's housing stock, like its population, also skews old. Just 6% was built from 2010 to 2019, compared to 9% nationally, while 60% predates 1980, well above the 48% U.S. average, and Hobbs said much of it is in disrepair.
Some of that is changing. A recent homebuilding spurt has helped boost inventories, TD Bank analysts said in June, but Maine still has "lower than average supply levels, which we expect will lead to above average price gains in 2024." The state's rental availability has lagged the nation's since 2019, and nearly half of tenants are "cost burdened," spending at least 30% of their income on housing.
"It's a really big worry," Hobbs said. "You cannot have a strong and prosperous economy without affordable housing."
You cannot have a strong and prosperous economy without affordable housing.
Kelsi Hobbs, assistant professor of economics, University of Maine
Unlike other parts of Maine, where populations swing sharply with seasonal tourism, the state's Midcoast region, which includes Rockland, has plenty of full-time residents, said Shannon Landwehr, who leads the Penobscot Bay Regional Chamber of Commerce.
"There are people who want to work, who want to be here — want to live here, want to be part of the businesses that are here — who are struggling to find the housing," she said.
Landwehr worries about sustaining the "diversity of the population" needed to power the economy and keep the area desirable for both residents and visitors if the problem deepens: "We'll start to see kind of a division, if you will, of who's here."
Housing as a hiring problem
Maine hosted 8.5 million visitors last year, netting an estimated $16 billion in economic impact. Already, frustrations around wealthy vacationers' driving up local living costs are colliding with opposition to workforce housing projects — tensions that could deepen political divides.
Maine and Nebraska are the only states that can apportion their Electoral College votes to multiple presidential candidates. Vacationland has delivered a split only twice — in 2016 and 2020, with its rural upstate district backing Donald Trump both times and the more affluent coastal one supporting first Hillary Clinton and then Joe Biden.
Service-sector employers like Barnes say they're focused on keeping prices affordable for customers. Among the Stephen Taber's guest bookings this year, "we've got pilots, and we've got lab techs, and we've got plumbers, and we've got cable installers," he said. "It's everybody."
Eleven miles south of Rockland, nightly rates at the Craignair Inn by the Sea start at around $200, little more than $40 above the national average. Like Barnes, owner Greg Soutiea said business has been good — even though he's also housing some of his workers.
Yearly sales at the 21-room hotel and restaurant have surged more than 500% since Soutiea bought the property in 2018, he said. Bookings this summer are already on par with the last two, when people's discretionary "revenge spending" was booming.
But "housing has been a significant challenge for not only our staff but ourselves as restaurant owners," said Soutiea, who employs about 25 people in the offseason and 50 during the summer peak. The issue limits the pool of candidates who "can commute in a reasonable amount of time and who can work year-round," he said.
If we were to rent from anyone else, we both would have to work two jobs.
Shannon Dennison, head of housekeeping, craignair inn by the sea
About three years ago, Soutiea bought a four-unit building in downtown Rockland to rent to employees at below-market rates. He now owns three properties with a total of 10 rental units, eight of which are set at levels allowing someone earning 80% or less of the area's median income to spend no more than a third of their pay on housing, a common measure of affordability.
Five of his rentals are occupied by full-time employees, with another four workers — three seasonal ones and a year-rounder — living in the Craignair itself.
Soutiea said becoming an employer-landlord has "definitely been a significant driver in staff retention." Even so, he still has only enough workers to keep the inn's 95-seat Causeway restaurant open five nights a week.
Shannon Dennison, 38, a mother of three who heads up housekeeping at the inn, has rented one of Soutiea's two-bedroom apartments for $1,250 a month for about a year. Before then, Dennison, who grew up in the area, had "thought about moving out of state" as housing costs surged.
Dennison recalled paying $750 a month for a two-bed as recently as 2015, and she said renting from her boss has been a lifeline for her and her husband. "If we were to rent from anyone else, we both would have to work two jobs," she said.
State lawmakers have been trying to shift the equation. In 2022 and 2023, Maine's Legislature passed a pair of bills loosening zoning restrictions to allow for greater housing density and to streamline approvals to build accessory units. The state has also poured tens of millions of dollars into subsidizing affordable housing construction, and it launched a rent-relief pilot program for low-income tenants this spring.
In the meantime, Landwehr said, calculations like Dennison's and Soutiea's — about how much to work to stay housed and how much to invest in housing to stay staffed — aren't uncommon. But while the problem is urgent, it attests to a thriving economy.
"We've got people interested in this community," she said. "Now we just need to find the right ways to support that."
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I just watched on the news that in tourist areas of Greece many residents are losing their rental units because AIRbnb is buying them up. That could be happening in Maine as well.
Artificially low interest rates encouraged speculation in real estate which drove up prices. Chinese investors bid up prices in my old home town in Western Oklahoma. They were almost all into illegal marijuana cultivation which has ran its course. Prices are as already down...
Same problem in my resort town. Service workers are being forced further and further out of town. Decreases their housing cost but crushes them in additional transportation costs. Especially with higher gas prices.