Dismal news about home ownership rates is dismal news for the Maine and national economies.
As 2010 census data emerge, a clearer fix on the impacts of the recession is being revealed. It isn’t pretty. According to HousingWire.com, home ownership rates are the lowest nationally since 1998. The rate fell to 66.5 percent in the fourth quarter of 2010, down from 67.2 percent a year earlier.
Though Maine has one of the highest home ownership rates in the country — it has been at or above 70 percent from 1970 to 2000 — the construction of vacation camps and second homes is an important component of our economy. Renovation and expansion of existing homes also have ties to the economy. Building contractors, tradespeople and material suppliers all fill important job sectors in Maine, and building materials are often among the top generators of sales tax revenue.
And of course, new affordable housing, both for individual ownership and for rent, is vital for people wanting to put down roots here.
According to MaineHousing, the state agency charged with developing affordable housing, in 2009 the median house price was $158,000 and the median income was $47,445. The income needed to purchase the median-price house was $52,937. The median house price would have to drop to $141,608 for median-income families to purchase. The gap between income and price left 313,046 Mainers, or 56.4 percent, unable to afford to purchase, MaineHousing reports.
From 2002 until the beginning of the collapse of the housing market in 2007, the gap between income and house prices was widening at an alarming rate. So, too, was the gap between median income and affordable rental houses.
MaineHousing Director Dale McCormick believes Maine’s most pressing housing need is for more affordable, quality rental units. As the numbers of rental units increase, the cost should drop, making it easier for young adults and families to transition toward stable employment and eventual home ownership.
As the housing market recovers, Maine must be wary of returning to a climate in which builders cater more to well-heeled retirees and second-home owners. Affordable housing, whether subsidized or not, must not be overlooked as a component of the economy. If workers cannot afford to live near employers, which is increasingly the case in coastal and southern areas, growth can be hampered.
And home ownership helps grow communities, as people put down roots and invest in their property and buildings. They are more likely to buy products and services locally, which in turn helps sustain the local economy.
The LePage administration and Republican legislative majority should not see state housing initiatives which subsidize builders, owners and renters as part of a broad menu of “welfare” programs. Housing is as critical to an economy as roads and bridges, utilities and banks.