Thirty Years in Housing

If you haven’t been to the Portland Room at our own public library near Monument Square, you should consider it. It’s a wonderful historical resource cultivated by a friendly local archivist. Most recently, I went in search of precisely 30-year-old classified ads. There wasn’t much time, unfortunately the archive’s hours are even more restrictive than the rest of the library’s, but I was able to pull a microfilm reel from the Maine Sunday Telegram, dated January 9^th, 1993. The nearest Sunday to exactly 30 years ago.

This period, centered in 1993, is not only exactly 30 years ago, it also was the best time to rent or buy a home in Portland in over fifty years. This current period of the past couple of years is the worst. Before looking at any charts, it’s worthwhile to simply look at what the housing market was like three decades ago.

Feel free to pore over these ads yourself, but here are a fairly random selection of transcribed 1993 rental advertisements, in the left column. In the right column, I have attempted to find listings today in the same neighborhoods with similar amenities, for the sake of comparison. In the 1993 listings, I have followed the prices in 1993 dollars by added italicized adjustments for inflation. E.g. “$600/mo (~$1,274)” means that the price in 1993 was $600 per month, and that adjusted for inflation, this would be about $1,274 per month today.

This is not an exhaustive quantitative examination of the Cumberland County housing market in the late 20^th century. There are no photographs between the two columns of listings to compare. It may be that several of these are quite dissimilar. But these are not cherry-picked examples, these are an arbitrarily chosen group of ads from the nearest edition of the Maine Sunday Telegram to 30 years ago. And the selected listings on the right are nothing more than the nearest available listing one could find right now with the same number of bedrooms. Some, (especially the Hill St. one) don’t even look too unfavorable in comparison. But it’s obvious that at some point over the past 30 years, renters lost a lot of power.

Vacancy

If we do want to look at hard numbers, we can see exactly what happened, and when. 30 years isn’t just a round number to use, it’s the number of years it’s been, more or less, since the peak of the Rental Vacancy Rate in Maine. This means the number of housing units that are available for rent or sale in proportion to the total amount of rental units in the state. So, what does the vacancy rate actually look like?

If we look at this data compiled by the Census and Federal Reserve, we can see the clear trend. A late ‘80s construction boom of new housing, combined with a stagnant population in the early ‘90s, resulted in a substantial housing surplus with vacancy rates pushing eleven percent between 1992 and 1994. Ever since this peak, that number has wended downwards, peaking again at nearly 8% during the construction boom prior to the financial crisis. It bottomed out in 2020 at just 3.5% vacant. In other words, thirty years ago, more than one-in-ten apartments were up for rent. Today, about one in twenty-five can be rented.

As any Mainer can tell you, though we in Portland are more pressed than ever, it’s not hard to find cheap houses for sale or rent if you go up north to the old mill towns and rural counties. These are not useful in addressing southern Maine’s housing crisis, but they do contribute mightily to our statewide vacancy rate. Unfortunately, the Census only keeps track of more specific data for the top 75 metro areas in terms of population, (we’re #103,) so we don’t have access to those numbers from them. MaineHousing, the independent state housing authority, also provides similar data, but not as precisely. The best we can say is that numbers for Portland and its suburbs track somewhat below the statewide vacancy rate for the period of 2016-2020, but by how much exactly isn’t clear from publicly-available data.

What MaineHousing can tell us, however, are the characteristics of Portland’s housing stock. After the building booms of the 1970s and 1980s, housing vacancy peaked in the first half of the 1990s. At this peak, however, building slowed to a crawl, and hasn’t recovered since. As of the year 2020, 92.5% of the housing stock in Portland was built in 1989 or earlier. Despite the rising population and skyrocketing demand over these past thirty years, we have been building miniscule amounts of housing compared to the mid-20^th century. Nearly half of Portland’s housing stock predates WWII.

Something has clearly gone very wrong with our priorities in the last couple of decades, not placing nearly enough value on the simple goal of building homes for people to live in. The 1970s and 1980s building booms were mostly not bureaucratic projects managed by government committees, nor centralized corporate endeavors, nor nonprofit projects. They were the product of thousands of individuals, businesses, and communities investing in our city by building homes, and a city government which encouraged this growth.

Vacancy Taxes

However, there are those that are skeptical of the simple claim of “more housing = cheaper rent.” This past year, the Bangor Daily News ran a headline which seemed to belie this algebra.

Anything that makes a state the “first”, “only”, or “most” of anything is always grist for the mill of local journalism, and the article itself is well-founded and clear about what is going on here – a mixture of abandoned towns in the north and seasonal homes around lakes and rural coastlines. Like many other parts of the country, northern Maine has suffered from post-industrial decline, leaving ghost towns in the shadow of the 20^th century.

Besides that, Maine has always been a place in which wealthy snowbirds own lakehouses to use during summers, and a place in which townies from Portland or Lewiston own little inland camps for hunting, fishing, and other recreation. These sorts of dwellings are obviously not useful for, say, nurses at MaineMed, students at USM, clerks in downtown offices, restaurant servers in the Old Port, mechanics on Forest Street, or asylum-seekers trying to get on their feet. Even if they could be made habitable year-round, (they often aren’t,) they are typically (intentionally!) situated far from the bustle of business and tourism – aka, where people work. People live where the jobs are, jobs don’t go where the houses are.

Nevertheless, when headlines like this run, all sorts of misleading implications can be drawn. Are houses being intentionally bought and kept vacant, in a speculatory bid to drive up prices? Are landlords intentionally not renewing leases, cooperating with each other to force renters to pay more? Are rich people from away buying up all the land to keep their vacation homes pure and quiet and free of all those ugly Mainers?

Confronting failure is hard. We’ve failed as a state to build enough housing. So instead of confronting failure and beginning the long trek to normalcy, we prefer to identify an enemy and try to punish them, and extract normalcy from them by force. But like blood from a stone, it will not work.

This isn’t to say that there’s nothing to be done to prevent a misuse of land – restricting Airbnb (this past election notwithstanding) has the potential to put a few hundred units back on the market quickly. This alone would not solve the crisis, but it could allow for some much-needed short-term relief. Inevitably, however, there are many voices that drill down on one issue – vacancy taxes.

Vacancy taxes, municipal policies to enact punitive taxes on housing which is not lived-in for at least half the year, are illegal in Maine. Last year, state representatives held a vote to legalize them, and allow for towns to charge vacancy taxes if they wanted to, but with 17 democrats joining every republican, this was shot down. This was infuriating for many Portland leftists, who see vacancy taxes as a prime method for taking back housing for working-class Mainers.

But the data is, in fact, mixed. The best case-study to look at here is Vancouver, British Columbia. An infamously unaffordable city, Vancouver enacted fairly comprehensive vacancy taxes in 2017 to try and loosen up market-rate supply. Despite a smörgåsbord of exemptions to the tax (including all vacancies due to medical treatment, extended travel, estate management, renovations, etc.) there were still several thousand properties which were identified as liable to pay.

Has it worked? In the sense that the city has made a ton of money – yes. In the sense that these houses have been put on the market – eh. Data is hard to quantify, as conversions are rarely made for just one reason, but in the first three years of its implementation, about 27% of the impacted properties were converted to long-term rentals or other habitations. This sounds like a lot, though is in fact only about 2,400 units in a market of well over a million, and these 2,400 were almost entirely high-end units. Still, any increase in supply is a good thing, and the vacancy tax is enormously popular with voters as establishing a level playing field.

Trying to measure the impact on supply more precisely is difficult. Many of those conversions probably would have happened with or without the tax, but perhaps other conversions not captured by these figures (some estimate up to 20,000) were influenced by the tax. As with so many things, the data is just ambiguous enough to support almost any narrative. But what can’t be doubted is that it has been a substantial revenue-spinner for the city (more than $80mm in 2020) without causing economic collapse. This money can then be put towards public housing projects, or towards subsidies for home builders. So, while such taxes may be worth implementing, we should look at them as money sources, not supply fixers. Of course, first Maine would have to legalize them.

Supply and Demand

Many with even a cursory understanding of Portland’s history will point out, when looking at that vacancy chart from earlier, that the high vacancy rates in the early 90s were just as much due to collapsing demand as to high supply, and lessons from that period can’t be applied to our predicament today. The lull in demand was certainly a major factor, this is uncontroversial, but demand-reduction is not a policy. There is no way to significantly cut demand that wouldn’t also be catastrophic to Portland’s current residents. Vulgar internet creatures will sometimes speak callously about crime as a method of rent control, believing that random acts of violence, intimidation, and property destruction will help keep rents low. Not only is the idea of subjecting one’s neighbors to fear and harm reprehensible on the face of it, but the level of crime that would be necessary to affect demand in Maine would be far beyond what most New Englanders can even imagine living with.

And where is this demand coming from? All from nasty Floridians and Californians? Far from it. Consider that the number of young people living with their parents, instead of renting or buying their own homes, is higher than its been since the Great Depression. Or the number of young people that leave Maine every year for better-paying jobs in Massachusetts, or cheaper housing in North Carolina. And of course, consider the thousands of homeless people and asylum seekers in Portland right now who lack stable housing. These people want to live in Maine, stimulate the economy, participate in the community, and grow their own families. But without housing, how could they?

Consider also that while Portland’s population has stayed relatively modest over the past several decades, the population growth of Portland’s Suburbs has been accelerating. While all of our suburbs, (some maybe more than others,) are certainly attractive and lovely towns in their own right, the question has to be asked – how many of the people buying and renting homes in our suburbs would live in Portland if they could afford to? Why are we, as a city, allowing all of this human potential to go elsewhere? Not only does the population growth represent economic dynamism that should be in Portland, but at least for those who work in Portland, the reduced commutes, public transit, cycling, and walking that would replace their long drives to work would help combat global climate change. Instead, traffic on the highways get worse while carbon emissions continue to choke us. We should be making it easier, not harder, for people living and working in Portland to live here, and not somewhere else.

While assisting me with the microfilm reels and projectors, the incorrigibly kind archivist who was staying late was reading the ads with me. Clearly affected, he shared that he had lived in his home in Portland for many years before his landlord evicted him to renovate the property, and the new rent price after renovations would be too high for him to afford. He found another place to stay, after a fraught period of uncertainty, but he couldn’t bring himself to call it home. He’d lost his home. He was mournfully dignified in recounting this, not bitter, but the pain that he and people like him feel when they know that their home city is becoming completely unaffordable to them is a cruel one. Portland should be a place where our historians can live.

In this context, it is natural to lash out against the obvious immorality of it all, that in such a rich country, in such a bounteous state run by such intelligent people, the simple ability to live is retreating quickly beyond reach. Clearly this is the fault of some malicious conspiracy, maybe the rich, maybe the snowbirds, maybe mooching immigrants, maybe gentrifying yuppies. But we had the rich in 1993. We had snowbirds in 1993, and immigrants, and yuppies. The simple, tragic difference is that in 1993, we had enough housing for everyone. In 2023, we don’t.

~

Ashley D. Keenan – Ashley is an editor of The Portland Townsman, writer on urbanism, local small business-owner, and Maine native. Her work primarily covers the national housing crisis, building sustainable and livable cities, responsible market economics, and New England culture and history. She lives in Portland with her fiancé and can be personally reached at ashley@donnellykeenan.com.