Kathy Clemm is about to become a refugee from southern Maine's rental market.
Forced to leave a two-bedroom apartment she can no longer afford, unable to find another one and fearing her $40,000 salary was still not going to keep a roof over her head, Clemm made a risky escape. She cashed in her retirement savings – despite substantial taxes and penalties – and bought a condominium in Westbrook from a family friend. "I won't be homeless." And, Clemm said, "nobody's ever going to go up on me on rent."
Renters in Portland and throughout southern Maine are enduring one of the most unforgiving markets in memory. It's so tight, in fact, a new Portland study found a 1 percent vacancy rate in city apartment houses with three or more units. That translates into just 177 vacancies at any one time in the entire city – essentially leaving room only for evictions, forced moves and deaths.
Although some dispute the city's figure – the 2000 census gave Portland an overall 3.6 percent vacancy rate a year ago – no one disputes the harsh realities confronting tenants. A healthy vacancy rate is considered to be between 5 percent and 7 percent.
While renters like Clemm are facing sudden upheaval, this housing crisis has been under construction for some time. Its foundation was poured more than a decade ago, and the economic prosperity of the 1990s finished the job. Some who have seen similar markets in the 1970s and '80s knew it was coming.
"I think this one was avoidable," said Peter Howe, director of the Portland Housing Authority.
The rental shortage extends beyond Portland, through southern Maine.
In Saco, for example, the Hilltop Motor Inn is letting rooms at $225 a week to summer workers and others who can't find apartments.
In Yarmouth, rents have gone up about 30 percent in three years and one-bedroom units rent for as much as $900 a month. "There is just a huge demand," said Bob Miles, a landlord.
The red-hot core of the region's rental market is Portland, the only community in Maine with more renters than owners. Maine's largest city has some 17,700 rental units out of 31,862 overall housing units. It accounts for half of all rental housing in Cumberland County.
Portland has been through similar cycles before, always on the heels of economic good times.
In the early 1970s, Portland officials even suggested the construction of emergency low-cost housing at Fort Williams Park in Cape Elizabeth. While that never happened, the construction in Portland of large-scale public housing – the last of its kind – helped to ease the crunch.
In the 1980s, growing employment and incomes again fueled demand among renters and homebuyers, forcing up costs and pinching supply.
In 1985, frustrated tenants formed the Greater Portland Neighborhood Action Coalition to fight the conversion of apartments into condominiums and rent profiteering by landlords. The coalition's call for rent control, while never coming to pass, echoes today.
Although both represent the dark side of a good economy, the 1980s housing crunch was different in many ways than the current market.
"The crisis of the late 1980s was not nearly as destructive as the crisis today," Howe said.
Howe and others say it was mostly an affordability crisis. There were vacancies, he said, if you had the money.
"The big difference is that in the 1980s, we were building housing," Howe said. "Today, we have not only an affordability problem, we have the supply problem."
There was so much construction and growth in the late 1980s that the economy overheated. Job losses and the recession chilled the market and the housing crisis went dormant.
New condominiums built during the 1980s in Portland sold for fire-sale prices by the early '90s and a lot of them became rental units, helping to create a housing glut through much of the decade.
Peter Wovkonish, a city landlord and president of the Greater Portland Housing Association, remembers a 20 percent vacancy rate in Portland that drove some landlords out of the business.
Robert Duranleau, the city's director of social services, remembers when landlords, not tenants, were the ones pounding the pavement. "They would come to the homeless shelter (and) kind of sell themselves in the waiting room," he said.
Even then, however, the seeds of the current housing crisis were germinating.
The economy's crash landing in the late 1980s froze financing and the creation of multifamily housing. Some, including Howe, warned that the state and the city should plan for the next economic cycle by continuing to finance affordable apartments. But little happened.
"Construction (of rental units) came to a complete stop. It never started again," Howe said.
"We haven't added to the rental market, except for specialty projects" such as housing for the elderly, said Mark Adelson, Portland's director of housing and neighborhood services.
Richard Berman knows well the reasons for the lack of apartment construction in Portland.
Berman is the developer of Unity Village, a 33-unit apartment complex rising in Bayside and the first such construction in the city in a decade. He and city housing officials overcame a series of obstacles, including the need to rebuild a street and dispose of polluted city soils, as well as a complex financing package that allows the inclusion of rent-restricted apartments throughout the brick town-house style complex.
"You put a lot of lawyers to work when you build affordable housing," Berman said.
It ultimately cost about $155,000 to build each apartment, he said. Only a crying need for decent affordable housing, together with city support and public financing, got it done, he said.
Although apartment construction virtually stopped a decade ago, it took years to become a crisis for renters.
Portland's overall population has remained virtually the same in the last decade. The increased demand for rental housing has come from a more subtle and gradual demographic change – shrinking households.
The average number of people in each Portland household dropped from 2.49 in 1990 to 2.08 in 2000. So while population was stable, the actual number of households in need of housing grew – from 28,235 to 29,807.
The trend toward smaller households is believed to reflect a variety of cultural changes: People stay single longer, older residents stay in their homes longer, there are more single-parent families. "It all adds up," said Adelson.
That trend eventually collided with a finite number of apartments in southern Maine. And the result is rents rising far faster than incomes, and intense competition for every apartment put on the market.
While Portland incomes have increased by 132 percent since 1980, rents have jumped 289 percent, according to York-Cumberland Housing Development Corp.
For Clemm, the housing shortage became her own personal crisis this month. Her roommate moved out, and she faced a $950 July rent bill plus utilities costs that she could not pay – even on her roughly $40,000-a-year salary as an administrative assistant.
When she was unable to quickly find a compatible roommate or an affordable apartment, desperation inspired her to buy her way out of the market. Her 401(k) savings turned out to be just enough to cover a down payment and closing costs. Now she'll have a $750 mortgage payment – the cost of some one-bedroom apartments in Portland.
Another Portland renter, Toby Simon, saw her landlord raise the rent this month from $700 to $825. As director of community services for Portland West, Simon earns an average Portland salary. But the 16 percent increase in rent has forced her and her preschool-aged daughter to leave.
"I can barely find a two-bedroom apartment now that is under $1,000," she said.
Unable to find an affordable place, Simon is moving into a friend's house in Scarborough. She plans to save up some money to buy her own home.
"I cannot be at the mercy of the market anymore," she said. "It's very scary. It makes you feel really hopeless."
Dramatic rent increases are occurring all over the city. There also are increasing complaints about landlords who refuse to do maintenance or make repairs because they know they don't have to. The feeling of helplessness has led some Portland tenants to band together.
"Certainly in this housing market . . . the balance of power is not with the people who are renters," said Todd Ricker, one of a group of renters forming the Portland Tenants Union.
"Some landlords know that if they don't fix the faucet this week or take care of the hot water, that if somebody decides to leave, they can fill the apartment immediately with someone who's not going to complain as much. And they know they can jack up the rents," said Ricker, whose own rent went up $100 this month.
The group is still forming strategies and goals. But individual tenants around the city have started to call for rent controls to limit increases and profiteering.
"Unless there is some restriction on the amount that rents can increase, then tenants are simply at the whim of the so-called free market," Ricker said.
Wovkonish, a landlord in Portland for 30 years, said the market is starting to stabilize and rents are hitting a ceiling. He disputes the city's vacancy rate and the stories of displacement.
"The issue that I have when people say they can't find housing is, what percentage of those people have had previous housing difficulties?" he said. He said there are more vacancies than reported by the city.
While some landlords are gouging tenants, he said, some are simply making up for the losses in the mid-1990s. And many landlords are using the revenue to make extensive improvements, according to Wovkonish.
He said the market will work itself out, without rent controls that do more harm than good. "You put rent controls in, you're automatically going to stifle new construction," he said.
Housing experts and city officials also don't see rent control as the long-term solution.
"We really need more housing," said Dana Totman, director of York-Cumberland Housing Development Corp. "It's going to take a significant amount of state and federal resources to come to the southern part of the state to bridge this gap."
Local officials, and state and federal funding, are now focusing on the problem, especially in Portland.
A second new complex, Island View Apartments, is being built on Munjoy Hill. It will add 70 units of mixed-cost apartments. While a welcome addition, officials say it will take a lot more than 100 new apartments in Portland to end the housing crunch.
"It's going to be very difficult if this economy remains strong," Adelson said.
That's not to say Adelson is hoping for a dramatic downturn to solve the problem.
"That's job loss," he said. "Nobody wants to plan for a recession to solve the problem. It's not something we want to count on."
Staff Writer John Richardson can be contacted at 791-6324 or at: jrichardson@pressherald.com
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