Mainers overspent on housing in 1990s

By TOM BELL, Staff Writer

Copyright © 2002 Blethen Maine Newspapers Inc.

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A growing number of Mainers in the 1990s spent too much of their income on housing, leaving less for other needs, according to recently released U.S. Census data. The increased burden fell hardest on people in interior Maine, where incomes continued to lag.

Between 1989 and 1999, the number of households spending 30 percent or more of their incomes on the mortgage and property taxes increased by 10,300. The data, obtained from long-form surveys of Americans in 2000 and analyzed by the Portland Press Herald/Maine Sunday Telegram, also showed that most of the increase involved households that pay more than 35 percent of income on housing.

The figures showed that one in five Maine households — 51,690 statewide — spend more money on housing than financial experts say they can afford. Family budgets can be strained when housing costs exceed 30 percent of gross income. Too much money for housing means less money for other expenses, such as fuel, food, medical bills and education.

"A whole bunch of people are moving to that higher bracket, and they are going to be strained," said Galen Rose, an economist with the state planning office. "It puts them a little closer to the breaking point."

In Maine, the cost of home ownership affects more than the middle class. Many lower-income families own their own homes. Nearly three-quarters of the state's housing units are occupied by their owners, a rate that is among the highest in the nation.

Discussions about affordable housing typically focus on home prices, but the new data show the importance of income in the equation.

Franklin, Kennebec and Oxford counties saw the biggest increase in the percent of households spending more of the family budget than they should on housing costs, while more affluent York and Sagadahoc counties saw decreases.

The pattern confirms previous state studies that found incomes in labor markets such as Dover-Foxcroft, Houlton and Augusta were too low for the area's housing costs.

"It still costs money to build a house and heat it and pay the taxes," said Mat Eddy, a Westbrook planner who studied the issue statewide in the late 1990s. "There is the same base level that you can't move away from, no matter where you live."

The effect of the state's aging population may be a factor. The census shows that Maine has the third oldest population in the nation, behind Florida and West Virginia. An increasing proportion of the state's population is past peak earning years but may face the same housing costs as those in the work force. The census data on housing costs also includes the impact of rising property taxes.

The changing nature of households in Maine also may play a role in the trend. Although the state's population grew by only 3.8 percent, the number of households increased by 18 percent. That means there were fewer people per household to help pay the mortgage.

Maine has the largest proportion of divorced adults in New England and the eighth highest in the nation.

Michelle Bento, a divorced mother of two who works as a medical assistant in Portland, said she wants to buy a house in Portland but can't find one for less than $120,000, the most her bank will lend her. She's been looking for a year.

"Every day I wake up and pray and keep faith and look for that cozy home that me and my children can call home," she said. "It seems impossible."

In Oxford County, the proportion of households spending more than 35 percent of income on owner-occupied houses increased 3.7 percentage point in the 1990s. Only Franklin County saw a higher increase.

Thelma Giberson, a welfare administrator in the Oxford County town of Rumford, said more and more people are seeking help to pay for heating fuel and property taxes. Many of them are elderly, she said. When people retire, their incomes drop, but their expenses typically remain the same, said Rob Stevens, the welfare administrator and tax assessor in the nearby town of Mexico.

The county has seen an influx of retirees with low incomes, Stevens said. Also, poor families have moved there in search of more affordable homes. Many of them commute long distances to work in Lewiston or Augusta.

The median age in Oxford County in 2000 was 40.2, which is higher than the state average of 38.6. The median household income in Oxford County in 1999 was $33,400, nearly $4,000 below the state median income. A modest home in Oxford County may cost as little as $45,000, Stevens said, but it's still hard to pay the bills when there's not much money coming in.

In Cumberland County, 15.9 percent of the households — nearly 9,000 — are paying 35 percent or more for owner-occupied housing.

The proportion of households paying that much of their budget on mortgage and taxes may be even higher today. Since the census was taken, the real estate market in southern and coastal Maine has heated up, and many families' incomes have failed to keep pace.

In 1999, it was still possible to buy a house for less than $120,000 in Westbrook or Biddeford, Eddy said. But no longer.

The median sale price in Cumberland County in April was $170,000 — an increase of more than 20 percent from a year ago. In York County, it was $168,000, up more than 17 percent.

"I think the census captures what was going on in the last decade," Eddy said. "But not right now. Just because we are in this incredible housing cycle."

Staff Writer Tom Bell may be reached at 791-6369 or at: tbell@pressherald.com

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