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Residential Department: Spotlight: Maine: May 2018

 

Spotlight: Maine

Maine has only recently rebounded from the recession.

The Maine economy struggled to recover after the Great Recession. In fact, the state suffered through three additional recessions in 2010-2011, 2012 and 2015, according to a 2017 report from the Maine Center for Economic Policy (MCEC).

These recessions took a toll on Maine’s gross domestic product (GDP), which grew by just 0.3 percent from 2010 to 2015, according to a 2017 report by the Maine Development Foundation (MDF). During this same time period, the New England economy grew by more than 4 percent, while the U.S. economy expanded by 10 percent.

When looking at just the rural areas of the state, the economic conditions are worse. Real GDP — adjusted for inflation — for all areas outside the Portland metro region experienced negative growth from 2007 through 2013, which the MCEC report describes as “Rural Maine’s 7-Year Depression.”

As a result of rural Maine’s stalled economy, residents have been flocking to the Greater Portland metropolitan area, which has seen an annual net population increase of 1,000 people per year since 2012. The state’s largest city now accounts for more than 50 percent of the entire state’s GDP, according to the MCEC report.

The Maine economy has shown some signs of rebounding in the past three years, however. The state’s GDP grew by 1.1 percent from 2014 to 2015, reaching $51.1 billion, according to the MDF report. This growth was still slow compared to the region and the nation, however. During that same time, the New England economy grew by 2.4 percent and the U.S. economy grew by 2.5 percent.

Over the past two years, however, the Maine economy has expanded by nearly $6 billion (or 11.5 percent), however, to a gross state product of $57 billion as of this past November, according to Forbes.com. The business website still ranks Maine No. 46 on its list of best states for business.

The cost of doing business is improving in the state, albeit slowly, according to the MDF report. In 2000, Maine had the second-highest cost of doing business in the nation, with a 115.2 Moody’s Analytics score. (The national average is 100.) As of 2014, Maine was the 10th most expensive state in the U.S., with a score of 108.5. Maine is now the second cheapest state for doing business in New England, however, as the state’s improved score has dropped it below Connecticut, New Hampshire, Vermont and Massachusetts.

skip to 3 Cities to Watch>>  

Home sales and prices

r_2018-05_Spotlight_chart-1.jpgMaine’s housing market has heated up considerably over the past eight years. In 2011, total single-family home sales in the state stood at less than 10,000 units, according to the Maine Association of Realtors. In 2017, that number had increased by almost 80 percent to 17,633 units. Moving almost in lockstep, Maine’s median residential home price has increased by more than 20 percent, from $165,000 in 2011 to $200,000 in 2017.

In fact, 2017 set records in the state for both the number of homes sold and median price, according to the Realtors association. The state’s median home-sales price increased by 5.6 percent in 2017 with 14 out of the state’s 16 counties recording increases in the median sales price. Nine counties also had an increase in the number of home sales in 2017.

Unemployment

Maine weathered the Great Recession and its aftermath well in terms of unemployment numbers. Statewide unemployment just barely topped 8 percent during the worst of the downturn, peaking at 8.3 percent for one month in June 2009, according to data from the U.S. Bureau of Labor Statistics (BLS). At that time, the national unemployment rate stood at 9.5 percent, still on its way up to a high of 10 percent in October 2009.

As of this past January, Maine’s unemployment rate had dropped to 3 percent, more than a percentage point below the national average of 4.1 percent. As of the same month, Maine had 623,000 nonfarm jobs, according to BLS data. The state has added 30,000 jobs since the 2010 low of 593,000 and has now eclipsed the 2007 high of 617,700 jobs.

Delinquencies and foreclosures     

r_2018-05_Spotlight_chart-2.jpgThe foreclosure crisis hit Maine later than most states. Prior to fourth-quarter 2012, foreclosure actions (defaults, auctions and REOs) had only topped 1,000 per quarter twice dating back to 2010, according to Attom Data Solutions. Then, from fourth-quarter 2012 through third-quarter 2014, foreclosure actions averaged more than 1,600. These numbers have dropped since that period, but still averaged almost 1,000 per quarter over the past three years.

As of this past November, Maine’s mortgage delinquency rate (loans 30 or more days past due) stood at 5.6 percent, 50 basis points higher than the national average, according to CoreLogic. Some 2.8 percent of all Maine mortgages were seriously delinquent (more than 90 days past due) as of this past November, compared to a national average of 2 percent. Both delinquency percentages in Maine dropped 60 to 70 basis points year over year, however.

Sources: Attom Data Solutions, Bar Harbor Historical Society, barharborinfo.com, CoreLogic, Forbes.com, livability.com, Maine Association of Realtors, Maine Center for Economic Policy, Maine Development Foundation, National Park Service, Sperling’s Best Places, U.S. Bureau of Labor Statistics, U.S. Census Bureau, visitportland.com



3 Cities to Watch

Portland

Maine’s largest city and largest seaport was established by the British on the Portland peninsula in 1632 as a trading and fishing settlement. Prior to that, it had been called Machigonne, or Great Neck, by the Native Americans who lived there. It grew into a major shipping destination. Today, retail and accommodation/food services account for more than 20 percent of Portland’s employment as Portland embraces the many tourism opportunities of it coastal location. In fact, Portland has more restaurants per capita than any other city in America.

Bar Harbor

r_2018-05_Spotlight_city.jpgOriginally incorporated by Samuel Adams in 1796 as the Town of Eden, this quaint island town was renamed Bar Harbor in 1918. The town became a popular tourist spot in the mid-1800s after artists such as Thomas Cole and Frederic Church earned acclaim for their painted seascapes and mountain vistas. This drew the attention of notable people of the time such as Joseph Pulitzer and Frederick Vanderbilt, who built summer cottages on the island. Today, Bar Harbor is still a popular destination. Nearby Acadia National Park draws more than 2 million visitors each year.

Bangor

Home to horror writer Stephen King, Bangor is not as scary a place to live as King’s books would have readers believe. The city has an incredibly low crime rate and three hospitals to serve its 32,000 residents and outlying areas. A low sales tax (5.5 percent) and low unemployment (3.3 percent as of this past January) make Bangor a great place to live, despite a median household income of less than $38,000 per year. More than one in four residents of Bangor work in the tourism-related sectors of retail and accommodation/food service. Health care accounts for another 21 percent of the city’s employment.

What the locals say

“2017 was our best year since we’ve been keeping track, as far as statistics go. ... I hope it’s not a re-occurrence of 2005-2007, but it’s pretty crazy right now. ... We have 4,500 real estate professionals in Maine and they sold 20,658 residential properties — just shy of $5 billion — last year. And an additional 2,900 in land sales. [Some] 16,500 of [all home sales] were financed.”

r_2018-05_Spotlight_local.jpg

Kim Gleason  
2018 President, Maine Association of Realtors  
and owner of McAllister Real Estate  


 

Will McDermott is managing editor for Ask a Lender. Reach him at willm@scotsmanguide.com or (800) 297-6061.

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