Grace Rote in the apartment she shares with her husband in downtown Portland on Thursday. The couple recently bought a home in North Yarmouth after several months of searching at a time when housing affordability in southern Maine is at an all-time low. Brianna Soukup/Staff Photographer

Looking to buy a home in the Portland area? You’ll need to earn more than $130,000 to make that happen.

That’s a problem for many would-be homebuyers in southern Maine, where the median household income is under $62,000.

A new report by the Joint Center for Housing Studies of Harvard University illustrates the growing struggle for both homebuyers and renters across the country and in Maine, where the typical home is unaffordable to median-income residents in all four of the state’s largest metro areas.

The research, released Wednesday, also highlights the steep rise in the cost of owning or renting and how competition to get those homes has intensified. But there are signs the housing market may start to cool as interest rates rise, new homes are built and affordability pressures increase, though hurdles remain for first-time homebuyers and lower-income households, the report states.

The median home price in the United States has surpassed $400,000, making owning a home less affordable for the average buyer. In the Portland-South Portland metro area, which includes Cumberland and York counties, the median home price is now $472,790, a price tag that requires a yearly income more than double the median for the area.

A decade ago, an income of just $58,000 was needed to buy a typical Portland home for around $230,000. The income required to buy a home in the Portland area jumped from $92,600 in April 2021 to $130,000 this year as median home prices went up 20 percent.


“To have a 20 percent increase in one year is dramatic and has a big impact in terms of affordability,” said Daniel McCue, a senior research associate at the Joint Center for Housing Studies and one of the report’s authors.

Over the past year, Beth Tembreull and her husband, Jarrod, have seen how high prices and stiff competition make it seem nearly impossible for first-time homebuyers to get into a home. The couple, who rent in Portland’s West End, started looking for a house in April 2021, after he finished his residency at Maine Medical Center and took a job as a physician in the Midcoast.

They initially wanted to buy a duplex in Portland so they could rent out the second unit. They made what they thought was a competitive offer on a duplex, but lost out to an offer just shy of $200,000 over the asking price. They shifted their focus after realizing that, as first-time homebuyers, they couldn’t compete with investors with equity and cash who are scooping up multi-unit buildings.

“Jarrod just got out of 13 years of training and I am a teacher,” Beth Tembreull said. “We’re trying to save, but we don’t have the ability to save that much and can’t be competitive in this market.”

But their search for a single-family home – first in Portland, then in other areas closer to Androscoggin County – has been equally frustrating. They’ve gotten a bit burned out on the process and wonder how others will fare in the housing market.

“If we, as a physician and a teacher, can’t find a place to live, how will the influx of immigrants that are arriving in Portland ever find a home?” she said.



Soaring home prices have kept would-be buyers in rental housing, adding to the rental housing crisis that has been mounting in Maine for several years.  At the same time, increased competition for the limited supply of rentals accelerated the year-over-year rise in typical rents from 0.8 percent in December 2020 to 16.2 percent in December 2021, the report states.

The rental affordability gap in Portland has been growing for years. A 2015 investigation by the Press Herald found that average market rents had increased 40 percent in five years – after accounting for inflation – and that renter’s incomes had declined during the same period. At the time, the average renter household would have needed to spend 59 percent of its monthly income to live in the average two-bedroom coming on the market in Portland.

Grace Rote in the apartment she shares with her husband in downtown Portland on Thursday. The couple began looking for a house in the Portland area last October and finally went under contract on a house five in North Yarmouth five days ago. The process was ‘one hell of a ride,’ she said. Brianna Soukup/Staff Photographer

Large rent increases make it more difficult for would-be buyers to save for a down payment, further delaying the transition to homeownership, according to the report. One in five Maine renters pays more than half their income toward housing costs, far exceeding the standard 30 percent considered affordable by housing advocates.

“It’s harder to bridge the gap and for renters to achieve homeownership,” said McCue, the Harvard report co-author. “The inequalities that are mounting are pretty substantial and striking.”

McCue said Maine’s trends are similar to other parts of the country, but Maine faces extra pressure because it is an attractive destination for people who have the geographical flexibility to work remotely.


For buyers who can afford to get into the market, many have to expand their searches outside of Portland to find more affordable options.

Dava Davin, founder and principal of Portland-area real estate agency Portside Real Estate Group, said she sees a trend of “drive until you can afford it” as home prices in Portland and South Portland increased year after year.

“It’s causing people to go farther and farther out of Portland to find housing that is comfortable and affordable to them,” Davin said.

Davin has seen first-time homebuyers with a range of budgets entering the market, including some prospective buyers with budgets of $750,000. Even as interest rates rise, she said, there are still loans with lower interest rates available for first-time homebuyers.

“I think it’s not all doom and gloom. There are some positive things happening in that space for people with a lower price point and being first-time homebuyers,” Davin said.

Madeleine Hill of Harpswell-based Roxane York Real Estate said there is not enough inventory to meet the high buyer demand, which she credits to a combination of people moving to Maine to work remotely and a population increase in the state.


“I think buyers are feeling the low inventory and many people that I have worked with have widened their search criteria geographically to maybe move outside of the Portland market if something is more appropriate for their financing and their budget,” Hill said.

Grace and Joseph Rote began looking for a house in the Portland area last October and finally went under contract on a house in North Yarmouth five days ago. The process was “one hell of a ride,” she said.

The couple started their search closer to Portland, but quickly expanded it to within 30 minutes of the city. As they looked at houses, it seemed like everyone was priced at $575,000, even those that were small or required extensive renovation, said Rote, an architectural lighting designer.

When the Rotes started putting in offers, they found themselves outbid even when they offered $75,000 over the asking price, a situation she described as “just outrageous.”

“As interest rates are creeping up, I’m sure that home prices will start going down, but just from what I’m seeing from the people I’m talking to, I don’t see that the demand is going down at all,” Rote said. “Everyone in my mid-Millennial age bracket from their late 20s to early 30s is just starting to look for a home now. And if the prices do go down, I just can’t see how the demand is going to go down. And I’m concerned that it’s going to stay this way for a lot longer.”



First-time homebuyers still face huge hurdles to achieving homeownership. As prices continue to rise along with interest rates, the savings and income needed to qualify for a home loan have skyrocketed for first-time and middle-income buyers, the report states.

At today’s prices, a first-time homebuyer would need to make a down payment of $27,400, or 7 percent, on a median-priced home.

“Without help from family or other sources, this requirement alone would rule out 92 percent of renters, whose median savings are just $1,500,” the report said.

If the required down payment is reduced to 3.5 percent, the monthly mortgage payment would still be over $2,000. In combination with rising prices, the recent interest rate hikes raised the minimum income needed to afford these payments from $79,600 last year to $107,600 in 2022. That effectively prices out some 4 million renter households nationwide, the report states.

But there are a few positive signs that prospective homebuyers may get some relief from soaring prices and stiff competition, according to the report.

Housing construction is at a new high, with construction starts of single-family houses hitting 1.1 million in 2021, exceeding the million-unit mark for the first time in 13 years, according to the report. Multifamily home starts are at a 30-year high of 470,000 units. The last time production was nearly as high was 1973.

The strong pipeline of new housing coupled with rising interest rates should help slow the rise in home prices and rents, according to the report. If the Federal Reserve can tame runaway inflation without causing a downturn, the near-term outlook for housing is largely positive, the report authors say.

“Demographic shifts are favorable, unemployment is low, and wage growth remains strong. Conditions on the supply side are also encouraging, with supply-chain delays diminishing and a record number of homes set for completion in the coming months,” they wrote. “Nevertheless, it will take time for additional supply to catch up with demand and produce any meaningful improvement in affordability.”

Staff Writers Halina Bennet and Sam Pausman contributed to this report.

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