Here's what you need to earn in order to buy a home in Maine today
Photo / Peter Van Allen
A study by Bankrate shows Maine home buyers would need an annual income of at least $102,000 to afford the mortgage payment, up from $62,000 before the pandemic.
A report from Bankrate says a homebuyer in Maine needs to earn at least $102,557 a year to afford a house valued at the state's median sales price, up from $62,305 in January 2020.
The median sales price in Maine was $354,000 in February, an increase of 7.54% from a year earlier, according to Maine Listings. In January 2020, the median home price was $220,900, a jump of 10.45% from the year before.
Potential buyers have to deal with not only with higher home prices and higher interest rates but also with a shortage of available properties. Homeowners who locked in low mortgage rates during the pandemic are staying put to avoid today’s higher mortgage rates and shrinking the pool of available homes for sale, the Bankrate report says.
"Affordability is the biggest issue — finding a home that’s in your budget. The higher the price of a home, the harder it is to come up with the down payment or to qualify for the monthly payment," said Jeff Ostrowski, housing analyst for Bankrate. "Home values are near record highs, and if you want a house, you have little choice but to pay a high price."
Pandemic refugees
As we know in Maine, with the influx of "pandemic refugees," prices started to surge by late 2020, with bidding wars becoming commonplace. Cash buyers had the upper hand.
The median home price in Maine has been in the $350,000 range for some time. Even with higher interest rates and other economic factors, home prices have stayed high because of the lack of inventory.
Realtors have said over and over that people who might be likely to sell are staying put, citing the high price of homes and, if they'd be financing a deal, the higher cost of borrowing money.
Salaries not in line
At the same time, Maine salaries have not increased at the same rate as home prices.
Maine's median household income was $68,251 for the period from 2018-22, the most recent data available from the U.S. Census.
Household income for Cumberland County, including Greater Portland, was $87,710 for the years 2018-22. Of course, Cumberland County also has the highest home prices in Maine, at $513,250 in February.
“The combination of higher home prices and comparatively stagnant incomes is most challenging for first-time homebuyers who have not been able to benefit from the price appreciation of an existing home,” Tom Dworetsky, who studies New England housing trends and is director of research at Camion Associates, told Mainebiz.
He suggests that first-time homebuyers will need to be resourceful.
“Those able to buy into the market for the first time are making do by cutting spending in other areas or renting to a roommate," Dworetsky said. "Having a dual-income household is also becoming increasingly important.”
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