Issues

Problem Statement:

• Housing in Maine has become unaffordable for many. A large increase in demand and a shortage in supply was caused by many factors, including Out-of-State Buyers moving to Maine during Covid; a drastic increase in vacation homes, including short-term rentals; record low interest rates; and a myriad of land development issues. In addition to record-high housing prices, property taxes have increased significantly since Covid due to higher municipality spending. Finally, property insurance rates have had double-digit increases over the past few years; leading many consumers to either reduce or go without insurance altogether.

Supporting Facts:

• Maine needs an additional 80,000 housing units by 2030 (Source)
• Short-Term Rentals in Maine (Source)
  • In 2022, approximately 18,032 “Whole Homes” were used as short-term rentals in Maine. These houses could be repurposed as full-time housing for Maine families.
    • Of the 18,032 “Whole Homes” Short-Term Rentals, 61% of these units were rented for less than 90 days in 2022; while they remained vacant the rest of the year.
  • In 2019, 1 in 5 homes in Maine were registered as a “Vacation Home” (Source)
• The percentage of the population in Maine over 65 years old is 23%, while the median age is 44.8 years old. (Source)
• The average house in Maine costs over $400,000 (Source) to purchase or $1,750 monthly to rent for a 1 1-bedroom unit (Source).
• Homelessness Statistics in Maine (Source)
  • 55% of all households who experienced homelessness in Maine have at least one child
  • 64% of Maine homeless are Adults over 24 years old
  • 29% of Maine homeless are children under 18 years old
  • 7% of Maine homeless are Young Adults 18-24 years old
  • 6.5% of Maine homeless are Veterans
• Homelessness in Maine has nearly tripled since 2020 (Source)
• Homestead Exemption Requirements (Source)
  • To qualify, you must be a permanent resident of Maine
  • The home must be your permanent residence
  • You must have owned a home in Maine for twelve months before applying
• Property Insurance
  • The Maine Bureau of Insurance says the average Maine homeowner has seen double-digit rate increases in each of the last two years; that’s a 23 percent rate hike on average (Source)
  • Maine insurance rates follow national and local trends and claim experience. Home and auto rates continue to rise as insurers and customers struggle with rising costs. Portland, Maine, area insurance buyers saw more than a 15% price increase in 2023. Industry experts expect this to continue in 2024. (Source)
  • The proliferation of court cases seeking large monetary awards from insurance carriers is becoming an increasingly heavy burden for the Property and Casualty insurance industry. Third-party litigation funding of cases has become a significant issue for insurance carriers. (Source)
  • Third-party Litigation Funding is a side financial deal in which a third party, who has no claim in the legal dispute, provides funding to support the plaintiff’s legal claim. In return, the third-party funder receives a significant portion of the proceeds if the case is successful. It transfers the financial risk of a lawsuit from the plaintiff to an investor. (Source)
  • 3rd Party Litigation harms policyholders because of the resulting financial pressure it puts on carriers to increase premiums. (Source)

Proposed Solutions:

• Increase Veteran Housing Services close to Veteran Affairs (VA) locations
  • We need to take care of our Veterans and get those who are homeless and housing insecure into a better situation with proximity to health care and support services.
  • We should prioritize getting every Homeless Veteran off the streets as soon as possible; they served us, and now it is time for us to serve them.

• Increase Senior 55+ Community Development across the State
  • This will ensure our older generations have:
    • Reduced housing costs
    • Safer living spaces
    • Better accessibility in their new home
    • Convenient Locations for support services
  • As a result:
    • A significant amount of housing will be available for younger families
    • Aging towns will be revitalized with younger working generations which will lead to economic growth
    • Investments in Public School systems should be strengthened with increased State revenue as attendance increases

• Property Insurance
  • Ban third-party lenders from influencing or investing in Maine property litigation cases.
  • As a result:
    • Housing and car insurance rates will decrease due to lower litigation costs
    • More insurance companies will offer products in the State increasing competition, additionally lowering costs.

• Short-term housing properties should be assessed and taxed as commercial properties – just like hotels.
  • Higher property values on short-term rentals will increase property taxes for these units Statewide.
  • If your long-term rental is occupied by a single-family occupant greater than 270 days a year, you should be assessed as residential & qualify for the Homestead Exemption.
  • As a result:
    • A portion of the less successful short-term rentals will be sold or converted to long-term housing for Maine permanent residents.
    • Owners of the remaining short-term rental properties will pay a higher property tax.
    • Additional Tax Revenue generated from short-term rental property prices should be used to increase the value of the Maine Homestead Exemption. This will lower property tax for Maine families.

Summary of my positions: 

Maine housing prices have reached the point where deciding to live and build your life here is becoming unattainable. This leads to a “brain drain” in the State where our College & Technical School Graduates leave the State for higher wages and a lower cost of living. Additionally, we are seeing a significant increase in homelessness and housing insecurity, where many Maine families are having to make hard choices to keep a roof over their children’s heads. 

By exponentially increasing the development of low-cost housing communities for our 55+ residents; we will drastically increase the pool of available homes for younger families to build their lives here in Maine. This will lead to significant economic growth; by bringing in working-age folks to towns throughout Maine; income and consumption tax revenues will increase as a result for the State, which could be, in turn, used to lower overall taxes for Maine residents.

Like many, my family enjoys short-term rentals on our vacations, but the unfortunate reality is that Maine has too many vacation houses that sit empty nearly year-round while our younger folks and families struggle to find housing either for rent or sale within their budget.  We need a means of pressuring these underutilized short-term rentals into either converting to a long-term rental or selling altogether so a Maine family will have a place to call home.

Finally, property insurance. Like many, I bundle my home and auto insurance policies together to save money. As you might have noticed, our insurance rates have increased drastically in the last few years, significantly outpacing inflation. Part of this problem is due to Third Party Litigation Funding. As described above, if you get into an accident; a third party may try to convince you to file a lawsuit and, if successful, take a significant portion of your trial winnings. This practice has grown increasingly aggressive over the past few years; exploding insurance costs, which then get passed on to you – the consumer. In other States, efforts are underway to limit or ban these 3rd party litigators to stem insurance costs for consumers. I think Maine should have this discussion as well.

I will be the first to admit that these solutions are not perfect, but let’s at least have these conversations. Housing costs will only worsen over time if we do nothing about it. If you have feedback or other ideas for potential solutions to Maine’s Housing problem, please email them to me so we can discuss them at [email protected].

Let’s Move Forward Together,

Phillip

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