Across Maine's largest city, whole tracts of land are poised to be transformed in the next few years. More than $800 million in major projects are planned or anticipated on the downtown peninsula alone, from the $110 million Westin Hotel and condominium project on the eastern waterfront to the $161 million Mercy Hospital campus on the Fore River.

Housing imbalance may hurt city
by Kelley Bouchard
Portland Press Herald/Maine Sunday Telegram
November 20, 2005

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Much of the development is driven by Portland's growing national reputation as a "cool" place to live, work and play. It's attracting a variety of young, creative professionals, baby-boomers and empty-nesters, many of whom are escaping the stress and congestion of larger cities across the United States.

They like Portland's small-city feel, historic seaport architecture and culturally diverse population, which includes a variety of recent immigrants, a thriving gay community and many family-oriented neighborhoods.

The trouble is, a lot of the residential development is high-end condominiums and subsidized, income-restricted apartments. Single-family home construction is lagging, creating a housing imbalance that could be the final shove for Portland's already dwindling working- and middle-class core.

The likely result would be a city that's far less diverse.

"We're heading toward a situation, if we haven't gotten there already, where the only people who can afford to live in Portland are the very rich or the very poor. That's not a very good formula for a healthy city," said Alan Caron, president of Grow- Smart Maine, a Yarmouth nonprofit that studies issues related to planning and suburban sprawl.

City records show that only 11.8 percent of housing built or proposed in Portland since 2002 has been single-family stock, putting pressure on a segment of the city's real estate market that's becoming increasingly scarce – especially homes under $250,000.

The median selling price for a single-family home in Portland was $243,438 during the last 12 months, up 28 percent from $190,000 for the same period two years ago, according to Maine Real Estate Information System Inc. West End residents gasped at a recent public meeting when a nonprofit housing developer described a $215,000 home as "affordable" by state and federal standards.

Sorry they sold house

Nancy and William Barron were caught in that spiraling market last year, when they sold their 1,000-square-foot single-family home on Munjoy Hill, an older downtown neighborhood that juts into Casco Bay. The house, a 1850s former doctor's office built in the 1850s, had become a tight squeeze for them and their three daughters.

The house they bought for $80,000 in 1999 sold quickly for $255,000 – $5,000 more than the asking price. That left the couple scrambling to find a new place.

They saw little in Portland between $150,000 and $200,000, a price range they had set so Nancy Barron could stop working and take care of their young twins. Houses they looked at weren't much bigger than their Munjoy Hill home, and most required expensive upgrades.

In June 2004, they paid $150,000 for a 2,000-square-foot Victorian in Gardiner. They've spent thousands of dollars renovating that house, and now William Barron has a costly commute to his job at a credit card company in South Portland.

"I wish I'd stayed in Portland," Nancy Barron said. "I would have made it work."

Despite the demand for single-family homes, city officials and others say it's no surprise that most of the housing being built in Portland is apartments and condos. Open land is scarce, and housing developers want to maximize profits. They say the only option is to build "up," and the city is adjusting its zoning regulations in some neighborhoods to allow taller buildings and denser development.

The lack of single-family home construction in Portland comes on the heels of a demographic shift that started in the 1950s. Evan Richert of the Muskie School of Public Policy describes the hollowing out of American cities as "out-migration" or "second migration."

Moving to suburbs

The first migration came in the late 1800s and early 1900s, Richert said, when people moved from farms into cities. After World War II, with the mobility afforded by automobiles, that trend reversed. People started moving to the suburbs, often to escape the high cost and congestion of cities.

Today, Portland is experiencing both in-migration and out-migration. It's happening in cities across the United States as families leave and others move in. As a result, most cities show an increase in single-person households and income levels.

In Portland, while the number of households increased 5.2 percent from 1990 to 2000, the number of family households decreased 7.9 percent, according to the 2000 Census. Today, the average household in Portland has two people. The city's median annual household income, meanwhile, increased 34 percent from $26,576 to $35,650.

Richard Florida, author of "The Rise of the Creative Class," describes this phenomenon as "population sorting," when life- style and housing costs determine where people live.

Florida says cities don't have to be all things to all people. Still, he believes Portland should be concerned if certain groups are being priced out of the market. He notes that certain problems can result from an infusion of newcomers who don't have kids, including low-quality public schools and political agendas that aren't rooted in home-grown concerns.

"It's a whole different version of white flight," Florida said. "You don't want to build a yuppie playground."

Portland may be doing just that. Developers of high-end condos say they're building for buyers who are eager to move to Portland and have plenty of money to spend. They admit that speculators may buy some units in the hope of "flipping" them for a quick profit, which is happening in seaside communities across the country. Still, developers here say there's real money behind their projects and real demand among buyers. They're hoping people have seen all the top-10 lists that say Portland is as a great place to live.

"They've seen the articles. Portland is a gem," said Drew Swenson, a developer of Riverwalk, a $75 million project planned for the eastern waterfront. Swenson's project would include 75 luxury condos, a boutique hotel, an office building and a parking garage for the $22 million Ocean Gateway cruise-ship terminal that's under construction.

Calls from all over country

Swenson said he has yet to start marketing his condos, which will sell for $500,000 and up. Still, interest has spread with each newspaper article as city officials reviewed the project. Calls have come from Massachusetts, New York, Florida, Colorado, California and Great Britain.

Swenson and other developers say their target market includes young professionals, artists and craftspeople who can work anywhere thanks to modern transportation and Internet technology.

They're seeking an attractive, small city that's close to the country. They see themselves walking or biking to work, kayaking or hiking in their spare time, and walking to dinner and a show at night.

Their target market also includes baby-boomers and empty-nesters, many of whom are quite wealthy after several decades of hard work and smart investments. Some have received sizable inheritances from thrifty Depression-era parents. Many want to live where they grew up or enjoyed vacations.

Some seek a home near their grown children, who could live anywhere in New England. One real estate agent described a couple who live in a Midwest city high-rise and are looking for a place in Portland because they want to be closer to their children in Boston.

"They don't want to live in Boston, but they do want to live in a place where they're within walking distance of all the amenities that a small city like Portland has to offer," said Bud Singer, a partner at Town & Shore Associates in Portland.

Many of the over-50 set plan to have second or third homes in warmer climates, such as Florida or Arizona, where they will spend the winter months.

If Pat Amidon has her way, her second home will be an apartment in Paris.

A real estate appraiser who works in Portland and lives in Cumberland, Amidon and her husband, Robert, are under contract to buy four units in the 12-story, 94-unit Waterview condominium that's being built on Cumberland Avenue.

Condos to lease or sell

In their 50s with two grown children, the Amidons plan to lease or sell three of the condos and eventually move into the fourth. Then they can come and go as they please, spending a month or two each year in Paris each year.

Amidon understands the desire to keep middle-class families in Portland, but she believes the trend of building condos and apartments is good for the city and its neighbors. She says it will help revitalize the downtown core, stem suburban sprawl, reduce commuter congestion and preserve the quality of life that attracts so many people here.

"We can't keep moving out to the suburbs," Amidon said. "If we want that quality of life, we need to concentrate ourselves, not spread out."

Staff Writer Kelley Bouchard can be contacted at 791-6328 or at: kbouchard@pressherald.com