Justin Bolinger has had “homeowner” at the top of his bucket list since middle school. 

It’s always seemed an attainable goal for the 32-year-old lifelong Mainer, and now especially for him and his partner, an engineer and nurse, respectively, with well-paying jobs and no children. 

But after nearly two years of slogging through Maine’s hypercompetitive housing market with nothing to show for it, Bolinger can’t shake a nagging feeling: Homeownership may not be in the cards, after all. 

Like Bolinger, many other would-be first-time homeowners in Maine and across the country are being boxed out of the housing market. Increasingly, they’re unable to compete against cash buyers and experienced homeowners with equity, all tackling a market of high prices, rising interest rates and low inventory.

The share of first-time homebuyers dropped to a record low last year, while the age of the typical first-time buyer hit an all-time high, according to the National Association of Realtors. 

First-timers accounted for 26% of all home purchases in 2022, down from 34% the year before, and a peak of 50% in 2010, the association reported in its annual profile of buyers and sellers. The average first-time buyer was 36 years old, up from 33 the year before and the oldest average age since the profiles were first published in 1981.

Real estate professionals say they aren’t surprised.

It’s a tough landscape for first-time buyers, who typically have little assets, said Dave Demeo, a real estate agent with Tomazin Goff Realty in Portland.

 The result is a frustrating paradox.

“If you can’t get your foot in the door of your first house, you’re not going to build equity,” Demeo said. “For most people, traditionally it’s how they build wealth,” he said.

This is potentially bad news for Maine, as the nation’s oldest state works to attract young people to fill more job openings and replace the tens of thousands of workers expected to retire in the next six years.

PRESSING PAUSE 

Sarah Clark saved for a year to be able to afford a down payment on a home.

She’s proud of the $45,000 she has been able to put away on her own, but after several months navigating the housing market, that sum “feels like nothing.”

Clark, 32, lives in Portsmouth, New Hampshire, but she’s been looking at properties in both Maine and New Hampshire with the goal of being within 45 minutes from the city. 

Prior to the pandemic and the subsequent housing boom, Clark’s under-$300,000 budget wouldn’t have been an issue. Now she’s struggling to find anything in the range that’s habitable.

“I felt close and then I had all this momentum, but now I think I need to wait,” she said. “I have the energy, but it costs so much money … The ones I can afford need so much work.” 

The market is frustrating for first-time buyers like her who have less leverage than someone who has already owned a home, she said. 

“It’s just still so crazy to me that I have never not paid rent … and that counts for nothing. Why would that not automatically qualify me for at least $1,300 in mortgage (payments)? My credit is great,” she said. “It’s just silly the way it counts for nothing.” 

Bolinger and his partner don’t have a particularly demanding wish list for their future home. Their budget is between $330,000 and $400,000 and they’re looking at a wide stretch from Biddeford to Auburn. 

They want a house around 1,400 square feet away from a busy street, and they’d like a backyard space that’s level enough to one day have an in-ground pool.

Still, Bolinger hasn’t been able to land a home. After weighing whether he needs to wait or adjust his expectations for what his budget will buy, pressing pause made the most sense. 

“People ask, ‘Are you guys still house searching?’ and I say, ‘Nominally, yeah. Practically, no.’ I feel like I’m going to wait until I get a general sense that competition has died a bit and prices have calmed down,” he said. 

Their apartment is clean and comfortable and the rent is reasonable, so he’s willing to sit tight for a while, although it’s not by choice. 

“It sucks because I hear friends that talk about a starter house, a first house. I want a house. I want to live in a place I buy for my whole life,” he said. “Millennials grew up with this idyllic, romanticized notion of what a house could be, and I think we’re finding that reality is not matching our dreams.”

That “I’ll just keep renting for now” mindset is not surprising to Melanie Crane, a Portland-based real estate agent with Keller Williams.

“A lot of first-time homebuyers have just been priced out of the market and driven out of the areas that people are drawn to living in,” she said.

Crane estimates that 30% to 40% of her clients in the last two years have been first-time homebuyers. She said it makes sense that their share of the market has dropped and that the successful buyers are the oldest they’ve ever been. 

It’s nearly impossible to compete against out-of-state investors who can waive inspection requirements and offer cash over asking. Crane now mostly shows homes priced below buyers’ preapproved financing, just so they can stand a chance.

If a buyer is preapproved for $350,000, she won’t show anything above $300,000, because that buffer is needed in order to compete, she said.

YOUNG BUYERS WANTED

Maine has been looking to attract more young residents for years. 

The state is bracing for the loss of 65,000 workers by 2029 as baby boomers retire, according to a recent estimate. There aren’t enough younger workers ready to replace them. At the same time, a number of companies have either moved to Maine or grown within the state and are desperately seeking more employees. 

“If our economy is going to continue to thrive in the future, we need to attract younger people who can build their careers long term,” said Katie Shorey, director of engagement for Live + Work in Maine, a group that promotes worker relocations to the state. “If we had more housing right now, I would say it would be easier for us to attract more people to the state, especially younger people.” 

Hannah Somers and her partner were lucky to close on a “really cute three-bedroom” home in Bar Harbor last month, but the road to homeownership was not an easy one. 

Somers, 27, said everything in their $300,000-or-under price range was “abysmal” and needed substantial renovations. Anything newer or that didn’t need as much work was way above what they could afford. 

The home they wound up purchasing fell into the former category. Built in the 1950s, it had some issues that other buyers likely couldn’t overlook, Somers said. But the couple felt that with some TLC, it would be a good investment.

The pair, both scientists, are lucky to have some savings. And with no children and no dogs, they don’t need to move right away. They’re in the midst of some renovations with a target move-in date in February. 

Somers said their situation is not typical of many Mainers in her age group. Her partner, who is from Europe, doesn’t have any student loan debt. 

“That’s really the biggest factor that I see with people my age … Having student loan debt makes it almost impossible to buy a house,” she said. “I’m really lucky. If I wasn’t partnered with a really great person, there’s absolutely no way that I would be able to afford a house on my own.”

Many of her college classmates have left Maine in favor of states with more job opportunities and a lower cost of living. 

Lawmakers have been trying to prevent that “brain drain” for years, partially with programs designed to ease the burden of student loan debt. They include the recently expanded Student Loan Repayment Tax Credit program designed to incentivize college students to stay in Maine after graduation.

Legislators last year also considered a program that would forgive up to $40,000 in student loan debt for some first-time homebuyers, as long as they stayed in the home for five years. The bill passed in the Maine Senate but later died on adjournment. 

FINANCIAL ASSISTANCE OR COMPETITIVE HINDRANCE?

While first-time homebuyers hit a record low last year, MaineHousing’s First Home Loan Program set a new record for the value of loans the agency purchased.

MaineHousing purchased over $178 million in home loans in 2022, an increase from the previous record of $160 million set in 2018. But despite the increased value, a direct result of the increased house prices, the agency is still dishing out fewer loans than it was when the previous record was set.

In 2018 the agency financed 1,189 mortgages. Since the pandemic, numbers have been comparatively lower. Last year, the agency financed 918 loans. 

Craig Reynolds, director of homeownership for the housing authority, said the market has not dampened the interest in homeownership.

“The demand is there. For younger people, especially those starting families or who want to be in a home when they do, that is not going away,” Reynolds said. “But the market conditions have kept those numbers lower than they otherwise would be.” 

The MaineHousing First Home Loan Program touts little or no down payments, lower-than-average interest rates and a $5,000 grant (raised from $3,500 last year) to help with either a down payment or closing costs for people who meet income and home-price eligibility requirements.

While the program is a help for many who might not otherwise be able to afford a house, some real estate professionals say such loans make homebuyers less competitive.

“It’s hard because an FHA loan comes with another set of criteria that the house needs to meet,” Demeo said. “If you’re competing against someone using conventional financing … Well, if the offers are pretty much the same (the sellers are) going to go with what doesn’t have a more stringent set of appraisal requirements.”

‘IT’S BRUTAL’ 

Breaking into the housing market is challenging for people with traditional financing, too.

Wilson Adams and his wife saw 30 houses and put in offers on nine or 10 before closing on their three-bedroom Cape in Portland’s North Deering neighborhood last June. And the couple did it all remotely. 

At the time, the family lived in Tennessee and relied on a Realtor and family members to help scope out properties. 

Landing their house was pure happenstance, Adams said. A similar house for sale down the road offered almost the same layout but with modern upgrades. 

Their house, on the other hand, had some “pretty awesome design choices,” like green (and moldy) carpets, pink walls and glittery wallpaper, brown outlet covers and wood paneling galore, Adams said.

He thinks the other house probably drew more interest, helping their chances.

The house was listed between $430,000 and $450,000 and the appraisal came out to be $490,000. They paid $505,000.

Adams, an optical engineer with a Ph.D. in biomedical neuroscience, is now learning the trades as he chips away at the renovations that will probably take a decade.

The purchase of their home came at just the right time. Adams said he and his family were about three months from resorting to renting. They also secured financing soon after the first of the recent bank interest rate hikes, and locked in at 3.7%. 

A few months later rates had nearly doubled.

“If we had the same down payment now when we bought our house, with the same rate structure, we could afford a house a little more than half (as expensive) as what we ended up spending,” Adams said. “Pretty much anybody that doesn’t have that much savings, (like many) first-time homeowners, are basically out to pasture in that sort of market. It’s brutal.”

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