Bar Harbor Data Changes:
How Population Projections Could Change Town's Housing Needs
BAR HARBOR—New state population projections and data may show that Bar Harbor, a town that has historically not had enough affordable housing, might not need as much new housing as previous predictions indicated. Whether or not that housing can be affordable depends on multiple factors, not all within the town’s control.
On January 11, 2023, the Bar Harbor Comprehensive Planning Committee heard a presentation from RKG Associates on RKG’s then newly completed Bar Harbor Housing Analysis, which was dated December 28, 2022.
The housing analysis prepared by RKG stated that the population of Bar Harbor was projected to rise to as many as 6,216 residents by 2033.
In the report, RKG states that much of the data that it used was from the Maine Department of Administrative and Financial Services, State Economist. The state economist was the only listed source for the population projection chart in RKG’s report, which is shown below. In June 2023, the state economist updated the population projections.
The newer data, gleaned from the same source, the state economist, shows a projected rise to 5,234 by 2035. That is 982 fewer residents than the data used by RKG. If you push that data out to 2038, which is the last year shown on the RKG chart, the difference becomes even greater. RKG’s chart shows a projected population of 6,326 by 2038. The newer data shows a projected population of 5,173 by 2040. That is a difference of 1,153 fewer residents than the data used by RKG and an overall reduction in Bar Harbor’s population.
According to Maine State Economist Amanda Rector, the data that RKG used was the posted data at the time and was based on 2018 estimates. Those estimates have obviously changed.
RKG’s 2022 report is part of the data used for the town’s newly adopted Housing Policy Framework and upcoming Comprehensive Plan. According to Finance Director Sarah Gilbert, the town paid $20,770 for the housing analysis by RKG Associates and has paid a total of $229,387 so far for the comprehensive plan planning process.
The projections shown by the data on the state economist’s website show the projections in 5-year increments, and although the older version and the newer version do not align exactly by year because the updated data has a different start date, the difference in projection numbers is still quite obvious.
The state economist shows an overall projected population growth for Bar Harbor for the years 2020-2040 of only 1.7% whereas the RKG chart using the previous projection data shows an increase of 14.9% from 2018-2038.
For the chart below, the year 2020 is actually an “observed” population number and not a projection.
The RKG housing analysis states that “Bar Harbor is projected to see the highest percentage increases in population compared to surrounding communities.” And the report goes on to say that “broadly, Hancock County is projected to see population decreases meaning Bar Harbor will be a net absorber of new residents for the county.”
While this was a statistically valid statement at the time of the report’s publishing, it can no longer be seen as accurate if solely based on the data of population projections by the state economist.
Two major projections have changed. Bar Harbor is no longer the highest percentage increase in population and Bar Harbor can no longer be seen as the “net absorber” of new residents for the county.
The population projections of the towns chosen for the original RKG chart have changed in such a way that now, broadly, Hancock County, as represented in the chart, is projected to see population increases. In addition, based on its greater population and much greater percentage of projected population increases, Ellsworth is now projected as the “net absorber” of new residents for the county.
RKG includes this statement in the analysis, “The impacts of the COVID-19 pandemic, cost of living, and constraints to development, such as limited developable space, within the town could stifle some of this projected growth.” Which, if any of these variables has played a factor in the projected population changes is unknown. RKG also includes additional qualifiers stating that the data in its report can be inaccurate due to uncontrollable trends.
You can find the state economist’s methodology here in the State of Maine population outlook.
HOUSING UNITS
In that housing analysis, RKG said that by 2033, Bar Harbor could need 616 new housing units based upon population projections and other data. RKG broke those potential housing needs into owner-occupied units, 94, and renter-occupied units, 522.
Using RKG’s numbers from its housing analysis, the state economist was projecting a population gain of 681 in the 15-year period from 2018-2033. Using the new data, a population gain of 145 is projected in the 15-year period from 2020-2035. Using those numbers, 145 is approximately 21% of 681 so, in theory, the town should now need approximately 20 (21% of 94) new owner-occupied dwelling units by 2033, a number that should be easily met without any new interventions according to the data below.
Bar Harbor continues to see an increase in dwellings every year as shown by the total dwelling counts provided by the town’s assessing department and as of January 1 of each year.
2018 – 2,929 dwellings
2019 – 2,954 dwellings
2020 – 2,979 dwellings
2021 – 3,037 dwellings
2022 – 3,366 dwellings
2023 – 3,416 dwellings
2024 – 3,542 dwellings
Between 2018 and 2024 the assessor’s office recorded 613 additional dwellings. The assessor’s office has no way to separate the dwelling numbers by what kind of dwelling they may be. It could be single family, multi-family, shared accommodations, or employee living quarters. The staff also has no way of knowing if any of the new dwellings were replacements for a previous dwelling that was torn down to build a new one.
With all of that in mind, the yearly dwelling count has been going up at a rate, since 2018, that would cover RKG’s projected housing needs, with the outlier most likely being renter-occupied dwellings.
For the graph below, the year 2010 was chosen as the data starting point because it is the first year shown on the most recent state economist’s projections, Maine City and Town Population Projections 2040. For assessing department dwelling counts, archived records only go back to 2018. There was no attempt to carry out the graph’s timeline for new dwellings due to the fact that the increases vary widely by year. However, the graph still indicates a steady rise.
Short-term rentals were also inserted in the graph simply to show that because of the most recent short-term rental ordinance, they have reached their peak and are slowly declining. The updated STR numbers will be available shortly after May 31 and for the purpose of carrying out the graph’s timeline, they have been reduced by five permits per year which is most likely a low estimate due to the many possible ways of attrition.
AFFORDABLE HOUSING – RENTALS
The U.S. Department of Housing and Urban Development defines affordable housing as “housing on which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities.”
In Maine, in relation to L.D. 2003, affordable housing (development) is defined the same as HUD’s wording, but with the addition of “for rental housing, a development in which a household whose income does not exceed 80% of the median income for the area.”
According to the U.S. Census Bureau, the median household income in Bar Harbor in 2022 was $67,045. According to the U.S. Social Security Administration, last year’s cost of living increase was 3.2%. Using that as the marker for wage increases last year, the marker gives an amount of $1,384 per month for rentals at 30% of 80% of the median income.
The median price for a house in Bar Harbor is currently $522,350. Calculating for a typical 30-year mortgage at a generically accurate 7% interest rate and 20% down payment, that would give a monthly payment of $2,780 per month, eliminating a single-family dwelling that is affordable according to that definition. In addition, these calculations do not include utilities and other associated costs.
A two-unit property at the same price and the same characteristics of interest rate and mortgage term still eliminates an affordable-by-definition rental.
A single-family dwelling valued at $522,350 that has no mortgage and uses very low numbers as maintenance and utilities still barely comes in under the affordability cap for rentals at $1,051 per month and leaves the owner with $333 per month or $3,996 per year for their efforts, an amount that could very easily be eaten up by just one unexpected maintenance need, essentially making this scenario a fantasy.
Property taxes – $437 per month,
Water (minimum charge) – $25 per month,
Sewer (minimum charge) – $25 per month,
Oil/propane – $200 per month,
Electricity – $100 per month,
Upkeep/repairs – $200 per month,
Insurance – $67 per month.
AFFORDABLE HOUSING—OWNER OCCUPIED
In Maine, in relation to L.D. 2003, affordable housing (development) is defined the same as HUD’s wording but with the addition of “for owned housing, a development in which a household whose income does not exceed 120% of the median income for the area.”
This formula results in an amount of $2,076 per month for 30% of 120% of the median income. As you can see by the figures in the previous section, this amount is $704 less than just the mortgage payment and does not include any utilities or other costs such as homeowner’s insurance, thereby eliminating purchasing an affordable-by-definition house in Bar Harbor.
AFFORDABLE HOUSING—NEW CONSTRUCTION
After speaking with a number of local building contractors, using the lowest estimated new construction cost of $350 per square foot, and an easily calculated 1000-square-foot home gives you a price of $350,000. Using the same mortgage calculations as previously used, the estimated monthly payment would be $1,863.
However, this does not include land. At the writing of this article, the least expensive lot listed for sale on Zillow in Bar Harbor is listed at $195,000. Adding this into the cost of the home, this brings the estimated monthly payment up to $2,901, once again easily overriding an affordable-by-definition residence. This is without any utilities or other associated costs.
HOUSING MARKET
The real estate market embodies the age-old adage of supply and demand. Partly because of Acadia National Park, the incredible natural beauty, and increasingly more mild winters, Bar Harbor is and always has been a high demand area.
Add to that the numerous non-profits and for profits that purchase residential housing, sometimes at prices well above asking price, for employee housing or expansion and you have a situation where demand goes up and supply for more typical residential buyers goes down even further.
Also because of ANP, the amount of land that it takes up, and the many acres of fragile and important ecosystems in and out of the park’s boundaries, Bar Harbor has a reduced amount of land that is viable for building.
All of this is on top of national trends affecting the entire country where many people can’t afford houses or find houses close to their employment.
According to a May 2024 article written by Robin Rothstein and Caroline Basile in Forbes Advisor on Forbes.com, “Still-high mortgage rates and home prices amid historically low housing stock continue to put homeownership out of reach for many.” They also write, “Experts also anticipate a slower rise in home prices this year compared to recent years, but price fluctuations will continue to vary regionally and depend strongly on local market supply.”
In that same article, the authors quote Rick Sharga, founder and CEO of CJ Patrick Company, a market intelligence and business advisory firm who says, “I don’t expect to see a meaningful increase in the supply of existing homes for sale until mortgage rates are back down in the low 5% range, so probably not in 2024.”
If you’d like to donate to help support us, you can, but no pressure! Just click here.
Hmmmm, $20k for essentially misinformation which helped turbocharge a misguided poorly informed debate and restriction of short term rentals.
This reader hopes our Town Council reflects on this wasted and divisive effort when considering future actions….
Very thorough. Thanks. Interesting that Ellsworth will be the net absorber, does the state economist say where the new Ellsworth residents will likely work?