Location, location, location
Recently the Maine State Housing Authority told a developer that the costs for a housing complex were coming in too high. As Steve Mistler reported:
Dale McCormick, director of the Maine State Housing Authority, called an emergency meeting late last week with stakeholders of Elm Terrace, a 35-unit affordable housing project in Portland. McCormick had bad news for those assembled at the University of Southern Maine’s Glickman Library. Elm Terrace, she said, was too expensive. In late September, developer Community Housing of Maine had submitted a final price tag of $10.9 million, up from the $8.5 million it had previously cited. The 29 percent increase, McCormick told stakeholders, was unacceptable. She reiterated a mandate her office had given the developer last month: Cut $1 million, or risk losing nearly $800,000 in tax credits.
Reacting to the price McCormick had rejected, state Treasurer Bruce Poliquin weighed in:
“Why in the world would we ask the taxpayers to pay $314,000 for 1,100-square-foot apartments?” he said, noting that the average price for a 2,000-square-foot, single-family home in Maine is about $159,000.
Since the higher bid was not accepted, the specific figure of $314,000 is not correct. Still, take a moment to examine that statement.
See the apples and oranges?
In one sentence, Mr. Poliquin went from:
The cost of building an apartment unit in Portland
The cost of single-family home in Maine.
Do those cost the same?
Well, houses certainly don’t cost the same across the state.
As we all know, the three key elements in determing a property’s value are location, location and location.
According to September 2011 figures from the Maine Association of Realtors, indeed the average cost of a house in Maine is $159,000.
But, say the Realtors, the cost of a house in Cumberland County, where Portland is located, is $229,450. These, of course, vary by neighborhood and by the size of and number of bedrooms in the the house.
Moreover, buying an existing home is invariably cheaper than building one.
I don’t know the specific costs associated with building apartment buildings, but this adds even more apples and oranges.
Without taking a position as to whether this is a worthwhile or cost-effective project, it can be said that this was not an apt comparison.