Report Finds That Connecticut’s Housing Market Is Changing
HARTFORD, CT — A new report on Connecticut’s housing market shows an increase in rental households and a decrease in chronic homelessness.
The report from the Partnership for Stronger Communities found the number of Connecticut residents experiencing homelessness dropped 8 percent from 2015 to 2016, a five-year low.
Between January 2015 and July 2017, providers housed 1,756 people experiencing chronic homelessness. As of November 2017, 227 adults remain chronically homeless, three-fifths of whom have been matched to a housing resource.
The report credits Gov. Dannel P. Malloy’s administration and the legislature for its aggressive funding of affordable housing. There have been 10,000 affordable units created since 2011 and there are 3,300 more units under development, according to the report.
The report also found the number of renters is increasing and homeownership is down slightly.
The number of renter households rose by about 5.2 percent to 478,196 in 2016 from 454,668 in 2015, representing 35.2 percent of all households. This is a marked increase from 30 percent in 2007, when the real estate market and single-family home sales began a steep decline.
The number of households owning homes fell to 879,073, or just 64.8 percent of all households, down nearly 5 percent since 2007, according to the report.
While the report doesn’t pinpoint a cause for the decline in homeownership, Sean Ghio, policy director at the partnership, said there likely are several reasons based on the data.
Millennials are owning homes at much lower rates, and many of them are still living with a parent, Ghio said. He said new U.S. Census data shows Connecticut has the second highest rate of Millennials, defined as someone up to the age of 34 years old, living with a parent.
Part of the reason Millennials are making that choice might be that the continuing high demand for rental housing drove the gross average rent up to $1,115 per month in 2016. That’s up from $1,108 in 2015.
The increase in rents really “conspires against younger people trying to accumulate a down payment,” Ghio said.
Millennials in Connecticut are also burdened by the nation’s fourth highest average education debt ($32,326), and may avoid buying homes, which could weaken the housing market, the report found.
Homeownership has become more affordable, but is still burdensome, according to the report.
Connecticut households “burdened” by housing costs exceeding 30 percent of their income fell to about 27 percent from 30 percent in 2015.
The portion of renters paying 30 percent of their income toward rent dropped 1 percent to 48 percent.
The state’s “housing wage” — the hourly pay required to afford a typical two-bedroom apartment in Connecticut — remained at $24.72, the nation’s 8th highest, according to the report.
Ghio said Connecticut is really going to need to focus on a mix of housing options in order to maintain a healthy economy.
Because a large majority of the state’s municipalities are dominated by single-family housing stock (70 percent or more), 152 of the 169 towns have seen their real property grand lists (the total value of taxable real property) flatten or fall between 2008 and 2016.
On the bright side, homeowners enjoyed a slight increase in median home values — up to $247,000 from $246,000 in 2015 — as home sales increased 8 percent to 32,235 in 2016. But residential building permits remain far below levels seen prior to the Great Recession.
Single-family home building permits were down from a peak of 9,263 in 2004 to just 2,461 in 2016 — a decrease of 73.4 percent over 12 years. Multi-family residential building permits have surpassed pre-recession levels to 3,043 in 2016 compared to 2,574 in 2004.
What worries housing advocates is a widening income gap.
In 2016, Connecticut’s income disparity worsened, threatening higher costs for housing and other necessities as increasingly wealthy portion of state residents could potentially drive up prices.
Median household income rose to $73,433 from $71,346, up 3 percent from 2015. Homeowners enjoyed most of the increase and had the 4th highest household income in the nation ($98,163) while renting households had the 13th highest median income ($40,029).
According to U.S. Census data, Connecticut residents in the top 20 percent and top 5 percent income brackets saw their share of the state’s income rise while it fell for those in the 2nd, 3rd and 4th quintiles. The 20 percent in the lowest quintile saw their share of income rise slightly.
Only New York and Louisiana have a larger income disparity between wealthy and poor residents.
Paid for by Stevenson4CT, Michele Berardo, Treasurer