David Fink, Policy Director, Partnership for Strong Communities
The hidden story behind The Partnership’s just-released HousingInCT2014 report has less to do with Connecticut’s present housing situation – strained – than with the potentially dangerous future faced by the state’s municipal finances and quality of life.
Yes, the report shows that the demand for rental housing continues to grow: 34% of Connecticut households now rent, up more than 10% since 2007, when 30% rented. And yes, single-family home sales, and prices, remain largely flat, showing slackened demand that underscores the drop in home-owning households to 66% from 70% just 7 years ago.
For now, the obvious story is the dire impact on low-income households and individuals:
- With the nation’s 6th highest median home values, 8th highest rental costs and a 90,000-plus shortage of rental housing for those making under 30% of the median income, most low-income households are stuck in the 31 of 169 cities and towns that have more than a smidgen of affordable housing.
- And as scarce and substandard as much of that housing is, many of those families are paying too much for it. As HousingInCT2014 points out, 50% of renting families spend more than 30% of their income on rent and 28% of renting families earn less than half the median income and spend more than half of that on rent.
In other words, those families have very little left over for food, clothing, transportation, healthcare and other necessities.
The Ghost of Christmas Future is less evident, but scary in a much different way. Much of the increasing demand for rental housing is coming from Baby Boomers who want to downsize out of their single-family homes into residences that are smaller, denser, more affordable, energy-efficient, walkable to services and the town center and, if possible, close to transit.
Their children – Millennials – are also seeking rental housing because they neither like the idea of a single-family home in the suburbs and nor would their education debt allow them to buy a house now even if they did.
So as long as we don’t build enough of rental housing to alleviate the shortage – 70% or more of the housing in nearly three of every four towns is single-family – the price will stay high. Low-income people will continue to pay too much, or find themselves homeless. At the other end of the spectrum, we won’t offer a way for young families to move into affordable homes in Connecticut: they won’t be able to rent and thus save money to buy the Boomers’ homes, and single-family home sales, and prices, will stay flattened by low demand.
In other words, Connecticut has plenty of home-sellers these days. What we don’t have is buyers.
How does that hurt the towns, the services they provide and the quality of life we enjoy?
Virtually all of the towns’ revenue comes from the property tax. If home values stay flat in all those towns with all that single-family housing because there aren’t enough buyers, municipal grand lists and property tax revenues won’t keep up with the increasing cost of services.
Towns will have three choices: raise taxes, reduce services or both. All will wound the quality of life.
The answer implicitly stated in HousingInCT2014: we need more towns to create a wider array of housing options to offer more choices, particularly for low- and moderate-income people who want to save for a down payment to buy a home. Without Connecticut making a place for more buyers, demand will stay flat, the sellers won’t be able to sell, property tax revenues won’t keep up with service costs and municipal life in our lovely towns will suffer.
That’s not the obvious story, but it’s there, lurking.
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