ESSEX — With economic growth stagnant in the Connecticut River Valley, the Lower Connecticut River Valley Council of Governments, known as RiverCOG, recently outlined two scenarios for housing growth in the region over the next decade – one that calls for each year building 200 new housing units in the region over a decade, and other 600 yearly.
“If things improve, if the state and regions can reposition and turn around our demographic decline and see some job growth, then the high number is 600 units per year,” said Donald Poland of Goman+York Advisory Services, one of the planning firms that consulted with RiverCOG on its new Regional Housing Plan.
Due to lower demand and lack of growth, Poland said the region could absorb at most 200 new units per year for the next 10 years — unless the region and state move into a period of growth. Poland based his analysis on housing permit data within the region from 1997 to 2017 collected by the Connecticut Department of Economic and Community Development.
Poland said his analysis showed there was a housing boom from 1997 to 2007 with 769 permits issued in the region per year. Then came the housing crash in 2008 followed by the Great Recession and a period of slow recovery in Connecticut — with 191 housing permits issued each year from 2008 to 2017.
Poland said he estimated 200 housing units a year based on the number of housing permits issued during the region’s slow recovery from 2008 to 2017.
“I just want to be clear this [report] starts with the background of stagnant job growth and the anemic population growth and overall the demographic and economic trends for the state and for the regions are pretty stagnant at best,” Poland said.
The Regional Housing Plan used 2017 data from the Connecticut State Data Center that showed a 1 percent drop in population between 2010 and 2020, which included a 19 percent decrease in people under 18 and a 21.4 percent decrease in school district enrollment. The report predicted a 2.6 percent population drop between 2015 to 2040, with a corresponding weaker housing market, and depreciating property and grand list values.
Megan Jouflas, a senior planner at RiverCOG, told CT Examiner that discussion with the region’s towns indicated a desire for growth rather than the status quo.
“When we went to the towns and we talked to them about what their vision for the region was, we heard a lot about growing innovative industry sectors and about diversifying our housing choices and bringing back young people. So that kind of shows the trajectory that the region wants to go into,” Jouflas said.
When asked whether building housing in a location will attract jobs and new residents, Jouflas said job growth and the housing market feed each other but neither one comes first.
“It’s kind of a chicken and an egg scenario where you need both the chicken and the egg at the same time. You need jobs to bring people but also jobs locate where young people want to be, so you kind of need to be creating both.”
Poland separated the supply of housing from the home-buying market. He said the limited supply of houses and the increased demand for purchasing make it appear that the housing market is strong, but those numbers are separate from the home production market.
“Right now we see a robust homebuyer market but we actually have a very anemic home production market or construction market,” Poland said.
Sam Gold, executive director of RiverCOG, said supply chain and labor issues during the pandemic have made it more difficult to build houses and played a huge role in the increase in home prices.
“Unlike previous real estate, in periods of rising real estate costs, we don’t have the commensurate addition of new product or new housing on the market. So that’s one of the reasons why prices are going up. It does not necessarily mean there’s a huge growth in demand, but more of a constricted supply,” Gold said.
Poland said that, given the low housing starts, it is difficult to provide affordable housing in the region.
“My biggest concern is recognizing, yes, there is an affordable housing need within the region. But how do you actually provide affordable housing when you don’t have strong demand for housing overall?” he asked. “How do you provide affordable housing when demand for housing overall is anemic? That’s challenge or hurdle number one to overcome,” Poland said.
According to the report, 8 percent, or 6,733, of all housing units in the region are counted as affordable housing by the state, with 71 percent of those units located in Middletown. In the remaining towns, 3.31 percent are counted as affordable by the state. As of 2020, 31.1 percent of the region’s households are cost-burdened by their monthly housing costs — spending more than 30% of household income on housing.
Gold emphasized that it was important to consider how statewide, regional and local housing policy mesh with transportation-oriented development, known as TOD. He said the transit systems — train stations, express buses and bus routes — are only in certain areas of the state and can be a limiting factor for those who need affordable housing.
“There’s one other element of this chicken and egg. It’s sort of a three legged stool that came out during our GrowSMART plan that if we cannot provide all the housing we need for that economic growth, we need to supplement that with good transportation and good transit. So it’s really housing, it’s employment and it’s transit.”
In later comments to CT Examiner, Gold explained that if the region cannot build all the affordable housing it needs, which he said is likely because of high land costs and limited public utilities, transit can supplement the housing supply by providing people who live outside the region a way to get to jobs in the region.
Gold added infrastructure as one more key element. According to the regional plan, the region has limited sewer and public water connections, with 11 percent of the region served by sewer and 46 percent on a public water supply.
“Without a public water and public sewer, the full cost of providing those services are put on the homebuilder and the homeowner and those upfront costs are not within everyone’s financial capacity. And when you have public water or sewer, those capital costs are spread out amongst a much larger group and also timeframe,” he said.
This story was corrected and clarified to reflect Gold’s comments on housing and transportation.