More Housing, Elsewhere


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Connecticut needs more affordable housing.

At this point, I am fairly certain that no one left, right, or center will disagree with this statement.  Even if you have not been house hunting or looking for a place to rent, it’s anecdotally obvious that finding a place to live is a challenge. Available data is also very clear on this subject; almost half of renters in the state pay more than thirty percent of their income in rent, and some metro areas in the state (New Haven and Bridgeport/Stamford) have some of the lowest vacancy rates in the country. Home values have skyrocketed in recent years, and any sign of relief now has been quickly eaten away by raising mortgage rates.

Despite media narratives about the wealthy leaving, in fact the vast majority of Connecticut residents leaving the state make less than $75,000 a year The most common reason behind the decision to move to another state is housing affordability.

The main driver behind high housing costs remains our really tight housing supply. Connecticut just doesn’t build much housing at all; we rank 49th out of fifty states in new residential construction permits per capita, only ahead of Rhode Island. When people wonder why our population has been stagnant for so long, well, we are just not building anything to accommodate our own residents, let alone newcomers. Connecticut, however, remains a wonderful place to live, so people want to move here, hence pushing prices upwards.

We need to understand why we do not build more housing, and why despite high housing prices, real pain to families, constraints on our growth, and businesses constantly complaining about labor shortages, we are still not doing much to solve this issue. As usual, the problem is not of incompetence, but rather of institutions.

Connecticut municipalities rely on one tax to pay for their services: the property tax. The main virtue of the property tax is that it provides stable funding (you cannot move your house out of town) and it is really easy to collect and hard to evade (good luck hiding your house). The main problem of the property tax is that it creates a series of fairly counterproductive incentives to communities that rely on it.

If you are a municipality in Connecticut you want buildings and facilities to be as expensive as possible, because that means they will generate more revenue for you. You also want to have as few as them as possible, because this means you will have fewer people to provide services to. That is, you want big, expensive houses on big, expensive lots. This will also require smaller police and fire departments, and more importantly, smaller schools. The more expensive your average house is, the lower the mill rate you will have to charge residents to pay for those services. You will be able to deliver great services (because you are still raising tons of money thanks to your expensive grand list) without charging much for them, and have a really nice, pleasant town in the process.  This is exactly what we see in many of our wealthiest suburban communities in Fairfield, New Haven, and Hartford Counties: very little construction, one to two acre minimum lot sizes, low mill rates, very well financed public schools, police, and fire departments.

. Municipalities, of course,  are in charge of zoning and land use decisions, meaning they can take active steps to suppress the supply of housing in their towns, pushing property values upwards. Everyone would agree that we need affordable housing in our state, but it just isn’t in the self interest of any individual town to lower the price of housing on their own. Residents in these towns will largely agree – much of their wealth is tied to housing, so keeping it expensive is seen as a feature, not a bug.

Connecticut has ended up, as a result, as this strange system of competitive restrictive zoning, where towns actively work to build as little as possible to prop up their property values at the expense of the rest. Municipalities with older, denser, more affordable residential neighborhoods just can’t keep up with this McMansion arms race, and end up hit by a wave of lower property values, higher mill rates, and worse schools and public services. This is what drives both our residential housing segregation and our persistent inability to build enough housing in the state.

There is, of course, a way out from this mess – limiting restrictive zoning policies across the state. A mixture of zoning reform, additional funds for affordable housing, and careful planning can solve our affordability crisis and help grow our economy. This is precisely what H.B. 6633, the “Fair Share” bill does, creating a process to plan and build 200,000 new housing units in a decade, setting a clear criteria to allocate them to each town, but letting municipalities how to achieve these goals. If they fail to take action by themselves, the bill would allow multifamily housing instead, so new construction cannot be indefinitely blocked.

At the same time, we must continue investing in our cities – including building more housing there, both market rate and affordable. We need to make them more vibrant, walkable, and welcoming to both residents and newcomers. And to ensure no one is left behind, we need to take steps to limit rent increases, strengthen housing vouchers, and revamp public housing.

Our current housing mess is the result of Connecticut towns being perfectly rational and doing what is in is best for themselves and their voters, but  it  hurts the state economy as a whole. The only way to fix this is by changing what drives these decisions, and working together to address housing costs. We need this not just to help working families struggling to pay rent or buy a house, but to get our economy back on track. Let’s get it done.