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Sustaining the Connecticut Economy: Housing Costs, Population Dynamics, and Employment

Sustaining the Connecticut Economy: Housing Costs, Population Dynamics, and Employment. Barry Bluestone Director, Center for Urban and Regional Policy Northeastern University May 2007. Key Questions.

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Sustaining the Connecticut Economy: Housing Costs, Population Dynamics, and Employment

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  1. Sustaining the Connecticut Economy: Housing Costs, Population Dynamics, and Employment Barry Bluestone Director, Center for Urban and Regional Policy Northeastern University May 2007

  2. Key Questions • Are the recent discouraging trends in Connecticut employment and population related to the cost of housing? • Why should current homeowners in Connecticut who have enjoyed rapid appreciation in the value of their homes support an increase in housing supply?

  3. Presentation Outline • Employment Trends • Population Dynamics • Cost of Living across U.S. Metro Areas • Impact of Housing Prices on Employment • Impact of Housing Prices on Migration • Housing Price/Vacancy Relationship

  4. Net International Migration Net Internal Migration

  5. Source: Economic Policy Institute, “Family Budget Calculator, 2005”

  6. Stamford-Norwalk $60,720 Universe: 304 U.S. Metro Areas Source: Economic Policy Institute, “Family Budget Calculator, 2005”

  7. Housing Costs – Family of Four Among 304 U.S. Metropolitan Areas • Stamford-Norfolk: 2nd Highest MSA • Bridgeport: 27th Highest MSA • New Haven: 35th Highest MSA • Hartford: 41st Highest MSA • New London: 54th Highest MSA Economic Policy Institute, Family Budget Calculator, 2005

  8. Total Costs – Family of Four Among 304 U.S. Metropolitan Areas • Stamford-Norfolk: 4th Highest MSA • New Haven-Meridan: 20th Highest MSA • Bridgeport : 24th Highest MSA • Hartford: 28th Highest MSA • New London: 46th Highest MSA Economic Policy Institute, Family Budget Calculator, 2005

  9. Top Decile: 4-Person FamilyMetro Area Cost of Living Boston $ 64,656 Washington (D.C. portion) $ 61,440 Nassau-Suffolk, NY $ 60,780 Stamford-Norwalk, CT $ 60,720 Lawrence (Mass. portion) $ 59,280 New York, NY $ 58,656 Barnstable-Yarmouth, MA $ 58,236 San Francisco, CA $ 57,624 Worcester (Mass. portion) $ 55,704 Springfield, MA $ 55,320 Minneapolis-St. Paul, MN $ 54,948 Nashua, NH $ 54,852 Santa Cruz-Watsonville, CA $ 53,808 Oakland, CA $ 53,412 San Jose, CA $ 52,800 Pittsfield, MA $ 52,632 Rochester, MN $ 51,288 Monmouth-Ocean, NJ $ 50,736 San Diego, CA $ 50,088 Newark, NJ $ 49,992 New Haven-Meriden, CT $ 49,848 Honolulu, HI $ 49,824 Philadelphia (Pa. portion) $ 49,716 Boulder-Longmont, CO $ 49,596 Bridgeport, CT $ 49,272 Manchester, NH $ 49,152 Santa Rosa, CA $ 48,924 Albany-Schenectady-Troy, NY $ 48,900 Hartford, CT $ 48,684 Trenton, NJ $ 48,576 Rochester, NY $ 48,540 Universe: 304 U.S. Metro Areas Economic Policy Institute: Family Budget Calculator

  10. Stamford-Norwalk Monthly Housing $1,437 Monthly Food $ 587 Monthly Child Care $1,087 Monthly Transportation $ 324 Monthly Health Care $ 379 Monthly Other Necessity $ 546 Monthly Taxes $ 700 Monthly Total $5,060 Annual Total $60,720 Raleigh-Durham-Chapel Hill Monthly Housing $ 779 Monthly Food $ 587 Monthly Child Care $ 866 Monthly Transportation $ 358 Monthly Health Care $ 368 Monthly Other Necessity $ 369 Monthly Taxes $ 350 Monthly Total $3,677 Annual Total $44,124 A Tale of Two CitiesBasic Budget2 Parents, 2 Children A Tale of Two Cities Source: Economic Policy Institute, “Family Budget Calculator, 2005”

  11. Stamford ($1,437) Source: Economic Policy Institute, “Family Budget Calculator, 2005”

  12. 2.91% 2.29% 1.49% 1.53% 0.95% 0.86% 0.68% 0.12% -0.62% -0.68% Low Price High Price Universe: 245 U.S. Metro Areas Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics

  13. New Haven-Meriden (-1.7%) Hartford (-3.0%) Stamford-Norwalk (-4.9%) Universe: 245 U.S. Metro Areas Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics

  14. 2.53% 1.98% 1.09% 1.06% 0.84% 0.93% 0.62% 0.50% -0.02% -0.21% Low Cost High Cost New Haven-Meriden (-1.7%) Universe: 245 U.S. Metro Areas Stamford-Norwalk (-4.9%) Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics

  15. Universe: 304 U.S. Metro Areas Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of the Census

  16. And, finally, what is the relationship between housing prices and housing supply?

  17. Housing Price Appreciation vs. Vacancy Rates Housing Price Appreciation (1995-2005) Universe: 75 U.S. Metro Areas Office of Federal Housing Enterprise Oversight; U.S. Census Bureau

  18. Housing Price Appreciation (1995-2005) Universe: 75 U.S. Metro Areas Office of Federal Housing Enterprise Oversight; U.S. Census Bureau

  19. Housing Price Decline – Metro Areas U.S. Office of Federal Housing Enterprise Oversight

  20. Conclusions • The high price of housing is indeed a significant factor in the decline in employment and population in Connecticut • The high cost of living beyond housing – including health care, day care, and taxes – contributes to the decline in employment and population • An increase in housing supply could “inoculate” Connecticut homeowners against the possibility of a long-term precipitous decline in housing values

  21. General Policy Implications • INCREASING the housing stock, particularly starter homes for young families is critical to the future economic development and prosperity of Connecticut • REDUCING the high cost of health care, day care, and reduce the tax burden (particularly the residential property tax which contributes to housing costs) is important as well … along with assuring that the quality of local public services encourages families to stay in Connecticut despite its relatively high cost

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