Print

Affordable Housing More Elusive For Lower Earners In State

Zachary Abrahamson

June 05, 2008

Despite some gains in pay, low- and moderate-income families in Connecticut had a harder time finding homes they could afford in 2006 than they did two years earlier, a study released Wednesday showed.

And it's doubtful that the picture is growing brighter now that housing prices are falling, several experts involved in the study said.

The number of households who spend 30 percent or more of their income for housing — a measure of distress in the market — and who earned 80 percent or less of the state median income, has jumped by more than a third since 2004, the Hartford-based nonprofit Partnership for Strong Communities said Wednesday.

In all, 344,000 households in 2006, the latest year for which figures are available, were in that group, compared with 257,000 two years earlier. The median was about $63,000 in 2006, said Don Klepper-Smith of DataCore Partners in New Haven, who conducted the study.

Since then, foreclosures and falling house prices have hit this and other states. "But it has not led to the alleviation of the shortage of housing that's affordable today in Connecticut," said Diane Randall, director of the partnership.

It might seem logical that housing would grow more affordable, not less, in a real estate recession. The median price of a previously owned home in Connecticut is expected to decline by 12 percent in 2008, to $283,000, according to a forecast released Friday by the New England Economic Partnership.

Some neighborhoods and price ranges are maintaining their values, which means that others — including some in lower-cost areas — are declining in price even more steeply.

But other factors are working against people with low and moderate income seeking housing they can afford.

Banks and other financial institutions have become much more careful about potential mortgage borrowers, leaving many would-be buyers unable to take advantage of the depressed market.

"When you're looking at a $270,000 home, you're talking about a $50,000 down payment," Klepper-Smith said. "A lot of folks can't afford housing at that price, and so they're turning back to the rental market."

Rental prices are not dropping in many places, for several reasons. Many families that might buy houses are waiting to see whether prices drop further. Families that have lost houses to foreclosure or distress sales are renting, which boosts demand for apartments.

Meanwhile, since 2000, the state has ranked 46th for per capita construction of housing units, and much of the new construction is "four- and five-bedroom single-family homes," said David Fink, communications director for the partnership.

"What we haven't been building are affordable rentals," Fink said, "and we haven't been building starter homes."

Between 2000 and 2007, Connecticut's "housing wage" — what a household must earn per hour to afford a two-bedroom apartment in the state, as measured by the National Low Income Housing Coalition — rose by 40 percent, to $21.11.

That computes to an annual salary of about $44,000. But, Klepper-Smith said, according to state labor department statistics, 72 percent of new jobs coming into Connecticut through 2014 are expected to pay less than $40,000.

"Without increased income, where will those people live?" he asked.

One answer is in payments to towns that sanction lower-priced housing, the partnership said Wednesday.

Home Connecticut, a legislative initiative to provide state incentives for cities and towns that rezone land for high-density housing developments, was launched last year but has only garnered five proposals and one grant so far, officials said. Passed in June 2007, Home Connecticut offers towns and cities thousands of dollars to rezone well-located land for housing developments in which at least 20 percent of units zoned and built are certified affordable for households with incomes at or below 80 percent of the state median.

The program, said Bill Ethier, executive vice president of the Home Builders Association of Connecticut and a Home Connecticut steering committee member, "is a win-win-win. It allows towns to put development where they want it, it allows builders to build and it gives people somewhere to live that they can afford."