Connecticut’s Housing Shortage Is an Economic Threat

The following opinion piece first appeared in Hearst Connecticut Media‘s newspapers.

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Last month, the CBIA Foundation hosted a housing roundtable that brought together employers, developers, and state leaders to confront a stark reality: our housing market is failing to meet the needs of Connecticut’s workforce, a failure that threatens our economic future. 

Business leaders in attendance clearly laid out that the lack of affordable housing options creates a major barrier to attracting and retaining employees, growing their companies, and for some, even continuing to do business here. 

The impact of our housing shortage is not just being felt at the lowest end of the income ladder, but by employees across the spectrum, from entry level jobs to the skilled trades, to expert researchers and engineers. 

No industry has been spared. Healthcare systems struggle to attract essential staff. Manufacturing facilities can’t find workers willing to commute from more affordable locations. Young professionals seek opportunities in states where their salaries can secure reasonable and vibrant housing. 

One roundtable participant went so far as to note that housing has become “the primary limiting factor for growth” for their company. 

Supply, Supply, Supply

Year after year, businesses are losing out on the most talented workers and most ambitious young minds for the simple reason that finding a home in our state is just too difficult. While the problem might be daunting, the solution is simple: supply, supply, supply. 

Since the Great Recession (and even prior), Connecticut experienced one of the nation’s weakest housing construction markets, and as a result has accumulated a significant deficit of units across the state. 

Every state except Rhode Island is permitting more than Connecticut.

Last year, towns permitted a total of 6,499 units, the most since 2009, yet still 36% below the pre-2008 average. 

Despite surging demand and prices, which have grown faster than the rest of the country over the past five years, every state except Rhode Island is permitting more than Connecticut.  

The lack of construction activity here is not a demand problem, nor a New England problem, nor a Northeast problem, nor a national problem. It is a Connecticut problem. As a result, our housing stock is older, smaller, and less affordable than much of the country. 

Scope

While many disagree when assigning an exact figure to the size of the housing shortage, suffice to say it is large. Much of the focus is on the shortage of deeply affordable housing (a deficit of 95,000-136,000, depending on who you ask), but less attention is placed on the need for market rate housing. 

In the housing needs assessment presented to the state legislature in January, researchers estimated that households making more than 120% of area median income (the population primarily served by new, market-rate, Class A housing) lack 241,964 suitable units. 

We may not worry ourselves too much about folks who make plenty to keep a roof over their heads, but when they lack suitable housing, they occupy units previously held by lower income families leading to reduced affordability for all and a less dynamic economy. 

The number one roadblock to building more homes is ourselves.

This is all to say that solving our housing shortage requires us not just to build affordable, but to build more. 

Ultimately, the number one roadblock to building more homes is ourselves. The Cato Institute ranks Connecticut as having the second-most restrictive land-use regulations in the country and our state frequently surfaces as one of the hardest places to build anything, let alone a home. 

To paraphrase one of the developers in attendance at the roundtable, “If I start two projects, one in Connecticut and one in Texas, by the time I get through a town’s planning and zoning committee my project in Texas is halfway built.” 

Reforms Needed

If we are serious about solving the issue, each restriction on housing, be it zoning or otherwise, needs to be thoughtfully examined whether it is hindering our economy more than it is helping. 

While the state has made important investments in affordable housing and “workforce” housing, including the promising Build for CT program, investments alone will not solve our problem. We need reforms that make it easier to build housing of all types across Connecticut. 

The business community can take a more active role in this conversation too, and it was encouraging to hear many offer their support going forward. Too often, housing development proposals face opposition from residents concerned about change, while the voices of employers who desperately need housing for their workforce go unheard. 

Securing our state’s economic future requires treating our housing shortage as a serious threat.

We don’t need new legislation or funding to show up at our local zoning meetings to make our needs known. “Local control” can be an asset to our economy if we engage with it properly. 

Connecticut businesses, many of them small, family-owned operations, are an asset whose needs we can’t ignore, and their future viability is increasingly linked to the ability to house their workers. 

Securing our state’s economic future requires treating our housing shortage as a serious threat, but thankfully a threat well within our control, and the CBIA Foundation looks forward to continuing its efforts developing and promoting solutions. 

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Dustin Nord is director of the CBIA Foundation for Economic Growth & Opportunity.