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

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Presentation on theme: "Sustaining the Connecticut Economy: Housing Costs, Population Dynamics, and Employment Barry Bluestone Director, Center for Urban and Regional Policy Northeastern."— Presentation transcript:

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

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7 Net International Migration Net Internal Migration

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

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

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

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

14 Top Decile: 4-Person Family Metro 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 Economic Policy Institute: Family Budget Calculator Universe: 304 U.S. Metro Areas

15 A Tale of Two Cities Basic Budget 2 Parents, 2 Children 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 Cities Source: Economic Policy Institute, “Family Budget Calculator, 2005”

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

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

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

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

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

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

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

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

24 Housing Price Decline – Metro Areas Peak Qtr.HPI IndexTrough Qtr.HPI Index%CHGRecovery Gary, IN1981:I63.421984:III56.68-10.6%7 years BOSTON, MA1988:IV112.951992:II99.2 -12.2% 9 years Duluth, MN1988:II114.181991:III99.27-13.1%11 years WORCESTER, MA1989:IV117.261995:I100 -14.7% 9 years SPRINGFIELD, MA1989:iv117.431995:i100 -14.8% 11 years Honolulu, HI1993:II101.551999:III84.69-16.6%9 years Detroit, MI1981:IV61.291982:IV49.69-18.9%5 years Hartford, CN1988:III126.41995:I100-20.9%13 years Los Angeles, CA1990:III127.161996:III99.7-21.6%12 years Lafayette, LA1982:iii115.271988:IV65.53-43.2%15 years U.S. Office of Federal Housing Enterprise Oversight

25 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

26 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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