Report: Connecticut has tightest housing market in the U.S. with 7% vacancy rate

Yahoo

31-01-2025

Connecticut has the most constrained housing supply in the nation, with only about a 7% vacancy rate despite a demand for more, and the state needs at least 110,000 more units to meet the need, researchers told lawmakers on Thursday.
Researchers from consulting firm ECOnorthwest presented an early draft of their findings about Connecticut's housing need to key lawmakers on the Housing and Planning and Development committees on Thursday. The presentation was done in response to a law passed in 2023 that mandated a statewide study on a fair share zoning policy.
Fair share is a method of encouraging more affordable housing by assessing the housing need regionally, then dividing that need up among municipalities. Under the approach, towns would be required to plan and zone for a set number of units.
The information's release marks the next step for lawmakers in gathering the information they need to detail and debate a plan to push towns to reform their zoning policies and allow more multi-family housing.
The policy has been proposed in Connecticut a few times, but hasn't passed. While advocates say it's a good way to increase housing and cut down on segregation, opponents argue that it would dilute local control and impose housing increases that towns aren't equipped to handle.
Last year, a Department of Housing official sent scathing emails criticizing the fair share policy to other state government workers, The Connecticut Mirror found.
Nonprofit and housing advocacy group Open Communities Alliance is pushing a bill this year that would require towns to outline how they would plan and zone for a set number of units in their affordable housing plans every five years. It's likely those numbers would be based on the fair share study results. The alliance has advocated for fair share policies in the past.
Democrats said Thursday that the report highlighted how many people need help and the urgency of that need.
'My default position is really thinking about the most vulnerable among us,' said House Majority Leader Jason Rojas, D-East Hartford. 'But certainly this is a middle class issue as well.'
Rojas was a major proponent of the bill that passed in the 2023 session. The first phase of the study examined housing need in the state.
According to 2023 data, Connecticut has a ratio of 1.07 housing units per household, or about a 7% vacancy rate. This is compared to a national average vacancy rate of 11%, said Michael Wilkerson, director of economic research at ECOnorthwest.
'When we look at housing policy in its most simple terms, in economics, you're going to look at supply as the number of housing units, and demand or the number of households,' Wilkerson said.
During the pandemic, there was an uptick in household creation in Connecticut as people stopped living with roommates and moved to the state from New York and Boston. As the number of households grows, there is more need for housing, Wilkerson said.
More households does not necessarily mean population growth. Household growth can also occur when couples divorce, kids become adults and move out, or when people decide to live alone rather than with roommates.
Aspects of the study also aimed to account for housing that's aged to the point that it's no longer habitable, the elimination of second homes or vacation homes from the equation and ensuring there's housing for people experiencing homelessness or living with relatives, Wilkerson said.
The firm took three approaches to estimating Connecticut's housing need, all with focuses on different income levels. Lawmakers will debate which method is best for the state.
The 'baseline approach,' focuses on lower-income households, earning less than 30% of the area median income who spend more than half of their income on housing costs. Under that approach, the state lacks about 136,000 units of housing.
Another method focuses on the underproduction of housing and the needs for households earning less than 80% of the area median income. It takes into account the idea that building a unit of housing at any income level improves housing availability and makes it more affordable. Under this approach, the state would need about 110,000 units of housing.
The third approach looks at housing underproduction and the need across all income levels. Under this approach, Connecticut would need nearly 359,000 units of housing.
Over the past few years, Connecticut has typically permitted between 5,000 and 6,000 units of housing.
Rojas said he's not inclined to use the third approach and referred to it as 'boiling the ocean.'
Regardless of the chosen approach, the Capitol and Metropolitan and Western regions needed the highest number of units. The Metropolitan and Western regions, which are connected by transportation hubs, include the southeastern region of Connecticut from Bridgeport to Greenwich and north to New Milford.
Fair share policies have been implemented in New Jersey, California, Oregon and Washington with varying success. New Jersey's policy was created through a state Supreme Court decision in the 1970s, and has been changed several times over the years.
Washington's is more recent and since it began the state went from the second-most constrained housing market in the country to the 11th.
Lawmakers discussed the outcomes in Washington as well as California, which has remained one of the most constrained markets in the nation.
'These results confirm what we have long known,' said Erin Boggs, executive director of the Open Communities Alliance, in an emailed statement. 'Connecticut cannot continue the same policies that have left so many people in need of a decent and affordable place to live.'
Housing Committee co-chair Rep. Antonio Felipe, D-Bridgeport, said that the ideas weren't new to him, but it was helpful to have strong data behind the idea of a housing crisis.
Rojas said a fair share policy would be about providing people choices — choices about where they want to live, work and where their children attend school.
Rep. Doug Dubitsky, R-Chaplin, argued that there isn't demand from people who want to live in small towns. Arguments about market demand in small towns are a common criticism of zoning reform.
'It's hard to live there when there's actually no housing options to afford,' Rojas responded. 'So why not allow the marketplace to respond to that potential demand? Instead, we put all these constraints in place that don't even allow us to provide an option for people to live.'
Housing Committee ranking member Rep. Tony Scott, R-Monroe, said he thought the information was helpful, but he wanted to hold off on making further judgment until he sees the final draft of the policy. He said he worries that small towns like his don't have the infrastructure to handle large numbers of new housing units.
'We'll see what the real numbers are, and see how realistic those numbers are,' Scott said in an interview.
The consulting firm is expected to release the allocations of housing units by town in the spring.
Ginny Monk is a reporter for The Connecticut Mirror (https://ctmirror.org). Copyright 2025 © The Connecticut Mirror.
This article originally appeared on The Bulletin: Conn. housing market tight, especially from Bridgeport to Greenwich