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Sustaining the Connecticut Economy: Housing Costs, Population Dynamics, and Employment Barry Bluestone Director, Center for Urban and Regional Policy Northeastern University May 2007
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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?
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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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Net International Migration Net Internal Migration
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Source: Economic Policy Institute, “Family Budget Calculator, 2005”
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Stamford- Norwalk $60,720 Source: Economic Policy Institute, “Family Budget Calculator, 2005” Universe: 304 U.S. Metro Areas
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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
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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
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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
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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”
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Stamford ($1,437) Source: Economic Policy Institute, “Family Budget Calculator, 2005”
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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%
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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%)
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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%)
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Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of the Census Universe: 304 U.S. Metro Areas
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And, finally, what is the relationship between housing prices and housing supply?
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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
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Office of Federal Housing Enterprise Oversight; U.S. Census Bureau Universe: 75 U.S. Metro Areas Housing Price Appreciation (1995-2005)
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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
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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
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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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