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Sustaining the Connecticut Economy: Housing Costs, Population Dynamics, and Employment
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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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Sustaining the Connecticut Economy: Housing Costs, Population Dynamics, and Employment. Barry Bluestone Director, Center for Urban and Regional Policy Northeastern University May 2007. Key Questions. - PowerPoint PPT Presentation
Transcript of Sustaining the Connecticut Economy: Housing Costs, Population Dynamics, and Employment
Sustaining the Connecticut Economy: Housing Costs, Population Dynamics, and Employment
Barry Bluestone
Director, Center for Urban and Regional Policy Northeastern University
May 2007
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?
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
U.S. Non-Farm Employment (in Millions)
109.1 109 108.3109.7
112.5
116.4118.2
121.2
124.6
127.5
130.8132.5
130.6130.3130.4132.5
135.1137.3
100
105
110
115
120
125
130
135
140
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
CT Non-Farm Employment (in Thousands)
1645
1587
153415361528
15591560
1596
1630
1661
16831693
1675
1657
1642
1655
1674
1690
1500
1520
1540
1560
1580
1600
1620
1640
1660
1680
1700
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
CT Population
3108
3287
34123432
34583486 3499 3510
2900
3000
3100
3200
3300
3400
3500
3600
1980 1990 2000 2001 2002 2003 2004 2005
CT Net Migration - Foreign vs. Domestic
16,111
20,159
15,542 14,59412,524
-4,895-2,543
-1,234
-10,711
-14,319
-20,000
-15,000
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
2000-2001 2001-2002 2002-2003 2003-2004 2004=2005
Net International Migration
Net Internal Migration
Population Change (2000-2005) by Age
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Under 5 5-19 20-24 25-34 35-54 55-64 65+
CT
US
Population Change - CT vs. North Carolina
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Under 5 5-19 20-24 25-34 35-54 55-64 65+
CT
NC
Housing Costs - 4 Person Family
$1,539$1,437
$1,313 $1,266$1,187
$1,124
$929$847 $834 $805 $779
$673
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Mo
nth
ly C
ost
s
Source: Economic Policy Institute, “Family Budget Calculator, 2005”
Annual Cost of Living: 4 Person Household
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
$70,000
1 2 3 4 5 6 7 8 9 10
Cost of Living Decile
De
cil
e A
ve
rag
e C
os
t o
f
Liv
ing
Stamford-Norwalk$60,720
Source: Economic Policy Institute, “Family Budget Calculator, 2005”
Universe: 304 U.S. Metro Areas
Housing Costs – Family of Four
Stamford-Norfolk: 2nd Highest MSA Bridgeport: 27th Highest MSA New Haven: 35th Highest MSA Hartford: 41st Highest MSA New London: 54th Highest MSA
Economic Policy Institute, Family Budget Calculator, 2005
Among 304 U.S. Metropolitan Areas
Total Costs – Family of Four
Stamford-Norfolk: 4th Highest MSA New Haven-Meridan: 20th Highest MSA Bridgeport : 24th Highest MSA Hartford: 28th Highest MSA New London: 46th Highest MSA
Economic Policy Institute, Family Budget Calculator, 2005
Among 304 U.S. Metropolitan Areas
Top Decile: 4-Person FamilyMetro Area Cost of Living
Boston $ 64,656Washington (D.C. portion) $ 61,440Nassau-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) $ 55,704Springfield, MA $ 55,320Minneapolis-St. Paul, MN $ 54,948 Nashua, NH $ 54,852 Santa Cruz-Watsonville, CA $ 53,808Oakland, CA $ 53,412 San Jose, CA $ 52,800 Pittsfield, MA $ 52,632 Rochester, MN $ 51,288
Monmouth-Ocean, NJ $ 50,736San Diego, CA $ 50,088Newark, NJ $ 49,992New Haven-Meriden, CT $ 49,848Honolulu, HI $ 49,824Philadelphia (Pa. portion) $ 49,716Boulder-Longmont, CO $ 49,596Bridgeport, CT $ 49,272Manchester, NH $ 49,152Santa Rosa, CA $ 48,924Albany-Schenectady-Troy, NY $ 48,900Hartford, CT $ 48,684Trenton, NJ $ 48,576Rochester, NY $ 48,540
Economic Policy Institute: Family Budget Calculator
Universe: 304 U.S. Metro Areas
A Tale of Two CitiesBasic Budget2 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”
Regional Average Monthly Housing Costs (2004)
$892.60
$708.46 $692.82$617.23 $616.29 $566.14 $583.67
$720.00
$914.63
-$100
$100
$300
$500
$700
$900
$1,100
$1,300
Hou
sing
Cos
ts
Stamford ($1,437)
Source: Economic Policy Institute, “Family Budget Calculator, 2005”
Employment Growth (%) (2000-2004)
-1.00%
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
1 2 3 4 5 6 7 8 9 10
Housing Price Decile
Per
cent
Cha
nge
Low Price High 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%
Employment Growth (%) (2000-2004)
-6.00%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
1 2 3 4 5 6 7 8 9 10
Housing Price Decile
Per
cent
Cha
nge
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%)
Employment Growth (%) (2000-2004)
-1%
0%
1%
2%
3%
1 2 3 4 5 6 7 8 9 10
Cost of Living Decile
Per
cent
Cha
nge
Low Cost High 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%)
Internal Net Migration (2000-2004)
0.3
5%
-0.0
3%
0.5
9%
0.4
8% 1.2
3% 1.9
5%
1.5
2%
1.5
6%
0.1
1%
-2.1
2%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
1 2 3 4 5 6 7 8 9 10
Cost of Living Decile
Decil
e P
erc
en
t
Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of the Census
Universe: 304 U.S. Metro Areas
And, finally, what is the relationship between housing prices and housing supply?
Hou
sing
Pric
e A
ppre
ciat
ion
(199
5-20
05)
Housing Price Appreciation vs. Vacancy Rates
Office of Federal Housing Enterprise Oversight; U.S. Census Bureau
Universe: 75 U.S. Metro Areas
350.00
300.00
250.00
200.00
150.00
100.00
50.00
6.005.004.003.002.001.000.00
Average Vacancy Rate (2002-2004)
Cubic
Observed
Housing Price Appreciation vs. Vacancy Rates
Office of Federal Housing Enterprise Oversight; U.S. Census Bureau
Universe: 75 U.S. Metro Areas
Hou
sing
Pric
e A
ppre
ciat
ion
(199
5-20
05)
Housing Price Decline – Metro Areas
Peak Qtr. HPI IndexTrough Qtr.
HPI Index %CHG Recovery
Gary, IN 1981:I 63.42 1984:III 56.68 -10.6% 7 years
BOSTON, MA 1988:IV 112.95 1992:II 99.2 -12.2% 9 years
Duluth, MN 1988:II 114.18 1991:III 99.27 -13.1% 11 years
WORCESTER, MA 1989:IV 117.26 1995:I 100 -14.7% 9 years
SPRINGFIELD, MA 1989:iv 117.43 1995:i 100 -14.8% 11 years
Honolulu, HI 1993:II 101.55 1999:III 84.69 -16.6% 9 years
Detroit, MI 1981:IV 61.29 1982:IV 49.69 -18.9% 5 years
Hartford, CN 1988:III 126.4 1995:I 100 -20.9% 13 years
Los Angeles, CA 1990:III 127.16 1996:III 99.7 -21.6% 12 years
Lafayette, LA 1982:iii 115.27 1988:IV 65.53 -43.2% 15 years
U.S. Office of Federal Housing Enterprise Oversight
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
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
