Connecticut’s severe lack of housing supply has been a situation several decades in the making, according to a new report from the Connecticut Business and Industry Association (CBIA).
The report, titled “The Economic Impact of Connecticut’s Housing Shortage,” observed that Connecticut’s housing shortage can be traced back to when Bill Clinton was in the White House.
“Between 1998 and 2007, Connecticut permitted an average of 10,204 housing units annually, translating to approximately 2 to 2.5 units per 10,000 residents per year,” the report said. “While this production rate is substantial by Connecticut’s historical standards, it represented about one-third of the national housing construction rate during this same period. At the national construction peak in December 2005, the United States was permitting 7.29 units per 10,000 people, while Connecticut lagged significantly behind at only 2.73 units per 10,000 people. This pre-recession disparity highlights Connecticut’s constraints on housing production that predated the financial crisis.”
The report pointed that if Connecticut records a household growth similar to the past decade (6.4%), it will require approximately 9,275 units annually to accommodate new households along with 4,609 units annually to restore healthy vacancy rates, creating a total need of 13,884 units per year or 138,844 units over the next decade.
“The state permitted 6,499 housing units in 2024—its strongest production year since the Great Financial Crisis, yet still significantly below pre-2008 averages,” the report noted. “Meeting the Vacancy + Population estimate of needed production (10,092 units annually) would require a 55% increase over 2024 levels, while the upper-bound estimate (13,884 units annually) would necessitate a 114% increase in annual production.”
However, Connecticut has a leadership role in one aspect of housing: the cost of homeownership.
“Despite price increases of 63.7% over the past five years—outpacing the national average of 55.5%—Connecticut’s housing production response has remained muted,” the report continued.
To fix this situation, the CBIA report recommended reforms that would modify the legal frameworks, approval processes, and administrative requirements surrounding the creation of new housing, along with an improved infrastructure enablement to support housing growth in appropriate locations and financial subsidies to create incentives for development, particularly for affordable and workforce housing.
“By establishing a more efficient regulatory framework that enables diverse housing typologies while maintaining community character, Connecticut can enhance its economic competitiveness, support business development, and create sustainable paths for growth across its diverse regions,” said CBIA Foundation Director Dustin Nord. “For Connecticut to remain competitive economically, the state must expand its housing stock to accommodate our future workforce. There are multiple avenues that can be explored, but ultimately Connecticut requires a comprehensive approach to enable greater production.”
Photo: Rabbitti / iStock
