As physical workplaces started to shut down during the pandemic and Americans got more comfortable in their makeshift home offices, many people began to rethink the places they called home. And they have helped Connecticut grow in popularity.
The state’s housing market has seen a spike in the last year. Sales are up by more than 30%, and the market shows no signs of slowing down, according to Berkshire Hathaway Home Services.
The hot real estate market has been celebrated by Gov. Ned Lamont and other officials who point to the state’s economic growth. In fact, thanks to the market, Connecticut Comptroller Kevin Lembo recently projected a $306.9 million General Fund surplus.
Overall Lembo said these signs are positive, but the boom may have unintended repercussions.
Average selling prices increased by 23.1% in the last year, but rental prices also jumped by nearly 12.5%.
“The housing market may be great for the seller. The buyer is paying a little bit more than they should,” Lembo said. “But the available housing stock is the issue. First-time homeowners have fewer options, and rental prices start to go up.”
Tenants are seeing the fewest benefits of the booming housing market. In Connecticut, 35%, or nearly 500,000 households, rent their homes. And during a pandemic, as thousands report they’re experiencing financial hardships, Lembo said the situation is far from ideal.
“At the worst possible time, for the folks who can least afford it, they are caught in this squeeze,” said Lembo. “It’s not in our interest as a state from an economic perspective or a public health perspective to allow folks to go into homelessness or to double or triple up with family and friends.”
More than 80,000 Connecticut residents report they’re behind on rent. And more than 25,000 said they’ll likely have to leave their current home due to an eviction within the next two months, according to the U.S. Census Bureau Household Pulse Survey. Lembo said those numbers illustrate the state’s housing issues, problems that should concern the entire community.
“When people get evicted, it could lead to job loss, kids have to change schools and mental health issues,” Lembo said. “On the flip side, strictly from a dollars-and-cents perspective, home values get driven down. If you happen to be in that neighborhood, you could have a problem with your home value.”
It’s an issue that affects not only tenants and landlords, but even those who may not be involved in the rental market. When individual households hurt, entire neighborhoods can feel the effects, Lembo added.
While Connecticut’s projected General Fund surplus can’t go directly to housing right now, said Lembo, he sees it as a good sign for housing advocates to make their case for the next budget. And work toward stabilizing housing in the state for all.
“We are one community, we are a small state, and those needs bear weight on all of us. As a state, we want to keep our young people, but how do we do that when they can’t find an affordable place to live?”
