Expanding Affordable Housing

One of your stated goals as president of the Home Builders Association of Connecticut is an increase in affordable housing. How can your association accomplish this without government assistance?

Greater density, not government assistance, is the key to building affordable homes. Current zoning regulations limit the number of homes per acre. If a builder can only build one home per lot, it has to be a large home to cover the costs of land and building. If builders were allowed to build several homes per acre — think of the starter homes of your parent’s generation — they could afford to build more affordable homes.

In addition to density, the overly burdensome regulatory system adds to the cost of housing. This includes specific development requirements, delays in the approval processes and the multiple levels of decision makers who must sign off on projects.

The HomeCONNECTICUT statute passed in 2007 set up a process for towns to receive grant money to create Incentive Housing Zones (IHZs) where six or more homes per acre (three per acre in smaller towns) would be allowed. These affordable homes would allow young people to buy homes and continue to live in the towns where they grew up. We are encouraged that more than 70 towns are interested in affordable housing.

What steps have to be taken to make lower-price affordable housing attractive to home builders?

The definition of affordable is that someone earning the median income in that town can afford to buy a median-priced home in that town. For example, in 2007 the median price of a home in Granby was $289,000. So someone earning the town’s median income of $94,700 could afford to buy a home. In Avon, where the 2007 median-priced home was $460,000, someone making the median income of $105,800 would not be able to afford the home unless their income increased to $138,700.

Prudential CT Realty, in its year-end report, predicts 25 percent fewer new housing permits than last year, in line with the drop in sales. Your group predicts flat growth for 2009. How are your members weathering that drop in business?

Builders, like other business owners, know that every industry has ups and downs. Members are diversifying their businesses, doing remodeling or landscaping.

Some who have traditionally built single-family homes are looking at building apartments or small commercial projects. Some are making plans for future projects since the approval process for a subdivision in Connecticut can take several years.

Currently, Connecticut has approximately a nine-month supply of single-family homes on the market. This compares with a three-to-four month supply during a healthy or normal market. This nine-month supply is lower than most of the rest of the nation.

I believe that the decrease in permits for new homes in Connecticut during 2008 is having the effect of creating a pent-up demand for new housing. This pent-up demand combined with the relatively lower supply of homes and low mortgage rates is creating an environment that should lead to a quicker recovery for the housing market in Connecticut.