Dustin Nord
May 22, 2025
Politics & Policy
Report: CT’s housing shortage constrains economic potential; zoning reforms recommended
A new report from the CBIA Foundation for Economic Growth & Opportunity found that the state’s housing shortage has impeded economic growth, especially for middle- and moderate-income households.
Many of those households, the report says, are fully employed but increasingly priced out of suitable housing.
The state has a shortage of about 100,000 to 150,000 units, with some estimates saying the actual number is even higher.
In 2024, Connecticut had the strongest year for housing production since the 2008 recession; however, with 6,499 units permitted, the number was 36% below pre-2008 averages, according to the report.
“The economic consequences of this housing deficit are substantial — likely in the tens of billions of dollars per year,” said CBIA Foundation Director Dustin Nord. “The lack of housing not only reduces options for workers, but creates workforce mismatches, impairs business competitiveness and ultimately constrains economic growth.”
Reforms needed
Between 1998 and 2007, Connecticut permitted an average of 10,204 housing units annually, which equates to 2 to 2.5 units per 10,000 people, according to the report.
Nationally, housing construction peaked in December 2005, with states permitting an average of 7.29 units per 10,000 people, the report says, citing U.S. Census Bureau data.
Since then, Connecticut’s housing recovery has been slow compared to national trends.
“The 2008 mortgage crisis severely weakened Connecticut’s already underperforming housing construction sector,” the report concludes.
The housing shortage is perpetuated by the state’s restrictive regulatory environment – particularly its large-lot zoning requirements, town-specific zoning policies and cumbersome approval processes, according to the report.
“For Connecticut to remain competitive economically, the state must expand its housing stock to accommodate our future workforce,” Nord said.
The report recommends several reforms, including modifying legal frameworks, approval processes and administrative requirements; enabling infrastructure to support housing growth; and creating financial subsidies for development, particularly for affordable and workforce housing.The report says that many states have taken steps to reduce zoning burdens.
California passed laws that fast-track approval of accessory dwelling units – a type of secondary housing unit on a single-family residential lot, which some believe is a solution to the housing crisis in Connecticut.
The city of Minneapolis has modernized local zoning by eliminating single-family-only zoning, allowing triplexes on all residential lots.
The report also mentions parking requirement reforms and building code changes, among other things.
The full report is below.
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