Forty two percent of Connecticut’s millennials still live at home with mom and dad. Why? It’s the one-two punch of student debt and lack of affordable housing.
“Connecticut’s rental costs are the seventh highest in the nation,” says Charles Patton, Senior Policy Analyst, Partnership for Strong Communities. “Young people just starting out cannot afford the state’s housing prices,” adds Sue Murphy, Executive Director, Liberty Bank Foundation. “It’s an ironic fact that many of our grown kids can’t afford to live in their own hometowns.”
This is the problem in dollars and cents: a young professional’s starting salary of (for example) $43,000 equates to $20.67 an hour. However, in order to afford a local rental (and not spend more than 30 percent of income on housing), this same young professional would need an hourly wage of $23.32 to afford a modest rental in Middletown, and $26.29 for that same rental in Old Saybrook. Pair this with the average grad’s monthly student loan payment of $400 and it’s a no-go.
Repercussions for Employers
Lack of affordable housing may not seem like a big problem — the young professional is housed with mom and dad, after all. But the situation plays out in so many ways.
In today’s highly mobile society, Connecticut employers are competing with every other U.S. state for talent. If a recent college grad has multiple job offers, he or she may choose the job in the state with a lower cost of living.
Connecticut has the third highest departure rate of workers aged 24 to 35.
This places employers in a tough spot. “Connecticut employers should not have to pay workers more simply to offset the cost of housing,” says Patton.
Implications for CT Real Estate Market
Lack of affordable housing has implications for every homeowner in the state. The lovely three- and four-bedroom Colonial homes for which Connecticut is known have fewer buyers. In addition to the asking price, buyers must take into account property taxes (on a one-acre lot, for example), as well as upkeep on a large home.
In some towns where big one-family homes are prevalent, fewer kids are entering the school system and schools are consolidating. Patton’s research shows that over the next 12 years, school enrollment is projected to decline.
At the same time, seniors who currently own these big homes are looking to downsize. If they manage to sell, this group (projected to increase by 12 percent in the next 12 years) is in a much better financial position to compete with young professionals for desirable rentals.
Everyone Should Care About Affordable Housing
If our young professionals continue to leave our state, Connecticut will have an ever-dwindling population and even fewer ways to support a mounting state budget. This boils down to a sad, but not inevitable, truth:
A state without young people is a state without a future.
By making more affordable housing choices available, we can create a different scenario: one where young professionals can afford their housing and are pleased with their surroundings, and will keep our economy going. They will shop locally and contribute to the tax base. Their children will fill our schools. Their employers will grow and prosper. That’s the kind of future we can all look forward to.
--reprinted from The Liberty Bank Foundation