Spilo: Connecticut’s Lost Decade and Your Missing Home Value

By: |
Print

Letter to the editor from Michael Spilo, RTM District 11

Connecticut homeowners should be very unhappy. Years of bad government policy have left us poorer. Literally. Property values in the state are 4% lower than they were in 2009 at the end of the Great Recession.

Since 2009, the national average home price (green line below) gained a whopping 28.4%, while CT prices (red) have dropped 4.1%, a 32.5% difference.

Economic Research Federal Reserve Bank of St Louis

https://fred.stlouisfed.org/graph/?g=owBL Economic Research Federal Reserve Bank of St Louis. Source: US Federal Housing Finance Agency

You might think that CT homes were highly over-priced before the recession, but not so. In fact, between 1991 and 2009, the U.S. average, NY and CT housing markets moved largely in tandem. But since 2009, NY homes have risen 18%, and MA 30%, in line with the national average, while CT homes have lost 4.1% of their value.

According to Zillow, the median home price in Connecticut is $224K (the national median is $200k, NY $300k, MA $400k). This means that relative to the rest of the U.S., the average CT homeowner has missed out on $110,000 in appreciation. In Fairfield county the median home price is over $700,000 which means the “Lost Decade” has cost Fairfield county homeowners $300,000 each.

68% of CT Residents are homeowners, and the CT median income is just under $70,000, which makes the lost appreciation is equivalent to well over year’s salary, before tax.

On a state-wide basis, there are 814,000 single family homes, so CT has missed out on $90 Billion in home appreciation and over $2 Billion in associated tax revenues.

What does this mean to you? if you moved to CT before 2009, divide your current home value by three. That’s about how much more your home would be worth if you lived outside CT. Even if you moved to CT after 2014, you missed out on an average 10% appreciation relative to New York Residents.

But “what did we gain?” Is Connecticut better off? Do we lead the country in some measure? For example, CT has low poverty rates, but has CT done a better job helping our poor than the rest of the country? No. CT has 4% MORE people in poverty than in 2009, whereas the U.S. has 6% fewer.

https://fred.stlouisfed.org/graph/?g=otxU Economic Research Federal Reserve Bank of St Louis. Source: US Census Bureau

 

CT Median Household Income has been above the U.S. average and even ahead of NY and MA, but in the last 10 years, CT gains have lagged the rest of the country. Here, again, we find CT below the 2009 rate with NY and MA ahead.

https://fred.stlouisfed.org/graph/?g=ow2y Economic Research Federal Reserve Bank of St Louis. Source: US Census Bureau

Employment? Nope. CT employment growth since 2009 is nearly flat, where our neighbors have seen significant growth. CT is 10% behind.

https://fred.stlouisfed.org/graph/?g=ow3d Economic Research Federal Reserve Bank of St Louis. Source: US Bureau of Labor Statistics

What is the problem? A 2016 Gallup poll of CT residents found 47% plan to move out of the state within 5 years! The primary reason: State tax burden.

https://news.gallup.com/poll/189176/state-tax-burden-linked-desire-leave-state.aspx

The bottom line is that it’s a mistake to think we can tax or spend our way out of this mess. CT residents bear the second highest tax burden in the nation, and they’re leaving. More tax is not the solution.

I don’t pretend to know how to fix all this, but I believe that the problem is NOT our infrastructure. Our infrastructure may be older, but that’s not why businesses are leaving. The problem is NOT our safety net – CT has an excellent safety net, and yet people are leaving. The problem is NOT our education system – CT has one of the best educated workforces in the country, and yet people are leaving.

Let’s not suffer another lost decade. Let’s NOT elect people who say we need to spend even more. Ten years of their spending has not improved anything.