Housing 2000: Strong & Steady
By Kolie Sun Chang, Senior Research Analyst, DECD

Housing is an important sector of the overall economy and housing statistics are among the leading indicators in measuring economic performance.

Housing Market Built on a Solid Ground

According to the latest data from the Office of Policy and Management (OPM), and calculated by the Connecticut Policy and Economic Council (CPEC), average home sale prices for 1999 have returned to the high point reached at the peak of the1980s real estate boom in 1989. Current values, unlike those of the 80's, are based on consistent stable growth. The period of 1996 through 1999 saw an average growth rate of approximately five percent that tracked slightly ahead of the rate of inflation for that same period. In contrast, the period of 1986 to 1989 exhibited a dramatic (and as we know now, artificial) increase in values of approximately 39 percent, from $144,477 in 1986 to $200,256 in 1989. This increase outpaced the rate of inflation significantly and proved to be unsustainable as evidenced by the real estate crash of the late ‘80s.

The Connecticut Association of REALTORS, Inc. recently released its 2000 Connecticut Housing Affordability Index (HAI) with a reading of 1.38 that means, on average, Connecticut families had 138 percent of the income required to purchase the average priced single-family home last year. The U.S. HAI was 1.30, 8 index points below that of Connecticut. In other words, "Connecticut housing affordability shows that housing here still offers considerable value for investors with a long-term time horizon," according to Don Klepper-Smith of Centerprise Advisors, Inc. in New Haven.

1990 vs. 2000 Census

According to the Census report "Profile of General Demographic Characteristics for Connecticut: 2000," there were 1,385,975 housing units in the State, and 93.9 percent of the units were occupied housing. This ratio is comparable to the 1990 level of 93.2 percent. Within the occupied housing units, 66.8 percent were owner-occupied compared to 65.6 percent in the 1990 Census. In other words, the number of homeowners increased by over 62,000 during the last ten years. (See table on the front page.)

The rate of increase in housing units outpaced the State's population, growing 4.9 percent versus a 3.6 percent growth in population. Thus there were 2.46 persons per housing unit in 2000 compared to 2.49 in 1990.

Connecticut's inventory of residential dwelling units, as estimated by the Connecticut Department of Economic and Community Development (DECD), the lead agency for housing in Connecticut, was 1,399,819 at the end of 2000. The estimate was based on a net gain of 78,969 housing units authorized from January of 1991 through December of 2000, added to the base of 1,320,850 housing units reported in the 1990 Census. The DECD's estimate is within one percent of the Census 2000 official estimate. Beginning next year, DECD will use the 2000 estimate as the base for future inventory estimation until the next decennial census.

Total Production, Demolition and Net Gain

The Census Bureau recently released the 2000 housing authorization data, and reported that 9,376 new dwelling units were issued for Connecticut, the fourth highest number of permits since 1990. Among them, 8,158 units were for single-family homes with the remainder, 1,218, for multi-unit dwellings.

Although the Census Bureau discontinued the collection of demolition permits, DECD has surveyed each municipality to obtain this information. Of Connecticut's 169 municipalities, 155 towns responded to our survey and reported 1,790 units demolished. Demolitions in five large cities--Hartford, Bridgeport, New Haven, Waterbury and New Britain--accounted for 42 percent of the total. Based on the reported data, there was a net increase in housing units leveled of 7,586 for the year.

Counties

The largest three counties in the State--Fairfield, Hartford and New Haven--accounted for 63 percent of the new residential permits issued in 2000. The same three counties accounted for almost 68 percent of all the permits issued in 1990. This suggests the three counties’ combined share of new permits is shrinking while the rest of the State has increased its share of residential housing production activities.

In terms of the new permit growth rate, Middlesex County experienced a 115 percent increase from 403 units issued in 1990 to 867 units in 2000. Tolland County followed with a 94 percent gain from 358 units to 693 units authorized. Fairfield and New London Counties followed with 40 percent and 6 percent increases, respectively. Hartford and New Haven Counties both stayed at the same level, while Litchfield and Windham Counties declined in new permit authorizations.

Conclusion

In summary, 2000 housing permit levels showed strong and steady growth in housing construction in Connecticut. Favorable interest rates, growth in population, and a continued demand for housing in a growing economy were factors in this positive pattern.

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Hartford Leads in Jobs, as Stamford Tops in Wages in 2000
By Jungmin Charles Joo and Dana Placzek, Research Analysts, DOL

The table below profiles all of Connecticut's 169 cities and towns using five economic indicators for 2000. Below are brief highlights from the latest annual average data prepared by the Connecticut Department of Labor's Office of Research.

Labor Force

Stamford had the biggest resident labor force of 67,565, while the smallest was in Union with 408 persons. Among the State's largest cities, New Haven had the greatest growth in its labor force, 3.5 percent over the year.

Unemployment Rate

Hartford's 4.8 percent was the highest unemployment rate last year, but this was a significant drop from 6.4 percent in 1999. Sharon posted the lowest jobless rate of 0.7 percent. The statewide rate dropped from 3.2 in 1999 to 2.3 in 2000.

Establishments

Stamford continues to have the largest number of business establishments, with over 5,200 units in 2000. But the city's number of businesses has declined since 1998.

Employment

Hartford, Bridgeport, and Waterbury were among 61 cities and towns that experienced employment losses over the year. New Haven and Stamford were among those that added jobs.

Wages

In 2000, the highest annual wage of $90,625 was paid to employees of firms located in Stamford, a 17.6 percent increase from the previous the year. The statewide average was $45,406 per worker, a 6.5 percent increase over 1999.

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Gross State Product Grew 4.7 Percent in 1999
By Jungmin Charles Joo, Associate Research Analyst, DOL

In 1999, Connecticut's real Gross State Product (GSP) grew by 4.7 percent over the year, ranking fourth in New England, and 17th in the nation. That was about the same pace of growth as in 1998 (4.6 percent). Real GSP grew by 6.3 percent in New England and 5.0 percent in the United States in 1999.

GSP, produced by the Bureau of Economic Analysis of the U.S. Department of Commerce, is the market value of all goods and services produced in a state, and is the state counterpart of the nation's Gross Domestic Product (GDP). Real GSP is adjusted for inflation and is expressed in 1996 dollars.

In 1999, Connecticut's real GSP was estimated at $145 billion, the second highest dollar amount among the New England states, next to Massachusetts’ $252 billion. After a high of 8.5 percent in 1987, the State's economic growth slowed dramatically in 1989 and declined in 1990 and 1991. There has been steady economic growth in Connecticut since 1992.

The finance, insurance & real estate (FIRE) and services sectors made up nearly half of Connecticut's total real GSP in 1999, and their share of the total output rose from 1986 to 1999. Conversely, the manufacturing sector, third largest in terms of output, experienced a slight decline in the share of the total GSP between 1986 and 1999.

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Ask the Digest: What is the difference between "nonfarm employment" and the "employed"?
By Jungmin Charles Joo, Associate Research Analyst, DOL

The "nonfarm employment" estimates are derived from a sample of more than 5,000 Connecticut employers. As a payroll survey, this data reflects the number of jobs that exist based on where the jobs are located.

The estimates of the "employed" are produced based on a statistical model which incorporates a monthly survey of about 500 State households. This sample is a part of the national Current Population Survey (CPS). The data reflect the number of persons who are working, based on where they live.

As the name suggests, agricultural employees are not included in the "nonfarm employment" estimates, but are counted in the "employed" estimates. Additionally, the self-employed and unpaid family workers are included among the "employed," but not in nonfarm employment. For a more complete discussion of this subject, see "Defining Employment" on pages 3 and 4 of the May 1999 Digest.

So, "nonfarm employment" counts each job once, while the "employed" counts each individual once. This may not seem significant, until we consider that about six percent of employed individuals in the State are multiple job holders. In other words, if every employed individual in the State took a second job, and no new persons became employed, the number "employed" would not change, but "nonfarm employment" could double! This is because the number of jobs would increase, but the number of employed persons would remain the same.

In general, the "nonfarm employment" numbers present a good picture of the current job situation. The "employed" data are valuable for analyzing trends in the employment status of persons in the labor force, classified by such characteristics as age, sex, race, and occupation.

WE WANT YOUR QUESTIONS!

Please e-mail your questions to dol.econdigest@po.state.ct.us. Thank you!

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UI Covered Employment Sets New Record, Wage Growth Continues
By Edward T. Doukas Jr., Research Analyst, DOL

Preliminary figures recently released for the fourth quarter of 2000 (4Q00) show that Connecticut Unemployment Insurance (UI) covered employment grew by 22,340, an increase of 1.3 percent over the same period of the previous year (see table below). The employment total registered during 4Q00 was the highest on record for the period, inching past the previous high set in 1988 by 1.0 percent.

The total number of units also increased (+1.6%) over the year. The average weekly wage for Connecticut workers was $950 during 4Q00, up 2.7 percent from the previous year's $925.

The unemployment insurance program provides a comprehensive source of employment and wage data by industry and geographic area for workers covered by the State's UI law. These data differ in a number of ways from the those that appear monthly in the Digest as "nonfarm employment" and "manufacturing worker hours and earnings." The UI data represent universe counts and offer greater geographic and industry detail. They are available by calendar quarter five-to-six months after the end of the quarter that they reference. The more timely monthly data are developed from a sample survey and are published about three weeks after the end of the month to which they apply.

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Industry Clusters
Statewide Call

The DECD and FleetBoston Financial, in conjunction with the Initiative for a Competitive Inner City (ICIC), are looking for candidates to attend the Connecticut Inner City Executive Education Alliance program. An innovative initiative, the Connecticut Inner City Executive Education Alliance program will provide approximately 20 inner city business owners or their senior level managers with the advanced business skills needed to gain a competitive advantage in the New Economy. Course participants will pay one-third of the tuition, and will receive a one-third tuition reduction from the participating university. Fleet will underwrite the remaining tuition cost.

The Inner City Executive Education Alliance will provide participants with access to challenging executive education business workshops at some of the nation's most prestigious universities.

Connecticut is considered a national leader for its commitment to strategically reinvesting in its urban centers, and the creation of the Alliance is an integral part of Governor Rowland's multi-faceted Inner City Business Strategy. The Alliance will serve as the model for ICIC's 2002 national executive education program.

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Housing Update
May 2001 Housing Permit Activity

Commissioner James F. Abromaitis of the Connecticut Department of Economic and Community Development announced that Connecticut communities authorized 841 new housing units in May 2001, a 2.5 percent decrease compared to May of 2000 when 863 units were authorized.

The Department further indicated that the 841 units permitted in May 2001 represent an increase of 8.0 percent from the 779 units permitted in April 2001. The year-to-date permits are down by 1.8 percent, from 3,804 through May 2000, to 3,736 through May 2001.

Hartford Labor Market Area (LMA) recorded the largest number of new authorized units in May with 337. New Haven and Bridgeport Labor Market Areas followed with 91 and 79 units respectively. Bristol led all Connecticut communities with 20 units, followed by Shelton with 19 and Hamden, Newtown and Southington tied at 18. From a county perspective, Hartford County showed the largest gain (25 units) in new housing authorizations compared to a year ago.

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