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Connecticut Economic Digest: May 1998 issue
Housing Sector Buoyant | A Look At Connecticut's 169 Cities And Towns | Housing Update | Connecticut Economy Keeps On Truckin'

Housing Sector Buoyant
by Kolie Sun Chang, Associate Research Analyst

The soon-to-be-released 1997 Department of Economic and Community Development (DECD) annual Housing Production and Permit report, will present some strong summary statistics about the Connecticut housing sector. A preview is presented in this story.

Total Housing Production

The housing sector is booming. The most recently revised annual statistics released from the Bureau of the Census indicate that the total number of permits is up 19.7 percent, from 7,808 in 1996 to 9,349 through 1997, making it the biggest increase since 1987.

Counties

In 1997, Hartford County authorized the largest number of new residential permits with 2,246, followed by Fairfield County with 2,045, and New Haven County with 2,030. These three counties combined accounted for 67.6 percent of total permits issued. Compared with the State growth rate of 19.7 percent, New Haven County fared much better with growth of 37.3 percent, followed by Middlesex County with 24.3 percent and Hartford County with 24.2 percent.

Municipalities

The top five communities combined accounted for over 12 percent of the total permits authorized. Manchester led all Connecticut Connecticut communities with 321 permits issued, followed by Danbury with 242 units, Stamford with 199 units, Milford with 197 units, and Newtown with 195 units.

At the end of 1997, DECD sent out a survey to collect the residential demolition permits issued. Over 85 percent of the cities and towns responded to our request. Bridgeport issued the most demolition permits with199 units, Meriden with 103, Waterbury with 83, Hartford with 79 and New Britain with 62. The five cities contributed over 44 percent of all demolition permits.

Construction Employment

Construction employment was strong in 1997. It has shown a steady increase since 1991, with an annual average growth rate of 1.6 percent. The State Department of Labor's 1997 benchmarked annual average data indicated an increase of 32,700 nonfarm jobs from the revised figure in 1996. The construction industry employed an added 4,300 workers during the same period, a significant 13 percent share of the increase, second to the service industry with a 47 percent share (gained 15,400 jobs), and tied with the retail trade sector.

Median Home Sales Price

According to Connecticut Market Data 1998, the State median home sales price dropped eight percent from $150,000 in 1988 to $138,000 in 1996. Only a dozen towns actually showed an increase in median home sales prices. Norfolk had the highest growth rate with16.4 percent; Greenwich followed with 13.9 percent; and Ridgefield with 11.0 percent. On the down side, the cities of Bridgeport, New Britain, and New Haven had the biggest decline rate in median home prices during the same period, with 42.8 percent, 40.0 percent, and 36.4 percent respectively.

Construction Value

The 1997 average construction value of single unit housing has risen 2.5 percent from $127,172 to $130,363 compared with previous year. The Consumer Price Index for NY-Northern NJ-Long Island used to approximate price trends in Connecticut rose 2.0 percent in 1997. Thus, the growth rate of average construction value slightly outpaced the rate of inflation.

Impact on Economy

Except for a brief period in 1993 when it was below the current rate of seven percent, the 30-year conventional mortgage rate is now at its lowest level in 24 years. Recently, the stock market broke over the 9,100-point mark, which implies that wealth has proportionally increased. Together with the decline of median home sales prices, real estate market transactions have gone up 13.9 percent compared with 1996, according to the Commercial Record Real Estate Trendlines Report released in April.

Conclusion

Since the end of the early 90's recession, the housing market has rebounded noticeably. Although interest rates play a major role in the housing market, other factors have contributed to the strong housing sector. In summary, falling median home sale prices, a rising stock market, and positive employment trends have made 1997 for housing a year "as good as it gets."


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A Look At Connecticut's 169 Cities And Towns
by J. Charles Joo, Research Analyst

The table on page four profiles all of Connecticut's 169 cities and towns by five major economic indicators. Town data in this report on the labor force, unemployment rate, and jobs is for 1997, while the latest town data on population and per capita personal income is for 1996. Here is a quick summary of the cities and towns that ended up at the top and bottom of these measures.

Population

According to the most recent State Department of Public Health estimates, Eastford experienced the fastest population growth out of all 169 towns and cities throughout the State, rising 8.05 percent, or 110 people, from 1995 to 1996. The biggest drop occurred in Manchester (-3.5%, or 1,780 people), while the State's population shrank only slightly by 0.01 percent in 1996.

Labor Force

The newly revised 1997 data from the State Labor Department showed that Bethlehem led in labor force growth with a 2.6 percent increase (49 people) over the year, while Scotland came in last with a 3.7 percent (91 person) decline. Meanwhile, the statewide labor force rose 0.1 percent, or 2,084, from 1996.

Unemployment Rate

Hartford's 10.0 percent was the highest unemployment rate in 1997, almost twice as high as the State's average of 5.1 percent. The towns with the lowest unemployment rate of 1.7 percent were New Canaan and Weston.

Nonfarm Employment

Connecticut's nonfarm employment increased 2.0 percent (31,282 jobs) between June 1996 and June 1997. Willington's employment grew 38 percent, an addition of 60 jobs, while 31 percent of the jobs in Union, one of the least populated towns, were lost over the year. From the major cities, Hartford added 6,470 jobs, while New Haven lost 1,410 during the same period.

Per Capita Personal Income

In 1996, the per capita personal income estimates prepared by DataCore Partnership, Inc. and released by the Connecticut Department of Economic and Community Development showed growth rates ranging from an increase of 66.9 percent in Plainville to the decline of 0.3 percent in Morris. New Canaan had the highest per capita personal income of $91,777, while the lowest was in Hartford at $17,274. The State's average was $33,875.

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Housing Update
First Quarter Housing Permits Up 14.7%

Commissioner James F. Abromaitis of the Connecticut Department of Economic and Community Development today announced that Connecticut communities authorized 747 new housing units in March 1998, an 18 percent decrease compared to March of 1997 when 911 were authorized.

The Department further indicated that the 747 units permitted in March 1998 represent an increase of 15.5 percent from the 647 units permitted in February 1998. The year-to-date permits are up 14.7 percent, from 1,858 through March 1997, to 2,131 through March 1998.

"Permit activity in 1998 indicates that growth in the housing sector continues," James F. Abromaitis said. "As a symptom of the overall strength of Connecticut's economy, the first quarter increase of 14.7 percent is an encouraging sign."

Reports from municipal officials throughout the state indicate that Litchfield County with 29.2 percent showed the greatest percentage increase in March compared to the same month a year ago. New London County followed with a 13.3 percent increase.

Hartford County documented the largest number of new, authorized units in March with 190. Fairfield County followed with 168 units and New Haven County had 137 units. Southington led all Connecticut communities with 32 units, followed by Shelton with 26, and Stamford with 22.

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Connecticut Economy Keeps On Truckin'

For the second month in a row, the Connecticut coincident and leading employment indexes both reached new peaks in the current expansion with the release of (preliminary) February data. The coincident index portrays the Connecticut economy as shifting into a higher gear in early 1996, a gear in which the economy has remained to date. This recent growth is in marked contrast with the anemic recovery in a lower gear that characterized the Connecticut economy from 1992 through 1995. Moreover, the leading index shows no sign of reversing its upward momentum. So for the foreseeable future, the Connecticut economic highway appears to be clear of potholes and other obstructions.

The coincident index, a barometer of current employment activity, has recorded positive movements in every month since January 1997. The labor market has tightened significantly by historical standards with an unemployment rate of 3.8 percent in both January and February. It is also true, however, that the unemployment rate was even lower in the over-heated economy in the late 1980s. For example, the unemployment rate averaged just under 3 percent for all of 1988. So while the labor market is tight, it is not as tight as it was in 1988. Nonetheless, we need to watch labor market conditions carefully for any potential signs of weakness.

The leading index, a barometer of future employment activity, rose in January once again to a new peak. The seasonally-adjusted housing permit numbers have dominated the story so far in 1998, having increased by just over 160 and 35 percent on a year-overyear basis in January and February, respectively. Although the February number is down from the January number by over 80 percent, it is higher than any other month since February 1993. The mild weather conditions probably contributed to these numbers. Careful attention needs to given to the housing permit numbers over the next several months to determine if these numbers represent fundamental shift in activity, or just weather-related changes. At the moment, it appears that the movement is too large to reflect only weather-related factors.

In summary, the coincident employment index rose from 86.8 in February 1997 to 94.6 in February 1998. All four index components continue to point in a positive direction on a year-overyear basis with higher nonfarm employment, higher total employment, a lower insured unemployment rate, and a lower total unemployment rate.

The leading employment index rose from 89.9 in February 1997 to 92.1 in February 1998. All five index components sent positive signals on a year-over-year basis with a lower short-duration (less than 15 weeks) unemployment rate, lower initial claims for unemployment insurance, higher total housing permits, a higher average workweek of manufacturing production workers, and higher Hartford help-wanted advertising.

Source: Connecticut Center for Economic Analysis, University of Connecticut. Developed by Pami Dua [(203) 461-6644, Stamford Campus (on leave)] and Stephen M. Miller [(860) 486-3853, Storrs Campus]. Kathryn E. Parr [(860) 486-0485, Storrs Campus] provided research support.

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Last Updated: October 15, 2002