State’s homeownership rate falling
Joan Carty knows the 22 condominium units her Housing Development Fund is building in Stamford will not reverse Connecticut’s long-term trend lines for homeownership.
But if you add similar-sized developments in each town statewide, a home comes into reach for 3,700 more Connecticut families — many of whom are finding affordable options dwindling fast in the spring of 2021, as a hot real estate market stokes prices.
Connecticut entered this year ranked 32nd nationally for homeownership, with 67.1 percent of all units of housing owned by their occupants as estimated by the U.S. Census Bureau.
While that was slightly above the national rate of 65.8 percent, Connecticut homeownership has yet to recover to its levels on the eve of the Great Recession, even as neighboring Rhode Island has seen a surge. The Ocean State is nearly on par today with Connecticut for homeownership, after languishing in the cellar nationally only 15 years ago.
Connecticut homeownership had peaked at 72.3 percent in the early months of 2010, only to drop below the 70 percent threshold within 18 months, as mortgage underwriting standards stiffened after the financial panic and younger couples delayed purchasing homes in favor of urban apartment life.
Builders latched onto the trend, focusing their development dollars on large rental complexes in city centers in Stamford, Norwalk and New Haven, along with smaller cities and towns. At the same time, some municipalities continue to balk at allowing larger developments of a dozen or more houses priced at or below median prices, limiting the number of “starter homes” within the reach of those with lower incomes.
“Most of the developers in Connecticut have migrated to doing apartments — they’re not building condos,” said Joan Carty, CEO of Stamford nonprofit Housing Development Fund, which assists first-time home buyers. “With zoning requirements, land is your biggest cost. If you don’t have a zoning code that allows for small lots, then you are passing the cost of an acre of land onto the future buyer.”
This week, the Housing Development Fund will hold a commemorative groundbreaking for its 22-unit condo development in Stamford’s South End, which will sell to people making half the area median income.
The Housing Development Fund was selected last December to receive a $4 million grant from philanthropist MacKenzie Scott, after she decided to accelerate $4 billion in donations from her charitable fund during the COVID-19 pandemic. Scott handpicked nonprofits nationally to apply for the funding, ultimately awarding fewer than 400 grants.
Starting in January, the Housing Development Fund expanded its SmartMove CT down payment assistance program to cover amounts owed at the close of a purchase transaction, such as mortgage loan fees, legal bills and title insurance.
It is one of a handful of Connecticut entities offering help for renters looking to buy, along with the Connecticut Housing Finance Authority and city programs like one in New Haven that offers assistance for down payments and closing costs.
“We found that 25 percent of our otherwise eligible candidates were stopped because they did not have closing costs covered,” Carty said. “To the degree that people are ready and can find a house within their reach, they are getting a great mortgage rate. But you need the other pieces to fall into place too.”
If buying a home is top of mind for many in the spring market of 2021, keeping a home is an even bigger worry for some.
The Biden administration’s American Rescue Plan includes $10 billion to funnel mortgage assistance to those meeting qualifications for funding. Gov. Ned Lamont announced plans last month to distribute $10 million in mortgage assistance in Connecticut through the state Department of Housing’s UniteCT pandemic relief umbrella, with the Connecticut Housing Finance Authority also offering an emergency mortgage assistance program.