This Housing Needs Assessment offers data on housing, demographics, jobs, and income from the last two decades in New London, Tolland, and Windham Counties to illustrate past, present, and future trends in housing, as well as employment and education, which are closely related to housing. Data is provided for the entire region (New London, Tolland, and Windham Counties), and at the county and town level.

In particular, this assessment outlines the difference between the housing that currently exists, and the housing that may be needed in order to ensure that all existing and new residents can find an affordable home when they need one. While the data differ among individual towns and counties, there are regional trends across the three counties that comprise eastern Connecticut. The number of households is increasing, and the area is adding jobs, yet fewer homes are being built, especially within small multifamily buildings. The average household is getting smaller, but the average home is not. Residents with the least means are facing the greatest housing cost burdens, and these residents are more likely to be Black or Latino.

For example, across eastern Connecticut (New London, Tolland, and Windham Counties):

• Since 2010, the population has decreased by 10,413 people, while the number of households has increased by 5,996.

• More than 56 percent of households are composed of one to two people, but only 40 percent of homes are designed for this type of household, with two bedrooms or fewer.

• Nearly 56,000 households earn at or below 80 percent of the region’s area median income (AMI), but fewer than 25,000 affordable housing units are available for these neighbors.

• Since 2000, almost half of the region’s municipalities built no two- to four-unit buildings, like duplexes or townhomes, while a quarter of municipalities built no multifamily buildings at all.

• The region builds roughly half as many homes annually compared to the early 2000s.

• More than 58,000 households are either living below the federal poverty line or just above it, as Asset Limited, Income Constrained, Employed (ALICE) households.

• Statewide since 2000, adjusted for inflation, median income has decreased by five percent while median housing costs for renters have increased by 15 percent.

Eastern Connecticut residents have generally expressed a desire for stable homes and stable, prosperous communities, but these trends threaten that stability. Fortunately, state and local officials and families alike can use this data to make informed decisions about housing to foster a more stable and prosperous region.

Household Composition

Household composition has changed over the last generation in eastern Connecticut, but the type of homes we build has not changed in response. As a result, there is a gap between the homes we have and the homes residents need.

The majority of households in eastern Connecticut, 56 percent, consist of one or two people. Yet only 40 percent of the housing stock is designed for this type of household with two or fewer bedrooms, and just 14 percent of the housing stock has one or fewer bedrooms. The majority of the housing stock, 62 percent, is designed for a family of four or more people, with at least three bedrooms, but only 37 percent of households consist of three or more people.

Meanwhile, although the overall population in eastern Connecticut declined slightly between the 2010 Census and the 2020 Census by 1.5 percent, the number of households actually grew slightly by 1.1 percent. The number of people per household has been declining, and as a result, the region requires more housing even though there are fewer people.

Age

From 2012 to 2022, the number of households with one or more children decreased by four percent, while the number of households with one or more older adults has increased by six percent (and almost 10 percent in Tolland County). Generally, older adults require homes with fewer bedrooms while families with children require homes with more bedrooms. There are not enough suitably-sized homes in the region to meet the needs of either demographic. Sometimes, older adults can’t find a place to ​“downsize” and become stuck in homes with three or more bedrooms, leaving fewer homes available for new families.

Race

The racial composition of communities in our region and nationwide was shaped by public- and private-sector policies that sought to create and preserve racial segregation. The 1968 Fair Housing Act was passed to protect individuals and families from discriminatory housing practices, but barriers to fair housing persist today. In eastern Connecticut, households of color are far more likely to be housing cost burdened than white households, spending more than one third of their household income on housing costs (see ​“Housing Cost Burdens” section below).

Where We Build

Homebuilding dropped significantly after the 2008 financial crisis, and it never fully recovered. While today the region sees roughly 1,000 new building permits annually, it saw roughly 2,000 permits or more annually in the early 2000s. Some towns are experiencing robust housing construction, like Ellington and Vernon in Tolland County or East Lyme and Groton in New London County, but these communities are exceptions.

What We Build

When communities in eastern Connecticut permit new homes, they are most often single-family homes or, less often, homes in multifamily buildings with five or more units. Single-family homes account for nearly 72 percent of the region’s housing stock, while housing units in buildings with five or more homes account for nearly 13 percent. The ​“middle” homes in buildings with two to four units, are generally missing. Since 2000, almost half of the region’s towns built no two- to four-unit buildings (like duplexes or townhomes), while more than a quarter of towns built no multifamily buildings at all. In some communities, zoning prohibits the construction of multifamily housing.

Many people need or want to rent at different times in their lives, yet both the number and type of rental options in most towns and cities in eastern Connecticut is very limited. With few available homes in buildings with five or more units, and even fewer in two- to four-unit buildings like duplexes or townhomes, many renters are limited to single-family homes which can be expensive to rent.

When We Build

More than one in four homes in eastern Connecticut was built before 1950. These older homes are primarily concentrated in New London and Windham Counties. More than 30 percent of homes in Windham County and 27 percent of homes in New London County (including nearly 54 percent in the City of New London) were built before 1950. While older homes contribute to the charm many New England residents value, as homes age they become more expensive to maintain, raising housing costs for homeowners (and for renters, when landlords must pass on maintenance costs through rent increases).

Housing & School Enrollment

The type and amount of homes we build impacts who lives here. For example, statewide, a new four-bedroom single-family detached home on average results in one new child enrolling in the local school district. A new studio or one-bedroom apartment in a multifamily building with five or more units almost never results in any new children enrolling in the local school district. This illustrates how new housing actually impacts the capacity of school districts.

In eastern Connecticut, K-12 enrollment has been declining in many districts recently. As a result, new students have a limited cost impact on local schools. Instead, schools could benefit from additional students to meet their capacity and reduce their fixed cost per student. To realize these benefits, communities would need to support families that require homes with three to four bedrooms, both by permitting new three- to four-bedroom homes, and by permitting new homes with one to two bedrooms to allow downsizing families to move out of (and free up) the existing stock of three- to four- bedroom homes.

Jobs & Wages

Eastern Connecticut had approximately 194,000 jobs in 2022. The largest number of these jobs are in the government sector, followed by the health care and social assistance sectors. The average annual pay for a job in eastern Connecticut is $63,000, while the area median income for a household is $93,000. (Income includes wages as well as investments and other sources of income, and a household may have more than one wage-earner, or job, that comprises the household’s income.) There are nearly 56,000 households earning at or less than 80 percent AMI. Meanwhile, there are only 25,000 housing units in the region which are preserved as affordable for these households (see ​“Dedicated Affordable Housing” section below.) As a result, the region is not meeting the housing needs of its existing workforce.

Although overall job growth in eastern Connecticut has still not recovered from the 2008 financial crisis, recent job growth in parts of the region, specifically the Norwich-New London-Westerly Labor Market Area, is stronger than anywhere else in the state, particularly in the manufacturing sector. Despite this, only one of the region’s five most common employment categories, manufacturing, can support a mortgage sufficient to purchase a single-family home.

To describe the impact of wages on one’s ability to afford housing, the United Way has created a classification known as ALICE: Asset-Limited, Income-Constrained, Employed. Households which fall into this classification are employed and earn above the federal poverty level yet still struggle to afford the basics where they live. The region has more than 58,000 ALICE households, including more than 31,000 in New London County.

Housing & Wages

Within the last 20 years, the median income in Connecticut, adjusted for inflation, decreased by five percent while costs for renters increased more than 15 percent. Housing costs for homeowners with a mortgage decreased 10 percent during that time. Yet it is now often harder to become a homeowner with a mortgage in Connecticut because of the rapid increase in home sale prices during the last 10 years. For example, in Eastern Connecticut, single-family home sale prices have increased by roughly 38 percent since 2014 (including nearly 60 percent in Windham County).

Housing Cost Burdens

A household is considered housing cost burdened if it spends more than 30 percent of its income on housing costs. When this happens, a household often does not have enough income to pay for other essential needs including food, transportation, healthcare, and childcare.

Households that have to spend 50 percent of their income on housing costs are considered severely housing cost burdened. These households are often forced to make difficult decisions at the end of each month about whether to fill a prescription, get the car fixed, buy food, or pay the rent or mortgage.

In eastern Connecticut, out of 212,000 households, more than 62,000 are cost burdened, or pay between 30 and 50 percent of their income on housing costs. More than 27,500 of those are considered severely housing cost burdened and pay more than 50 percent of income on housing costs. Households earning 0-50 percent of the area median income are most likely to be cost burdened, although households earning the area median income may be cost burdened, too.

Housing cost burdens arise from many factors including market conditions. The limited supply of housing units available in the lower- to entry-level market increases competition for each unit and drives up their price, making them affordable only to higher income homebuyers. Low- and moderate- income homebuyers then compete for the same housing units, further driving up the cost and forcing homebuyers to purchase properties outside of their affordable price bracket. This pattern continues up the income ladder, causing additional cost burden in each income bracket.

People of color are more likely to face housing cost burdens. Just under 25 percent of white households in eastern Connecticut are cost burdened, compared to more than 53 percent of Black households, more than 46 percent of American Indian or Alaskan Native (AIAN) households, more than 37 percent of Asian American and Pacific Islander (AAPI) households, and more than 32 percent of Latino households.

Dedicated Affordable Housing

Due to the significant housing cost burdens facing households that earn less than 80 percent of AMI, the State of Connecticut tracks how many housing units within each town are dedicated to remaining affordable to this population. This list is referred to as the​“Affordable Housing Appeals List” and is required under State Statute 8-30g.

We refer to these as​“dedicated” affordable units because they are owned, managed, and/or receive funding from an entity that assures those who live there do not have to spend more than 30 percent of their income on housing costs. When housing is not​“dedicated” to remaining affordable, rents can increase beyond affordable rates and homes become out of reach of many households.

If less than 10 percent of a community’s housing stock is dedicated affordable housing, the town or city is subject to Connecticut’s Affordable Housing Land Use Appeals Procedure, widely known as​“Section 8-30g.” If the municipality denies a zoning permit to a development that includes affordable housing, the decision may be appealed.

There is no state requirement for towns to reach the 10 percent threshold, nor does reaching the threshold imply that the town has satisfied its housing needs. Currently, at least 10 percent of the housing stock is affordable in eight of the 49 towns in eastern Connecticut, including Groton, Killingly, New London, Norwich, Plainfield, Putnam, Vernon, and Windham.