|Middletown's Plan of Development
HOUSING: HOW MANY?, WHAT TYPE?, WHERE?, AND HOW AFFORDABLE?
In order to achieve the most desirable composition and quality of dwelling units in the community, the housing and residential construction portion of the Plan of Development has identified the following goals:
It is important to have a housing and residential construction portion in the Plan of Development to better understand the currently available housing stock and the potential future housing stock. Understanding the type of future housing available in the city will contribute to a better understanding of the future socio-economic characteristics of the city’s population.
This portion of the Plan of Development will review recent residential construction activity, the current number of dwelling units, the potential number of units and finally, will analyze the affordability of a home in Middletown. This portion of the Plan of Development will then end with several conclusions and recommendations aimed at achieving the housing and residential construction goals as discussed above. ALL FIGURES WILL BE UPDATED WHEN THE OFFICIAL 1990 CENSUS FIGURES BECOME AVAILABLE.
Middletown has experienced a rapid surge in residential building construction over the past several years. Figure 4.1 displays the building permit activity over the past 6 years. From this figure it is clear that construction activity has decreased substantially in 1988 and 1989, down from record highs in 1985 through 1987, and it appears activity will continue to be much slower in 1990. Figure 4.2 displays the certificate of occupancy activity. The large number of certificates of occupancy in 1988 is merely a delayed effect from the past record years in terms of building permits. Accordingly, the number of certificates of occupancy issued did decline in 1989 and 1990.
BUILDING PERMITS 1985 – AUGUST 1, 1990 Source: Middletown Building Department Chart here……. FIGURE 4.1
CERTIFICATES OF OCCUPANCY 1986 – 1990 Source: Middletown Building Department Chart here……
Figure 4.2 THE CURRENT HOUSING SUPPLY
The rapid surge in construction activity has resulted in a substantial increase in dwelling units over the past decade. In 1980 there was a total of 14,774 dwelling units in the city. From 1980 to August 1, 1990, there have been 3944 building permits issued for the construction of both multi-family and single-family dwelling units. This addition in units since 1980 results in a total of 18,718 dwelling units in the city. This growth represents a 27# increase in housing units. The next two figures, 4.3 and 4.4, display the distribution of dwelling units, by census tract, throughout the city. From these figures, it is clear that the Westfield portion of the city contains a substantial portion of the entire city’s housing stock.
Figure 4.5 displays the change in the number of dwelling units between 1980 and August 1 of 1990. In this figure, it becomes obvious the most substantial growth occurs in the 5413 census tract. This is the result of the multi-family construction in the Westlake Planned Residential Development. In order to gain a further understanding of the housing stock and the population contained within, it is important to divide the total number of dwelling units into single family and multi-family dwellings. Figure 4.6 accomplishes this and shows that the multi-family homes have been increasing much more rapidly than single-family. Figure 4.7 shows the distribution of multi-family (56%) and single family (44%) dwelling units. This phenomenon is once again due to the rapid development of the Westlake PRD.
1990 CENSUS TRACTS MIDDLETOWN, CONNECTICUT PLANNING & ZONING DEPARTMENT Map here…….
HOUSING UNITS BY TRACT
Chart here CHART HERE…….. CHANGE IN UNITS 1980 – AUG.1, 1990
Figure 4.5 Charts here……… Chart here………
THE COMPOSITION OF THE FUTURE HOUSING STOCK
The current distribution of single and multi-family homes, as discussed earlier, is generally not a favorable mix. Therefore, in order to understand whether the future distribution will be similar to the present distribution the Planning Office predicted the future mix. Based on the density the current zoning scheme allows for, it becomes clear that there is far more room for single family home expansion. Figures 4.8 and 4.9 display the approximate distribution of multi-family and single family dwelling units at the time of total residential build out, approximated in the year 2007, barring any significant residential zone changes which increase density.
The estimate of the year 2007 as the year of total residential buildout is merely an estimate based on previous building permit activity. Considering the recent slow down in construction activity, it is not unrealistic to project total residential buildout as far in advance as 2020.
DWELLING UNITS AT TOTAL BUILDOUT
Chart here… DISTRIBUTION AT TOTAL BUILD OUT Chart here……..
Having an understanding of the quantity and distribution of dwelling units both presently and in the future raises a new issue. This new issue, which is particularly pertinent in this region, is the question of affordability. More and more the lack of starter homes in Connecticut is arising as one of the State’s most serious problems. For this reason, Public Act 88-13 “An Act Concerning the Updating of Municipal Plans of Development” was adopted. This act requires that moderate income housing be considered in the Plan of Development. The act also provides that the Plan of Development may include plans for the implementation of moderate income housing programs. This section will analyze the affordability of housing in Middletown for various income groups, and then in consideration of the work of the Middletown Housing Partnership, make general recommendations aimed at bridging the affordability gap.
ON COST: What is Middletown’s current real estate market?
While Middletown’s housing supply has been growing steadily, the cost of these homes has increased dramatically. Based on the single-family home sales for the first half of 1990, the average cost of a single-family was calculation to be $156,080. This figure is down from the average calculated between May of 1988 and May of 1989, that figure was $159,000. In 1980 the Census of the Population reported the average price of a home to be $60,400. This reveals that there has been a 158% increase in the average price of a single-family home over the past ten years. Condominiums behaved similarly. The average price of a condominium during the first half of 1990 was $113,860. This value is up 108% from the 1980 value. The next table displays the current average values for various types of single-family homes and condominiums.
TABLE 4.1 AVERAGE HOME PRICES
In general, there are two reasons for these dramatic increases in the average price of a home. These reasons are land costs and location. Since 1980, land costs have represented an increasingly large share of the total cost of constructing a home. Statewide, between 1980 and 1986, the land as a variable in the cost of a single-family home has increased from 29% to 40%. Clearly, due to the lack of buildable land, land is gradually becoming the most significant cost in the price of a single-family home.
In terms of location, there has been substantial economic growth occurring in Middletown and in other towns surrounding the I-91 corridor. This economic development has resulted in a dramatic impact on the Middletown housing market. The development in greater Hartford has also affected Middletown and the region. Housing prices in Middletown have historically been less than those in the Greater Hartford region and easy access to major highways has been good. This has made Middletown an attractive residential alternative.
ON INCOME: What can Middletown resident afford?
While overall, the incomes of Middletown residents have been increasing, they have not matched the increase in the average price of a single-family home. Income figures for 1990 are unavailable, however, the Department of Housing and Urban Development estimates the median income as of May 1, 1990. This estimate as shown below would mean there has been a 112% increase in median family income between 1980 and 1990.
TABLE 4.2 INCOME FIGURES
MidState Region 1987 Income Figures
ON AFFORDABILITY: What income is required to buy a home in Middletown?
Having concluded that Middletown home prices have increased more rapidly than the incomes of Middletown residents, it is logical to discuss the incomes required purchasing these homes. The following tables analyze the affordability of homes in the following sales price distribution.
TABLE 4.3 SALES PRICE DISTRIBUTION OF SINGLE FAMILY HOMES FIRST HALF OF 1990
The table below presents the incomes required to purchase the homes in this distribution. The table is based on a 30 year 9.5% mortgage and assumes that a family can devote 28% of it’s gross monthly income to mortgage payments, real estate taxes and hazard insurance. One other very significant assumption was made. In developing these examples it was assumed that home-buyers had accumulated sufficient funds to cover down payments and financing costs. This is often not the case and the down payment is commonly the factor which prevents home ownership.
TABLE 4.4 INCOME REQUIRED TO PURCHASE HOMES IN MIDDLETOWN
When comparing the above required income figures with the income figures available and the 1990 estimate for Middletown it becomes clear that many people, especially fist time home buyers, are being increasingly shut out of Middletown’s single-family home market and in many cases, the condominium market.
ON THE RENTAL MARKET
A major source of housing here in Middletown is the rental market. In 1980, 51% of the housing units in the city were renter-occupied. For this section it is assumed that rental housing is affordable when it costs a household no more than 30% of its gross monthly income to pay rent and utilities. The following information on rental housing in the City of Middletown was extracted from the May 1989 Middletown Housing Partnership Report.
The partnership conducted a survey of 281 two-bedroom units in December 1988. This survey revealed that two bedroom non-subsidized units range from $515 per month, including heat and hot water, to $850 per month for a luxury unit. The survey also indicated a vacancy rate of only 1.4%.
The next table provides estimated data on households by income range and affordable rent ranges for the various income groups.
TABLE 4.5 1988 ESTIMATED HOUSEHOLD INCOME
As the Housing Partnership Report pointed out, this data suggests that for most households, the private market provides units which would be affordable. This does not mean that there are not problems in the rental market.
Rental needs tend to be concentrated at the lower end of the income spectrum. In 1980 only an approximate 27% if renters had incomes above the regional median. A more recent survey, conducted by the Institute of Social Inquiry at the University of Connecticut, found that statewide 53% of households with incomes less than $30,000 were renters compared with only 8% of those with incomes over $50,000. For this reason, the demand and thus the shortage for rental units are skewed towards the lower end of the income spectrum.
Based on the data available, it appears that one group which is poorly served by both the private market and the assisted market is that group earning approximately $15,000 - $25,000 per year. This group, capable of paying $375 to $625 per month, must struggle to find rental units which are affordable in the private market, but may not qualify for other assisted housing.
The table above indicates that 3,219 households had earnings of less than $15,000 per year. This constitutes approximately 22% of the cities population. There are 2,374 assisted housing units in the City. At first glance the conclusion may be drawn that the City needs approximately 1000 new assisted housing units. However, a substantial proportion of the households with the lowest incomes, at least 600, are elderly homeowners, often with small or no mortgage payments.
Keeping this in mind, the Housing Partnership concluded that there is a need of an additional 245 rental units for household’s earnings less than $15,000 annually. As mentioned earlier, there are 2,374 assisted rental units in Middletown. It should be noted that the Connecticut Department of Housing has indicated that Middletown has the sixth highest percentage of assisted housing units in the State. Only Hartford, New Haven, New London, Windham and Waterbury provide a higher percentage of assisted housing.
Nevertheless, the city should target this segment of the population when addressing the affordable housing issue. However, when attempting to provide homes for those households with incomes of less than $15,000 creativity and new ideas should be used. SOURCE: Housing Partnership
The implications of this lack of affordability in Middletown are many and include:
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