Connecticut’s housing scarcity numbers rank among the worst in the country. Housing inventory is at historic lows and experts say that the number of new housing permits issued in Connecticut is nowhere near what is needed to meet growing demand.
Why isn’t the residential construction industry meeting the demand for housing?
There are a myriad of issues affecting production, but it boils down to the fact that building the types of homes needed to meet the diverse needs of Connecticut residents has become too expensive. And the reality is that municipal, state, and federal codes and regulations are becoming increasingly larger contributors to the residential construction industry’s growing affordability issues.
The governor’s new climate bill, SB 11, unnecessarily pits climate change mitigation and resiliency against his stated goals of promoting housing affordability and accessibility. Among other things, the governor’s climate bill mandates that the state adopt the newest Energy Star and Fortified Building Standards with every new code revision. Blindly adopting these standards without considering the impact they will have on the cost of construction and the number of Connecticut families that will be priced out of the market is bad public policy the state can ill-afford right now.
There is a better, more affordable way.
Arbitrarily adopting codes without the proper analysis is intellectually lazy and a disservice to Connecticut residents who are just trying to make ends meet. Policymakers must first acknowledge that not all code reforms are justifiable, even the environmental ones. Deference must be given to the fact that costs associated with proposed code changes have real-world consequences.
For example, we know, based on a peer reviewed report titled “Priced Out,” provided annually by the National Association of Home Builders, in the state of Connecticut, for every $1,000 dollar increase in the median cost of housing, 914 Connecticut households are priced out of attaining the American dream of homeownership. To put this into perspective, in 2022 Connecticut was the first state in the country to adopt the 2021 ICC model codes (there is typically a lag time for review). It is estimated that adoption of the more rigorous, updated code increased the cost of constructing a typical home from $4,900 to $17,700 — a 361% increase!
The bottom line is the cost and return on investment of each code revision must be weighed against its intrinsic value to the environment. Michigan mandates in its statutes that proponents of code reforms must demonstrate a maximum seven-year return on investment (ROI) for a code amendment to even be considered.
In addition to the ROI, Connecticut should weigh each code amendment for its potential impact on housing affordability, housing accessibility, and disparate impacts on the housing of marginalized communities. If a reform is still deemed to have merit, we should consider incentives and education, rather than mandates.
Many states across the country are taking a more pro-business approach to encourage adoption of Energy Star and Fortified Building standards. For example, the Oklahoma state legislature is currently considering a bill to offer a tax credit to contractors that earn the federal energy efficient home credit on the construction of a new home. As for Fortified Building Standards, many states offer financial incentives to property owners who replace roofs to fortified standards. In hurricane-prone Alabama, insurers doing business in the state are required to offer property insurance premium reduction for residents that choose to build to that standard.
While Connecticut likes to follow the examples of its neighbors when it comes to policy making, maybe we should keep an open mind and examine what some of these Southern and Midwestern states are doing to promote resiliency and energy savings. We might learn some valuable lessons that could be emulated and that won’t add to our housing affordability crisis.
Overly prescriptive energy and resiliency codes are anathema to creation of affordable housing. Increasing standards beyond today’s code (Connecticut’s statewide code is among the strictest in the nation) will only lead to higher costs and ever diminishing returns.
It’s important for the public and policymakers to remember that building codes were created to act as the minimum design and construction requirements necessary to ensure safe and resilient structures. To make our codes increasingly burdensome will only serve to price residents, who can least afford it, out of an increasingly volatile housing market.
Policies can be mutually beneficial to the environment and the housing needs of our state and need not be mutually exclusive. Let us work together to get there.
Jim Perras is CEO of the Home Builders & Remodelers Association of Connecticut.
