The Dedly Blog

On The Economy

The US economy slowed to 1.6% in the 3rd Quarter. The housing slowdown is being cited as the primary reason. But here in Connecticut, the cost of a new home, or even an old one, continues to be exceptionally high. It's so bad, that 20% of young adults, defined as 20 - 34, move out of the state due to a lack of affordable housing. Before anyone gets crazy idea that by "affordable housing" I mean the trailers that FEMA was supposed to give to Katrina victims, I'm talking about reasonably priced homes that working class families can afford. The median price for a home is $217,000 nationwide. In Connecticut, it's $300,000. In Danbury, the affordable fringe of Fairfield County (I'd imagine that only Bridgeport is more affordable), the median price is $415,000. And before you think that it's all McMansions, even small 2 bedroom houses are ridiculous (link dead). It's no wonder CT experienced a net loss in population from 1990-2000. The loss of a Congressional seat should've been a wake up call, but it wasn't.

Salaries aren't commensurate with these home prices. The median income for the region is $75,000 - $80,000. While really good compared with the rest of the nation (I never made it that high when I was working dotcoms), it falls short if you want to buy a house and not be a slave to your mortgage and subesquent property taxes ($5400/yr for our raised ranch that we paid $225,000 for in 1999).

Meanwhile, The Hartford insurcance company reported a 41% increase in profits thanks to a hurricane season that never materialized. And Aetna, the big health insurance company, reported a 34% increase in profits. Somehow, I don't think that will prevent either company from raising their rates next year. It's benefits renewal season: the time when companies make their final decisions (if they haven't already) on insurance coverage for their employees. Let's remember this the next time insurance companies bitch and moan about having to pay out sooooo much money to their customers the next time disaster strikes.

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DED

posted by DED at 2:10 PM

 Anonymous said...

I agree with you about the unlikelihood of rate drops (or lack of an increase) next year for insurances even after all those profits. Once prices go up, they rarely fall unless substantial competition or consumer/government pressure exists - and, I doubt either will emerge in the insurance industry soon.

Those home prices are staggering! Wow!

10/29/2006 2:59 PM

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