Despite the rash of foreclosures and decline in home prices that began in 2007 when the housing bubble popped and the Great Recession arrived, the state continues to suffer from a lack of affordable housing, particularly rental units. That is the conclusion reached by the Partnership for Strong Communities in its most recent report, "Housing in Connecticut 2010."

The availability of housing for those at all economic levels is an issue the governor-elect and legislature cannot afford to ignore. Having an adequate housing stock is integral to economic development in Connecticut. Businesses will be reluctant to relocate to Connecticut if housing is scarce and expensive. Existing businesses that have tried to recruit employees know that relocating to Connecticut often produces housing sticker shock.

Until the state can revive housing production it will be difficult to revive the economy. Housing construction generates business and jobs for construction contractors, suppliers, banks, landscapers, insurers and many other businesses. Connecticut issued 3,786 building permits in 2009, continuing a downward trend since municipalities issued 11,885 permits in 2005. Since 2000, Connecticut ranks 47th among the states in units built per capita.

A big part of the problem is, of course, economic. While housing prices have dropped, so too have incomes, a 3.4 percent decline in personal income from 2008 to 2009, according to the Bureau of Economic Analysis.

A 2009 study by the Partnership, a private organization created in 1998 to advocate for creation of affordable housing, concluded that in 94 of the state's 169 municipalities families with a median income, $68,595, could not afford a median-priced home.

The situation is direr for renters and the shortage of units acute. The "housing wage," what someone must earn per hour to afford a typical two-bedroom apartment at no more than one-third of their pay, grew to $23 per hour in 2010. Of the 683 occupations tracked by the state's Department of Labor, about half, 337, have an average wage lower than that.

About one-quarter of state renters are making less than 50 percent of median income and spending more than half of that on housing, according to the National Low Income Housing Coalition. The National Alliance to End Homelessness estimated that as of 2008 more than 35,000 state households were doubled up to make ends meet.

Clearly, housing prices have not found a floor, the price at which the housing stock will be affordable to working people. After a significant decline in housing prices from 2007 to mid-2009, prices began trending up again, a trend driven by the temporary home-buyer tax credit.

Too many properties remain "underwater," with borrowers owing more than they are worth. Housing prices cannot align with incomes until banks address this situation. Government incentives are necessary to persuade banks to reduce mortgage principals. The bankruptcy code must change to allow judges to restructure mortgages.

On the rental front, suburban towns must abandon their zoning restrictions to multifamily housing construction. Town leaders fear increased school populations. This concern is unfounded. Connecticut is rapidly growing older. State enrollment figures are going down, with a 17 percent drop expected between 2004 and 2020.

For its long-term economic health, Connecticut needs more young families, not fewer. Yet towns continue to welcome age-restricted developments for seniors and discourage housing affordable to younger workers.

Connecticut cannot afford to ignore this problem.