For the first time in 40 years, Utah has more households than available housing units. This housing shortage creates a serious threat to our state’s cost of living and overall economic prosperity. While most of us recognize that we have a strong housing market, we may not all have a clear understanding of the issues at play.
One impact of high and increasing housing prices is businesses across the state having a difficult time recruiting and retaining talent. Noticing this trend and feedback from our members, the Salt Lake Chamber decided to take a closer look by commissioning a study from the Kem C. Gardner Policy Institute at the University of Utah. This landmark study examines Utah’s housing market over the last generation, current trends and projections for the future.
Utah Is Getting More And More Expensive
The study clearly shows that Utah faces a looming housing affordability crisis. The findings also validate business leaders’ concern that many of their current or potential employees could be priced out of the housing market. If trends persist in the next several years, the typical Utah family will spend nearly 50 percent of its income on housing. Already, housing is 20 percent more expensive than some of our top competitor cities in economic development such as Boise, Las Vegas, and Phoenix.
For me, the report has personal implications. By the time my children are grown and have children of their own, at the most conservative number, a modest-sized, single-family home in a suburban community could cost more than $700,000. Part of our growth and prosperity is due to the fact that Utahns want to stay here, close to their families and in the communities they love. The way things are going, that simply may not be possible for many.
A Few Ways We Can Keep It Affordable
In 2006, Clark Ivory, CEO of Ivory Homes, could see the market turning for the worst. He sounded the alarm bells with local media, the Federal Reserve Board, and other builders. Ivory now feels that same sense of urgency.
“While we are facing a totally different market, one of robust demand but limited supply, we all need to focus on how we’re going to handle our current gap in housing with our state’s growing population,” Mr. Ivory says.
To address this, Ivory Homes has been working to try to keep Utahns from being priced out of the market. “We’re growing and changing with Utah,” he says. “That means we’re focused on balance of housing types such as townhomes, apartments, condos, and smaller lots—all of the things that will make our community remain affordable for our kids and grandkids.”
Public policy also has a big impact on housing affordability. For example, some estimates place regulation at nearly 25 percent of the cost of a home and recent actions in trade policy have increased lumber prices by 40 percent over the last year.
“Ultimately, local zoning laws are where things need to catch up,” Mr. Ivory says. “We need elected officials to understand and lead out in balancing the demands for growth while implementing smart and sustainable planning. This also means builders and developers need to work in collaboration with cities and help educate the community about Utah’s future. It really is going to take all of us to solve this challenge.”
Our Plan For The Future
The report points out five components that help explain the increase in housing prices: a shortage of available housing, construction and labor costs, local zoning ordinances and the NIMBY (not in my backyard) mentality, land costs and topography, and demographic and economic growth.
To address these challenges, the Chamber brought together the state’s brightest minds from business, academia, and government to form the Housing GAP Coalition. The Coalition recognizes that each community is unique and that there is not a one size fits all solution. Instead, it will implement a variety of tactics to tackle housing affordability before it becomes a crisis such as meeting with city councils across the Wasatch Front to discuss how we can partner, launch a public awareness campaign to educate Utahns about this issue, and address the construction labor shortage.
We want our employees, children, and grandchildren to enjoy a reasonable cost of living, high quality of life and strong economic prosperity that we’ve enjoyed. To do this, there must be a variety of housing types for Utahns in all stages of life and socio-economic situations. We want them to have the option to stay here and continue the traditions of hard work, community and family that make Utah great. Together we can ensure the American Dream of homeownership is kept alive for all Utahns.
Derek Miller is the President and CEO of the Salt Lake Chamber.