Report: Utah faces housing shortage, skyrocketing prices
SALT LAKE CITY, Utah – The affordability of homes, condos and apartments in Utah is being threatened due to skyrocketing prices, lack of income growth and a shortage in available housing units, according to a new report from the University of Utah’s Kem C. Gardner Policy Institute.
“While the impact of higher housing prices are widespread, affecting buyers, sellers, and renters in all income groups,” the study reads, “those households below the median income and particularly low income households are disproportionately hurt by higher housing prices.”
The report, “What Rapidly Rising Prices Mean for Housing Affordability,” details the rise of Utah’s economy since 2010 and the accompanying population growth. Together, the growth “produced exceptionally strong demand for housing, which in turn has put upward pressure on housing prices.”
In addition, Utah is also having a housing shortage, with existing homes “falling short of demand,” the report says.
“The big issue here now is that we are not building enough housing to meet the households that are growing in Utah,” Clark Ivory, CEO of Ivory Homes, said during a panel discussion Tuesday at the Kem C. Gardner Policy Institute.
“It’s chaotic. In a word, it’s chaotic,” Amy Wilson, a realtor who lives in Salt Lake County, said of the current housing market. “We just cannot keep up with the demand.”
Wilson said buyers grow frustrated as they try to compete against other buyers for the existing inventory. Homes listed for sale get numerous purchase offers, she said.
“I’ve listed homes over the last few months where we had cash offers within an hour,” Wilson explained.
About 120,000 households in Utah are facing a “severe housing cost burden,” according to the report, because they are paying more than 50 percent of their income toward housing.
Over the past quarter century, the report says Utah’s annual increase in home prices has been 5.7 percent. Should that rate of increase continue for the next 26 years, the median price of a home along the Wasatch Front would be $1.3 million.
“Even when applying the real rate of increase (inflation adjusted) over the past 26 years of 3.32 percent, the median price would be $736,600” the report goes on to say. “And if this real rate of increase is cut in half to 1.7 percent the median price would still be $483,000 in real dollars; equivalent to Seattle housing prices in 2017.”
Further threatening the affordability of housing would be a rise in home mortgage interest rates to six percent, which the report says, “would jeopardize homeownership opportunities for many households with higher incomes and seriously reduce housing affordability in Utah.”
The increasing cost of housing could one day affect Utah’s competitive advantage in attracting new businesses to the state, the report says.
“The median sales price of a home in Utah’s two large metropolitan areas is already 20 percent higher than home prices in Boise, Las Vegas, and Phoenix: three cities Utah competes with for new business expansions,” the study says.
To combat these threats, the Salt Lake Chamber on Tuesday announced the creation of the Housing Gap Coalition.
“It’s about increasing supply to match the demand so that we don’t have inordinate pricing increases,” said Derek Miller, president and CEO of the Salt Lake Chamber.
The coalition has a goal of addressing Utah’s housing issues before they create a crisis.
“We don’t want to lose that competitive advantage that we have today,” said Steve Starks, chair of the Housing Gap Coalition and president of Larry H. Miller Sports.
Members of coalition say finding a new housing balance in Utah will take educating cities and towns about how to build the right kind housing.
“Right now, we’re consumed with single family homes,” said Abby Osborne with the Salt Lake Chamber and also part of the new coalition. “We’ve really got to get ahead of this problem, because there’s nowhere for us to go. We’re constrained by mountains, we’re constrained by the lake. We don’t have luxury to just continue to sprawl.”
“At the end of the day, there’s not going to be a single solution,” Starks said. “But what are the options? And what are the levers we can pull now that will impact us 20, 30, 40 years down the road.”
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