Condos are disappearing in Utah and experts think that needs to change

BARRIERS TO CONDO DEVELOPMENT IN UTAH

Bailey Chism
The City Journals

In 2023, builders in Utah delivered more housing units than in any year in the past four decades — and the majority of them are rental properties.

Condominiums have made up about 20 percent of housing stock for decades. According to the National Association of Home Builders, the share of attached condos jumped to 53 percent in 2005, but then dropped dramatically to 5 percent in 2022.

The Utah chapter of the Congress for the New Urbanism organized a recent event, titled “Barriers to Condo Development in Utah,” to bring developers, researchers and lawmakers together to discuss the barriers preventing condos from being built.

“We find ourselves in a situation where it’s significantly more expensive to buy a home than it is to rent a home,” said Dejan Eskic, senior research fellow at the Kem C. Gardner Policy Institute.

At the event, Eskic spoke about the affordability of housing and said most renters are stuck renting now because they can’t afford to buy a median-priced home in Utah.

Experts say the need is urgent as the U.S. undergoes dramatic demographic changes. The number of U.S. homes owned by those with no children is now larger than the number of households with children, and it’s growing at a rapid pace.

Baby boomers currently own the largest share of housing stock but are now at an age where they have no children living at home. And they have no plans of changing that amid a shortage of alternative housing options that would suit their lifestyles better.

Utah lawmakers often put their effort toward making it easier for homebuilders to create housing on farmland while overlooking changes that could impact the for-sale housing market, the panel said.

CW Urban, an infill developer and Building Salt Lake advisor, planned to build two new condo buildings near downtown in 2021, but instead converted the project into rental apartments and sold the buildings before they were completed.

Other developers have pointed out that they already face risks when developing a housing project of any kind, and condo liability laws increase the legal risks they’d be facing if they built condos instead of apartments.

Developers have to sign personal guarantees that make them liable for certain things. If a developer finished a building, sold it out and then started having issues related to construction, they’d be exposing their company and financial backers to high risks of lawsuits that are better avoided through apartments. At that point, developers only have to hire a management team and worry about leases.

State Rep. Ray Ward, R-Bountiful, and Sen. Nate Blouin, R-Millcreek, attended the event and joined a panel to speak about making changes to the policy and creating more housing development.

Blouin shared his thoughts on the difficulties of finding spaces for housing in the municipalities of Utah.

He said, “It’s certainly going to take a lot of collaboration to find ways to create some of these opportunities.”

Steve Waldrip, senior advisor for housing strategy and innovation for Utah state government, said that the issue is being recognized at a state level and he believes the state is moving in the right direction.

“I think we do have a lot of officials that want to do the right thing, that recognize the need for good housing development in our communities,” Waldrip said.

Ward spoke about the policies surrounding housing developments and what policies could make it easier to bring condo developments back.

“I think most people are coming around to the fact that we need to do something differently if we want our kids and grandkids to still live around us,” Ward said.

A legislative audit released in November found that time is running short to act on Utah’s housing policy. The audit report said, “If cities do not allow for the construction of more units on less land, parts of the Wasatch Front could begin to run out of housing capacity in less than 20 years.”

Going forward, Utah would need to add 27,900 housing units per year to keep up with the forecast growth. The state would need near record levels of housing construction over the next 20 years to avoid a worsening housing shortage.

The legislative audit stated Utah’s significant population growth and slower housing production has resulted in a shortage of housing units. Because there’s not enough housing to satisfy demands, home prices have increased and it’s become more difficult for first-time and low-income buyers to find housing at an affordable price.

The audit said, “Utah’s political leaders have already set housing affordability as a policy priority, stating that the construction of higher density, owner-occupied housing units will enable upward mobility for young families, setting them on the path of home ownership and equity.”

Leader’s have warned that without smarter policies to keep up with the growth associated with a strong economy, Utah’s future prosperity is at risk of becoming very limited.

“If cities do not allow the construction of more efficient housing options, population growth could begin to exceed Wasatch Front housing capacity in less than twenty years,” the audit stated.

A growth model put together by audit researchers shows that by 2048, Davis County will be approaching full capacity. Current housing plans do not have enough room to accommodate official household growth projections. But if city officials were to commit to strategies with wisely planned city and town centers, where more housing units are built on less land, the county should be able to provide enough housing capacity to meet forecast growth through 2050.