Photo courtesy Vecteezy
UTAH ECONOMIC OUTLOOK & POLICY SUMMIT
Brice Wallace
Utah’s housing affordability crisis could turn the “American dream” into a nightmare for future generations.
That was the sentiment expressed at a recent economic outlook event in Salt Lake City. Several speakers said that if Utah cannot get a handle on high housing costs, the economic and societal ramifications could last for decades.
“I think the single greatest threat to our future prosperity is the price of housing in our state,” Gov. Spencer Cox said at the Utah Economic Outlook & Public Policy Summit, presented by the Salt Lake Chamber and Kem C. Gardner Policy Institute. “By the way, it’s not just a Utah problem. It’s happening in every state. It’s actually happening in just about every developed country in the world, but it’s especially true here in the Mountain West because of our economic success.
“And I’m just here to tell you, the American Dream is dead if you cannot own a home. I believe that homeownership is central to everything that makes us prosperous, keeps us rooted, helps with our economy, helps with our culture, helps with our neighborhoods — everything that we value.”
Cox asked the audience to imagine a time 50 years into the future, in which an entire generation of Utahns had never owned property. “”What is that like? I submit to you that that is a very weak picture,” he said.
If Social Security is unable to survive, Utahns will have less financial security in their later years than the current generations, he said.
“So what happens if you rent for the rest of your life and you do not have a retirement? Where does that put us? It puts us in a very weak place,” the governor said.
Natalie Gochnour, director of the Gardner Institute and chief economist and senior advisor to the Salt Lake Chamber, agreed with Cox about the long-term ripple effects of the issue.
“We’re denying young people the ability to get into ownership,” she said, “and when we delay ownership of a home, their wealth is affected for rest of their lives.”
Housing affordability has been a multiyear issue in Utah. Zillow reported that in December, the average Utah home value was $500,981, down just 0.3 percent over the past year. Redfin reported that the median sale prices of all home types in Utah in November was $546,200, up 3.6 percent year over year. The number of homes sold fell 2.6 percent and the number of homes for sale fell 9.23 percent, it said.
The median sales price of existing single-family homes represents “shocking data,” Gochnour said. Depending on which stats are cited, Utah is either No. 7 or No. 8 in the U.S. for the highest such price.
Phil Dean, chief economist and public finance senior fellow at the Gardner Institute, said Utah’s single-family home prices are higher than even New York and Virginia, considered to be costly places for housing. At one time, Utah home prices tracked closely with those of the entire U.S., but “that’s not the case anymore,” he said.
“It’s a critical issue that we need to understand,” Dean told the crowd. “And you as businesses need to understand about your ability to attract people from out of state and to be able to retain your workers here. Our kids cannot afford to buy homes.
“And this has pervasive implications for the economy as a whole, right? It means they won’t have the money to buy other things when everything is spent on housing. It hollows out the middle class. It’s a massive challenge that we face.”
Ginger Chinn, the Salt Lake Chamber’s vice president of public policy, said Utah’s rising population and rising home prices have been coupled with a shortage of affordable housing. The chamber, she said, is working with state legislators on finding funding and financing to help local governments deal with housing affordability. She also noted broad effects of the issue.
“We talk about housing. However, most people need two incomes to buy a house, so two incomes necessitates both people (parents) at work, which necessitates the need for childcare, and that now becomes a workforce challenge,” Chinn said.
At a government panel discussion, Utah House Speaker Mike Schultz, R-Hooper, said local governments and state legislators “got it right” on housing density, leading to many new apartments. High home ownership prices have forced more people into apartments, and as more apartments have become available, rents have fallen 5 percent in Salt Lake City and 3.4 percent along the Wasatch Front, he said.
Meanwhile, people moving into Utah from other states are “fine buying a home” because they sold their houses and moved across the country to buy a big house in Utah.
“But we’re missing the boat on our first-time homebuyers, for our kids and for our grandkids,” Schultz said. “We’re going to work with our local governments to turn that, and we’re excited to do that as well.”
To help address the problem, Cox and Lt. Gov. Henderson have recommended in their budget a $150 million “Utah First Homes” program toward a goal of building 35,000 starter homes over the next five years.
“We can do it,” Cox told the summit audience. “I know it’s complicated. I know all the reasons it shouldn’t work, but I’m here to tell you, we will make it work. … I refuse to believe in Utah that our kids and grandkids are going, for the first time in the history of our state, to be worse off than their parents and grandparents. I refuse to let that happen.”