Utah’s strong economy, bolstered in part by robust population growth, is a great benefit to anyone seeking a job, supporting a family or starting a business.
But a strong economy with a growing population brings its own challenges — among them housing shortages and affordability.
The housing challenge needs to be addressed, or it could help slow or even end Utah’s strong economic growth. Our economy won’t prosper if families decline to come to Utah, or move elsewhere, because homes are too scarce or too expensive.
James Wood of the Kem C. Gardner Policy Institute at the University of Utah noted last year that, for the first time in 40 years, Utah has more households than available housing units. In the five-year period between 2010 and 2015, Utah added 109,321 households but only 81,656 housing units — a negative 34.3 percent difference. And despite this year’s 10-year high in housing starts, the shortage continues.
All three housing markets are strained: existing homes, rentals and new construction. These conditions have created high demand and driven up prices in all three markets.
If you are settled into a nice home, this might seem to be just be an abstract issue. But if you are a young family looking for a first home, a college student looking for an apartment or a growing family looking for a larger home, then it becomes a real, personal problem.
Two big factors are limiting Utah’s housing supply: a shortage of qualified labor and local housing regulations. The solutions are obvious but complicated.
Homebuilders say finding skilled labor is their biggest problem. Utah enjoys an unemployment rate well below 4 percent, and homebuilders are competing for workers with many large construction projects, including the new state prison, major highway projects, hospital projects and the new $3 billion Salt Lake International Airport — the largest construction project in state history, requiring 2,000 workers.
The solution is to encourage more young people to engage in vocational training, increase training programs across the state and liberalize immigration policies to allow more workers. Excellent jobs are available in the construction trades if our education system prepares young people for them.
Local housing policies, including zoning, ordinances and impact fees, have limited the diversity of housing projects brought to market. Too many cities exclude multifamily housing, regardless of market demand and the needs of their communities. Because of tax structures and ordinances, cities are inclined to compete fiercely to develop retail commercial space, rather than encourage housing developments. Rising impact fees also drive up housing costs.
Sometimes citizen groups inadvisably fight multifamily developments in their cities. One Salt Lake Valley mayor has wondered if city councils are making housing decisions based on a few clamoring voices, while the majority of residents support development but tend to be silent.
Many Utahns prefer to stay in Utah because they want to stay close to family and raise their families in the communities they love. But this ideal will become harder to realize as average housing costs continue to increase.
Leaders and citizens need to be more informed and focused on the housing crisis. Most of us have heard anecdotes about housing problems, but the broader impacts of the housing shortage on the community are less understood.
Housing availability and affordability may be the most serious threat to economic development that is not getting serious attention. While business and community leaders are collaborating to solve issues like air quality, workforce availability, transportation infrastructure and education, housing affordability has had less focus.
The Salt Lake Chamber has recognized the problem and is now helping to organize a coalition to act and advocate on housing issues. It is time to act, before housing affordability becomes a drag on the economy.