In our opinion: Utah housing prices are through the roof

Jeffrey D. Allred, Deseret News

Housing construction continues 400 S. and 400 E. in Salt Lake City on Tuesday, April 3, 2018. Research indicates that housing affordability is becoming an issue along the Wasatch Front.

Utah politicians, for the most part, have done a good job making Utah attractive for businesses. Tax rates are low and the barriers to starting a business are relatively few. Despite better judgment, they dole out tax breaks as incentives to certain out-of-state companies looking to relocate — a practice seen too often as necessary these days.

The state isn’t a perfect bastion of free enterprise, but it typically ranks high on the list of job creators. However, all of this leads to demands in other areas of the economy, not the least of which is housing.

Utah, and the Wasatch Front in particular, faces a housing shortage. That, in turn, is leading to higher rents and home prices, which is creating a crisis for many workers, especially young ones.

More must be done. Local communities should relax zoning restrictions, allow more high-density housing projects in places where they make sense and be less restrictive about people wanting to rent out parts of their homes. Supply must catch up to demand, and that won’t be easy.

Developers are trying to keep up. Last week, the U.S. Census Bureau reported that Utah led the nation in housing construction during a 12-month period spanning 2016-2017, adding about 22,000 units. In a seven-year span dating to 2010, the state finished second. New home construction increased 10 percent during that time, according to a study of permits.

Yet it isn’t even close to enough to keep up with demand.

An analysis by Jim Wood, a senior fellow at the University of Utah’s Kem C. Gardner Policy Institute, found that about a third of Utah’s households are forced to pay at least 30 percent of their salaries toward housing, as reported by the Deseret News. One in 8 dedicates at least half his or her salary.

Naturally, this crisis hits renters and low earners the most. Rents are lower the farther one goes from downtown Salt Lake City, but much of that savings then is eaten up by higher commuting costs.

A separate study last March by the Gardner Institute, commissioned by the Salt Lake Chamber, found that home prices in Utah outpaced all but three states during a 26-year period ending in 2017. It found a significant gap between the real annual appreciation in housing prices, which was 3.32 percent during that time, and the annual increase in household income, which was 0.36 percent.

Perhaps most ominously, the study identified this growing lack of affordability as a likely constraint on economic development, if left unabated.

“The median sale 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,” it said.

That lends a special urgency to the problem. In the end, it may not matter so much how business-friendly Utah’s politicians make the state through laws, policies and incentives. If it costs too much for employees to live here on an average salary, companies may go elsewhere.

Source Article