Utah’s homebuilding boom led the nation last year, adding homes and apartments at a rate nearly three times the national average. But economists say more is needed to reduce shortages and help lower current high prices that shut out many people from buying or renting.
“We need more units. That’s the bottom line,” James Wood, a fellow at the University of Utah’s Kem C. Gardner Policy Institute, said. He has researched Utah housing since the 1970s.
“It’s inevitable that you’re going to get stress in the housing market when you lead the country in employment and demographic growth,” he said. “If we were building at a lower rate, prices would be even higher, and the market would be even more unhealthy. It’s not a very healthy housing market, in my view.”
The number of housing units in Utah grew 2.2% between 2017 and 2018, up by 23,897, according to U.S. Census Bureau estimates released Thursday. In comparison, the national rate was 0.8 percent. Just behind Utah in rankings were Idaho at 1.9% and Colorado and Texas at 1.6% each.
(Christopher Cherrington | The Salt Lake Tribune)
Utah also ranked No. 2 since the last census in 2010. The number of housing units grew by 13.2% in that time, behind only North Dakota at 18.9%.
“I’m not surprised,” Wood said. That’s because Utah also has been near the top of national rankings throughout the decade in job growth and low unemployment — which attracts more people. The Census Bureau also recently reported that Utah is No. 1 in the nation for population growth this decade.
(courtesy of U.S. Census Bureau)
Housing shortages have helped drive up prices by double digits annually in recent years, Wood said.
“In my memory, this is the first period where it was even difficult for people to get into the rental market. They are priced out,” Wood said. His study of 20 apartment complexes built in Salt Lake City since 2011 found their vacancy rates average 3%. That means they are essentially full.
“Affordability is still a serious issue," he said, and it’s getting worse, although it looks like housing prices might be moderating a little bit."
Since the Great Recession, Wood said, Utah has added far more new households than new housing units.
(Francisco Kjolseth | The Salt Lake Tribune) Liberty Crossing takes shape along the S-Line between Main and State streets as new Census data says Utah led the nation in housing unit growth last year as construction booms around Salt Lake City as seen in late May 2019.
However, 2018 was the first time in many years that the state actually built a few more housing units than it added new households, “but just by a few hundred, so it really didn’t relieve the shortages,” Wood said.
Since the recession, he figures Utah has added 40,000 more households than housing units. But he adds that may be a bit deceptive because the recession created many vacancies through foreclosures and people doubling up in homes to save money. Those vacancies were absorbed by the market — probably by 2013 — or housing shortages would be even more severe now, Wood said.
A dip in home prices during the first quarter this year “is an indication that buyers are pushing back on prices,” Wood said, adding it may be a turning point at which “prices still are going to go up, but just not as fast.”
Apartment construction during the first three months of the year was down 30% from a year ago. Condominium construction was down 21%, and single-family homes were down 17%, Wood said.
(Francisco Kjolseth | The Salt Lake Tribune) New construction develops on the corner of 400 South and 400 E. in Salt Lake City as new Census data says Utah led the nation in housing unit growth last year as construction booms around Salt Lake City as seen in late May 2019.
While 2018 saw an extra big boom, Wood said the state seems to be returning to building levels seen in 2017 and 2016.
Last year’s boom was biggest in three counties: Utah County added 7,038 housing units, Salt Lake County added 6,497 and Washington County, 3,163, according to Census Bureau estimates. That continued the recent trend of Utah County growing faster than the much larger Salt Lake County.
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