Utahns are increasingly worried the state’s housing crunch will start to dampen economic growth, according to a Zions Bank survey released Tuesday.
Fully 60% of Utahns polled in June for the bank's Consumer Attitude Index said they believed rising home values are having negative effects on the state's economy. Another 22% said the impact was neutral and the remaining 18% said they thought it was positive.
Two-thirds of those surveyed said they felt housing was not readily available in their neighborhood in their price range, while a third said they could not afford housing that was within a reasonable distance from their workplace if they moved.
Those sentiment indicators — which emerge just as Utah enters what is typically the busy summer season of homebuying — have economists warning that escalating prices could erode the state’s ability to recruit new businesses by pushing up labor costs.
With median home prices in Utah’s larger cities hovering nearly 20% higher than they are in places such as Las Vegas, Boise and Phoenix, concerns persist that the state’s ability to lure new employers and talented workers, while not directly hampered yet, eventually could suffer.
“Utah’s growth has benefited from people from other parts of the country, particularly California, moving here because housing costs are lower,” said Chad Berbert, an economic consultant to Zions Bank from the Utah management consulting firm Cicero Group. “So as those housing prices increase, you lose some of that benefit.”
Driven in part by the state’s healthy economy, the housing market has seen the fourth highest rate of appreciation in the United States over the past 26 years, said an influential report issued last year by the University of Utah’s Kem C. Gardner Policy Institute.
The study, referred to during Zions Bank presentation Tuesday morning at the Utah headquarters of the state’s largest homebuilder, found that the Beehive State currently has a shortage of about 50,000 affordable dwellings.
“That’s an astronomical number when you think of a state of Utah’s size,” said Michael Parker, Ivory Homes’ chief economist. He aded that those gaps persists even as Utah is setting records on homebuilding.
“We’re basically addressing the growth in the population,” Parker said, “but we’re not addressing the gap.”
As The Salt Lake Tribune reported last month, Ivory Homes — driven by its CEO Clark Ivory — says it is working on several fronts to ease Utah’s affordable housing crisis, including building more apartments, condominiums and town houses as well as traditional homes with smaller yards. In February, the company created new set-asides of moderately priced homes it builds each year for subsidized purchase by teachers, firefighters and police.
The influential firm has also worked with the Salt Lake Chamber and others in lobbying cities in hopes of reducing opposition to higher-density housing projects, driven by residents concerned about the impacts in their neighborhoods.
"I invite everyone in the community to start thinking about how we say, 'Yes in my backyard,' " Parker said Tuesday.
Utah home prices have continued to rise by roughly 4% over the past 12 months, according to Zions Bank data, but Berbert said there were recent signs the trend may be slowing.
The downbeat housing numbers in the Zions Bank survey for June came in contrast to broader indicators that Utahns are feeling positive about their current economic status and optimistic about the future.
Overall, the Zions Bank Utah Consumer Attitude Index rose 2.4 points to 115.6 in June, while its national counterpart, the Consumer Confidence Index, fell by 9.8 points over the same period.
Two-thirds of Utahns view jobs as plentiful, the highest share since early 2001, when Utah-based Zions Bank first began measuring consumer sentiment.
Some 36% of Utahns believe their household income will rise in the next six months and the share of respondents who were pessimistic about future job prospects fell 4% in June, to 12%.