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Soaring construction costs are blowing up Utah’s already charged debate over affordable housing.
A pandemic-induced surge in the price of basics like lumber, concrete, bricks and metals is now all but dominating the political conversation over skyrocketing home prices and a lack of supply as more and more would-be buyers are being squeezed out.
In the name of protecting affordability, the Utah Legislature has moved to take city and county leaders, along with their planners, largely out of regulating design elements on new construction of single-family homes and duplexes in their communities.
With backers on Capitol Hill casting it as a way to smooth the steepening cost curve, lawmakers have freed homebuilders from a range of city rules on height, exterior color, minimum sizes, roof pitch and some fencing and landscaping requirements.
Homes still have to comply with building codes, but homebuilders say the added flexibility free of regulation could shave tens of thousands of dollars off median homes prices, which are now jumping by double digits year over year in all but a few counties on the Wasatch Front.
Utah Gov. Spencer Cox signed the measure Thursday, but it already has many city officials, planners and historic preservationists alarmed over its potential effects.
Rep. Paul Ray, R-Clearfield, called HB1003 — passed by sizable majorities in the House and Senate — “a first big step we can do that’s not about subsidizing housing” in addressing the state’s affordability crisis.
“This is truly something that allows us to cut the costs to build a home,” said Ray, who is also CEO of the Northern Wasatch Home Builders Association, a trade group for the sector.
A previous version — vetoed by Cox over insurance concerns — had been trimmed and resurrected for this month’s one-day special session, he said, as part of a priority placed on housing by legislative leaders.
Some housing advocates say while it helps homebuilders, it may do little if anything to ease a deepening cost crunch for prospective homebuyers or for the thousands of Utahns who rent.
“It doesn’t seem to have much to do with affordable housing,” said Tara Rollins, executive director of the Utah Housing Coalition.
On top of worries about the durability of homes built with less-expensive materials, many city leaders warn the new approach could throw key portions of their land-use and zoning rules into confusion. And, in varied ways, it also could deprive residents in Utah’s built-out urban areas, rapidly growing suburban cities and unincorporated areas a full say in how their communities grow.
“One size misfits all,” said Cameron Diehl, executive director of the Utah League of Cities and Towns. “Our cities are in different life cycles, with different geographies and different needs. And even if this reduces the cost of housing, will that actually reduce the price?”
Lumber up an ’unsustainable’ 300%
It’s no shock that savings on construction materials is now a part of Utah’s housing debate, but you might be surprised how big of a deal they have become.
The effects of limited land, labor shortages and upward materials costs on housing prices in the Beehive State have pushed pricing issues into hyperdrive amid a rush of new demand for homes, an upsurge in do-it-yourself improvements and record-low interest rates.
Prices on core materials shot up with the U.S. onset of the pandemic as lockdowns disrupted factories and supply chains, but the pinch has worsened with 2021 and intense demand from the new home construction season.
Lumber alone has skyrocketed by more than 300% since April 2020, and supply issues with wood products have begun to complicate and even slow a range of major construction projects across the Wasatch Front.
Rob Moore, CEO of Salt Lake City-based Big-D Construction, said dramatic price run-ups are leading to material shortages that threaten to dampen an upswing in construction of apartments and industrial warehouses, two strong sectors in Utah right now.
“Steel, copper, concrete, anything made of oil — highest they’ve been in many cases,” said Moore. “The reality is, we’re headed toward inflation.”
Members of Utah’s all-Republican congressional delegation signed onto a May 10 letter to newly confirmed U.S. Trade Representative Katherine Tai, urging her to craft an agreement with Canada to bring down softwood lumber prices “directly affecting the housing market.”
“With the economy stressed as a result of the coronavirus pandemic,” they wrote, “the U.S. government should make every effort to help create certainty and predictability in our supply chains.”
Utah Senate President Stuart Adams, R-Layton and a real estate executive, has also written to Tai in conjunction with World Trade Center Utah, calling lumber prices “unsustainable, particularly considering the housing affordability crisis,” and urging resolution with Canada “to help ease market concerns for builders and consumers alike.”
And in a further signal of how building costs have altered the housing debate of late, one of this year’s winners of the Ivory Prize — a yearly Utah-based competition for the best ideas for boosting affordable housing — is a pioneer in bamboo as an alternative to lumber.
BamCore, a privately held California manufacturer, supplies builders with hybrid panels and other components made from a combination of fast-growing bamboo and traditional wood. The firm’s high-tech milling system then labels each piece with diagrams on how to assemble them, increasing construction site efficiency.
The process is faster, greener and — now more than ever — highly price competitive with more typical building methods, according to Zach Zimmerman, BamCore’s director of business development. Demand for BamCore was already strong before lumber prices took off, Zimmerman said, “but now it’s off the charts. I mean, it’s really unbelievable.”
‘New solutions’ or ‘a real burden’?
HB1003 supporters say even small savings on materials costs in homebuilding with less city regulation will be meaningful to prospective buyers — many of whom, they add, face a decision to leave Utah if they can’t find an affordable home.
More flexibility on roof pitches can mean less lumber for trusses, Ray said. Allowing stucco instead of brick on home exteriors will also ease costs and open up new home construction, he said. Exact cost savings, though, will be decided by market forces.
“This lets the market adjust to these cost fluctuations better and just puts the consumer in the driver’s seat,” added Michael Parker, senior economist at Ivory Homes, the state’s largest homebuilder. “And the reality is, we’re in a crisis. Everybody needs to come to the table and we need new solutions.”
Opponents say the new law throws major curveballs at cities as they try to match new development in their communities with the needs of established residents and neighborhoods. Regulating building design, they say, is a chief tool as the state’s population continues to swell.
Nick Norris, Salt Lake City’s top planner, said the exemptions for areas that were “substantially developed” before 1950 mean that houses in the same zone district could face different rules, making enforcement more difficult.
“That creates a real burden on cities,” Norris said.
Many regulations on the look and feel of new construction in Salt Lake City’s eastern foothills could be preempted by the shift. It also could set back west-side neighborhoods seeking to preserve their historic character.
The change retains the ability of cities to regulate building designs in neighborhoods designated as historic districts, but only for districts created before Jan. 1, 2021. So any new areas created for west Salt Lake City neighborhoods such as Glendale, Rose Park and Poplar Grove would not have the same enforcement powers.
Ray said he wrote that into the bill to prevent a rush of new historic districts being formed to bypass HB1003.
David Amott, head of Preservation Utah, said the housing crisis is being used to justify the change, “but the real reason is that developers have long wanted less regulation.”
Cox made clear his earlier veto hinged on the bill’s effect on flood insurance — concerns since stripped from HB1003.
Ray said that opponents “had tried to kick the crap out of me. They called me corrupt. But, you know, I’m just trying to help homebuyers. They can’t afford to build.
“If you want housing affordability,” the lawmaker and former Clinton City Council member said, “pushing things up to a half-million dollars for a starter home is a no-go.”