Thousands of potentially affordable homes in Utah are being deployed instead as short-term rentals in a trend that is worsening the state’s housing shortage, according to Utah Gov. Spencer Cox.
While also calling for more residential construction and higher housing density along the Wasatch Front, the Republican officeholder told a bipartisan audience Tuesday that listings on rental platforms such as Vrbo and Airbnb seem to be dampening the effects of stepped-up homebuilding in addressing Utah’s lack of an estimated 40,000 affordable rentals and homes for sale.
“We’re building more and more homes at an expedited rate, more than ever before in our state’s history,” Cox said during an online chat held by the Washington-based J. Ronald Terwilliger Center for Housing Policy. “But we aren’t seeing what we would expect to see as a measured decline in housing prices, because that amount of housing should be keeping up with the new growth that is coming and should stabilize things.”
Nearly 20,000 properties are now listed as short-term rentals in the Beehive State, “which is something we haven’t had before. ... This is a new phenomenon,” Cox said. “We’re taking houses, and we’re turning them into hotels. ... That’s housing stock that now isn’t being rented to families or available for purchase by first-time homeowners or others.”
Even as short-term rental markets catering to tourists grow, the state Legislature has moved to limit how Utah’s cities and towns are able to regulate such rentals in their midst, protecting the interests of homeowners.
The governor labeled himself “a private-property-rights person,” adding, “I don’t like to tell people they can’t do those types of things with their property,” but Cox also called short-term rentals “an issue we need to talk about more” in dealing with the state’s housing crisis.
Some tiny rural towns near Utah’s tourist destinations now have housing markets so tight, he said, “we have schoolteachers that can’t live within 100 miles of the school where they teach because there are no homes for sale in those areas. And when a new home is built, it’s immediately turned into a short-term rental.”
The governor characterized Utah as a “victim of our own success” in the state’s latest housing crunch, with a soaring population, a strong, diversified economy, and lower taxes all fueling record growth and luring newcomers. But that also has spurred a 27% leap in home prices over just the past year after more than a decade of similar escalation and increases in rents, making housing what Cox called “one of our biggest challenges.”
It also has shifted residents’ once-favorable views on growth, with support dropping “precipitously,” Cox said, and residents now associating it with clogged traffic, expensive homes and a lower standards of living. He noted Utah now has among the worst residential real estate markets in the country in terms of prevailing income levels relative to housing costs.
“That’s a big concern to me,” Cox said, “and to everybody in the state.”
Though some Utahns view higher housing density as negative, he said, it “is only bad if you don’t have infrastructure,” referring to state investments in better roads and expanded mass transit.
Saying Utah continues to battle “not in my backyard” (NIMBY) sentiments from the public when it comes to new housing, the governor called for a review of the state’s ballot initiative process in light of a spate of community campaigns across the state to block new development.
“We should have the ability to overturn egregious decisions with broad support from a community,” said Cox, who described himself as “a local government guy” as a former City Council member and mayor of central Utah’s Fairview. “But when a handful of people in a neighborhood can get something on a ballot and overturn something fairly easily, we may be a little bit out of balance there.”
He pointed to heavy state spending in recent years on financing for deeply affordable housing and programs for rehabilitating and preserving existing homes. Cox said the state was seeing success in its efforts to encourage cities to zone for added density along transit corridors by tying those moves to the state transportation funding those cities receive.
“We’ve had the state taking a bigger role,” said Cox, who also referred to a recently passed Utah law requiring cities to permit accessory dwellings such as basement and mother-in-law apartments to be added onto existing homes in most residential areas. “It’s still mostly local control, but with some of those exceptions that I think are important.”