Home ownership seems out of reach for young Utahns. Here are ideas to fix that.

This story is part of The Salt Lake Tribune’s ongoing commitment to identify solutions to Utah’s biggest challenges through the work of the Innovation Lab.

Kevin Fagundo Ojeda and Cole Knuckles had just one night to come up with a solution to one of Utah’s most intractable problems: the affordable housing crisis.

They were tackling the challenge as part of Hack-A-House, a 24-hour online hackathon that took place in late September. For the uninitiated, a hackathon is typically a competition associated with engineering computer software, mobile apps, operating systems and other development projects. In this case, Ivory Innovations, a nonprofit housed at the University of Utah’s David Eccles School of Business, invited students from across the country to brainstorm ways to tackle one of three topics: homelessness, environmental challenges and construction technology or sustainable renting and affordable homeownership.

Other universities joined as co-sponsors, including the University of California at Berkeley, the University of Arizona, Harvard University, University of Denver and Howard University.

Fagundo Ojeda and Knuckles are University of Utah students. Fagundo-Ojeda, 30, is a graduate student in city planning and architecture and Knuckles, 21, is completing his undergraduate degree in finance.

The Salt Lake Tribune interviewed the pair and other Utah students about their projects, experiences with housing challenges and what they’d like to see leaders doing differently.

Lowering utility costs

Fagundo Ojeda and Knuckles’ project focused on reducing utility costs for low-income Utahns.

They noted utility burdens, that is, the amount of money renters spend on utilities as a percentage of their rent, play a big role in housing affordability. Their aim was to “help people not fall through the cracks,” Fagundo Ojeda said.

So they created a “rainy day fund” for those struggling to pay utility bills — including water, internet, trash collection, electricity and heat.

The fund would be supported through a progressive public utility tax. They estimated that tax alone could pay for the bulk of their rainy day fund, but also noted additional funds could come from increased taxes on excessive water consumption.

Housing affordability is not just an abstract issue for Fagundo Ojeda and Knuckles.

Fagundo Ojeda wanted to live off campus, but found that with utilities, a downtown Salt Lake City apartment would cost close to $2,000 a month. Even living in one of the U.’s affordable units, he said, about 60% of his income goes toward rent.

Knuckles lives with his parents. “If I’m working full time and going to school,” he said, “I just don’t see it as a viable option for me to move out right now with rent as it is.”

“I am hopeful on some things,” Knuckles said, “but I think there’s a huge population of people, that I used to be a part of, that just don’t really see these issues.”

Improving awareness and empathy for affordability, Knuckles said, “would be the biggest way that we could make these plans politically feasible.”

“I don’t think these ideas are translating into electoral politics,” Fagundo Ojeda said. “I have a lot of optimism about Gen Z and the things that Gen Z can do.”

However, he continued, “there’s still a lot of people that are opposed to new ideas.”

Down payment financing

Ian Cahoon, 23, Sydney Donovan, 20, and Mario Ayala, 33, tackled homeownership affordability.

They wanted to help buyers purchase “a home in an area where the schools are better, or the neighborhood’s better or the actual building itself is better,” Ayala said.

Saving enough for a down payment is both difficult to accomplish and crucial to determining affordability of monthly mortgage payments.

In Cahoon, Donovan and Ayala’s plan, a homeowner would put just 5% down and an outside investor would contribute 15%. The owner would then live in the house for five years, and at that period of time the investor would receive a 7% return on investment while the owner would receive the remaining profits.

“The biggest risk in my mind,” Cahoon said, “is that the person can’t make the payments or the home is foreclosed on.” Or some natural disaster strikes, “where the homeowner loses their value in the house. But as a result, it also makes investment riskier for this investor.”

Reining in the vacation rental market

Emanuel Garcia Flores, 21, Nolan Martin, 20, Jeremiah Munn, 25, realized vacation rentals pose a huge threat to housing affordability.

Munn noted that other cities have tried to curb vacation rentals by setting limits, but that solution just resulted in “illegal short-term rentals.”

“What we ended up with was a fund where Utah could tax vacation rentals and curb the demand for vacation rentals in the state,” Munn said. “And create a fund for affordable housing, specifically for people with 60% area median income and under.”

Under their proposal, they’d tax short-term rental profits at 20%. Those taxes would then be used to fund new affordable housing projects in tourist towns like Park City.

“I think we are going to need to see some changes,” Martin said. “Especially in a place like Park City, that’s high demand with low supply.”

The three students noted a generational divide as well, and felt lawmakers might be wary of taking a “too-big step.”

Ultimately, they were optimistic about the ideas generated during the Hack-A-House, and about their own housing futures.

“Do I see myself as a homeowner? I want to say absolutely,” Garcia Flores said. “I mean, who wouldn’t want to be a homeowner?”

It’s just that achieving that, he said, is likely to be a lot harder than it was for past generations.

Editor’s note • The Clark and Christine Ivory Foundation is a donor to The Salt Lake Tribune’s Innovation Lab.