Commentary: High density will just make Utah housing crisis worse

(Francisco Kjolseth | The Salt Lake Tribune) Construction at the former Granite Furniture in Sugar House continues at a quick pace as the new Sugarmont Apartments take shape on Tuesday, May 22, 2018. New census data show that Salt Lake City has surpassed 200,000 residents, and again is the state's fastest-growing city by numbers. It added 5,891 residents between July 1, 2016, and July 1, 2017.

Developers run this state. It’s not a surprise that they want the public to believe we have a housing affordability crisis that can only be solved by high density.

High density, in a majority of cases, means higher profits for developers and builders. They can minimize the amount they invest in development costs and fees while maximizing the units and square footage they can sell. The current strategy being pushed on Capitol Hill is convincing the Legislature of Utah that minimizing impact fees, zoning ordinances and other permit costs will help increase affordability. In layman’s terms, that means pushing costs onto taxpayers and reducing their own out-of-pocket investment.

What these developers do not want you to know is high density, as a solution to affordability, does not work. An examination of nationwide affordability data and population density shows a clear correlation between high-density housing and astronomical housing prices. Simply put, the world’s biggest cities that have attempted to “build up” their way out of soaring home prices have failed miserably.

The Median Multiple is an affordability indicator used by a number of the world’s largest financial institutions. It divides the median home values by median income in order to determine the affordability of home ownership in different areas, relative to their variations in income levels. Using U.S. Census data, the Cato Institute examined a number of U.S. cities, evaluating the relationship between density and affordability. What the data show is a clear and inarguable negative correlation between population density and housing affordability.

A majority of the highest-density urban areas like New York, San Francisco, Seattle, Portland and others have seen rapidly increasing house prices. At the same time, the Cato Institute points out that some of the fastest-growing urban areas, such as Dallas, Atlanta, Omaha and Raleigh, have remained affordable. They have all found ways to grow out, not up.

Even the Salt Lake Chamber of Commerce, a Who’s Who of developers and builders, cannot present data that support high density. In a recent social media post, the Chamber identified that “Utah’s home prices are 20 percent higher than cities like Boise, Las Vegas and Phoenix. Our cost of living is now letting some of our top competitors edge us out in attracting new jobs and businesses.”

Not surprisingly, the population density of these “competing” metropolitan areas is at or below that of Salt Lake County, clearly establishing they are not using high density to champion affordability.

The question again is why so many people continue to ignore the reality that high density does not make housing more affordable. The answer is money. Developers can build and sell more on less land at a higher cost per square foot. This means a greater return on investment for them and higher-priced square footage for buyers. In turn, this will ultimately increase the cost of multifamily housing while doing nothing to reduce the prices of single-family homes.

The shortage of affordable single-family housing means that households currently living in smaller, more affordable homes won’t sell because they have nothing to “move up” to. This corroborates information from the Gardner Institute report that the biggest concern for the Utah real estate industry is lack of existing home inventory.

Call the high-density opposition what you would like. The truth is we are not neighborhood busybodies. We are not citizen mobs. We are not NIMBYs who will accept nothing but low-density, single-family homes on sprawling 1-acre lots.

The reality is we are logical thinkers, driven by actual data and research. We want affordability, but we support methods proven to work and not those proven to fail.

Justin Swain

Justin Swain is an executive account manager for a Utah-based software company and a member of Utah for Responsible Growth, a citizen organization dedicated to responsible growth and sustainability.