What is the problem with housing affordability in Utah?

May 4th, 2018|Issue Update|0 Comments

Housing Affordability Matters

by Kathy Abarca, Summer Practicum Fellow at Action Utah

On May 1st, 2018 a report on housing affordability from the Kem C. Gardner Policy Institute, in partnership with the Salt Lake Chamber, was announced. The report reviewed the state of housing affordability in Utah. Unfortunately, the report does not deviate from previous warnings about lack of affordable housing. This
is what we learn from the report:

The bottom line is there is not enough housing in Utah, what is out there is unaffordable
to many, and we are not building affordable homes at a rate to meet needs.

According the census, Utah became the number one fastest growing state in the nation in
2016. For the first time we have households outnumbering housing units. In the past six
years, Utah added 162,300 households while only adding 111,455 housing units.
Furthermore, we are not currently on course to build the 28,000 units necessary in 2018.

Adding to the situation is the historical gap between household income increases and
median sale price increase. Annual household income increased by .36% while median
sale prices have increased by 3.3%. Currently, a $10 an hour worker would need to work
91 hours a week to afford a typical two-bedroom unit.

Additionally, housing prices are expected to increase, as are interest rates. Both increases
are a threat to homeownership opportunities. If prices continue to increase as they have
the past 26 years then the median price of a home in Salt Lake and Provo-Orem will be
$1.3 million.

Housing affordability is complex because of many factors, such as:

  • lack of construction laborers
  • rising housing prices
  • rising interest rates
  • rising costs of development
  • wages not keeping up with costs

Why does it matter?

Lack of affordable housing hurts Utah families. Households below the median income
line face a 1 in 5 change of being classified as severe housing cost burdened where at
least 50% of the income goes toward housing. Compare to households where the income
is above to median then there is only a 1 in 130 of being severely cost burdened by
housing. For Utah families who are struggling, current benefits may not be set up to help
them. Even with benefits such as HUD section 8 housing vouchers, tax credit rentals, and
rural development programs 75,000 renters still have no rental assistance.

Lack of affordable housing may hurts Utah businesses down the line as well. Utah
competes with Boise, Las Vegas, and Phoenix for new business expansions. However,
our two largest metropolitan areas are already priced 20% higher than home prices in our
competitors’ metropolitan areas. This gap may make Utah less competitive for housing
businesses.

What is being done to address it?

In the most recent legislative session, legislators opted for further studies, creating a
commission concerning housing affordability, taking $6.6 million out of the state’s
budget to fund homeless shelters, and diverting sales tax money from cities that don’t
have homeless shelters to pay for costs of cities hosting shelters.

Further reading

https://jobs.utah.gov/housing/publications/documents/affordablehousingreport.pdf
http://gardner.utah.edu/wp-content/uploads/May2018HousingReport.pdf
http://envisionutah.org/envision-utah-blog/item/418-utah-housing-shortage
http://nlihc.org/oor/2016/utah

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