SALT LAKE CITY — A new study paints a dire picture of the housing situation along the Wasatch Front: demand is up, creating higher prices, but wages are not, setting the stage for a shortage of affordable homes.
Natalie Gochnour, Director of the Kem C. Gardner Institute, says since 2000, incomes have gone up just 2.2 percent in Salt Lake County, compared with a 4.7 percent increase in the median price of a home.
“We have this gap between what our incomes are doing and what our housing prices are doing,” Gochnour says.
In this page from the May 2018 Housing Report, the Kem C. Gardner Institute illustrates the disparity between increases in housing prices and wage growth.
Gochnour says the research illustrates what anyone who’s been trying to buy a home already knows right now: prices are way up. For example, in 2000, the median sales price of a single-family home in Salt Lake County was around $150,000. In 2016, that same home was likely to sell for closer to $295,000. In the same time frame, median household incomes went from just over $48,000 to just shy of $69,000. The trend for the entire region, from Weber to Utah Counties, is similar. Researchers with the Kem C. Gardner Institute warn that within another generation, it could cost $730,000 to buy a home.
Part of the reason behind the crunch is Utah’s success. Gochnour says since 1991, Utah’s had the fourth fastest housing price increases of any state.
“One of the biggest reasons is strong demand that comes from our population and economic growth,” Gochnour says.
Clark Ivory, CEO of Ivory Homes, worries about the implications.
“If we become a state or a city that is not considered affordable, we price ourselves out of the market, and we will see jobs going elsewhere,” he says. “I am concerned about northern Utah County. They are not prepared to handle the growth, and the biggest issue will be transportation.”
Dan Lofgren, President and CEO of Cowboy Partners, a firm that specializes in multi-family and mixed-use housing developments, described affordable housing as the key to economic development.
“Education, healthcare, crime, you pick the category, and I can tell you a story about how affordable housing or the lack of it has an impact there,” Lofgren says.
Even rental property has become out of reach for many families, because there is a shortage of available rental space. The researchers say 30 percent of all Utah housing is rental property, but fewer rental units are available than there were just a few years ago. In 2005, Salt Lake County’s apartment vacancy rate was 6.1 percent. In 2017, it was just 2.7 percent.
“At some level, it is about reaching out to those in need. It’s about all of us in the room who lean in and help resolve that challenge,” Lofgren added.
