Jeffrey D. Allred, Deseret News
Equity Utah President Troy Peterson looks over a house he is selling in Holladay on Friday, Aug. 11, 2017. The Salt Lake Board of Realtors reported Thursday that Wasatch Front existing home prices reached their highest point ever during a second quarter period, with the median single-family home price climbing to $300,000 — up from $275,000 the same time last year.
The price for a single-family home along the Wasatch Front is at an all-time high. Last year the median cost hovered around $275,000, and, today, it’s at $300,000, according to the Salt Lake Board of Realtors.
The problem of rising prices, especially for single-family “starter” homes, shows no sign of abeyance. With a young population, there’s a high demand for smaller homes. Meanwhile, Utah’s aging population overwhelmingly prefers to stay put as they age. The imbalance between supply and demand is further exacerbated in Utah by an influx of move-ins as a result of the state’s robust economy.
We have in the past discussed the potential social costs of families priced out of home ownership. Not only is a home a shelter, but it also has a stabilizing effect for child rearing and is one of the primary means by which American households amass wealth. The numbers at the family homeless shelter make it clear that too many have been priced out and put on the streets.
In an effort to solve these problems, we have called for more home construction and affordable housing programs. These solutions still make sense. But with regard to new construction, especially of single-family homes, builders are unlikely to develop a large number of new units unless present levels of land prices and labor decrease. For some interested developers, the current profit margins don’t make sense.
Since wages are on the rise, the best way to incentivize new construction is for the officials to collaborate in expanding infrastructure, especially transportation, to places where land is listed for less. Another way to increase the supply of single-family homes in the market — and thus stabilize single-family housing prices — is to incentivize homeowners interested in downsizing, as well as those interested in upsizing, to sell and make the move. This would, in effect, help to free up a greater supply of single-family homes to more fully satisfy demand, thus helping to keep prices down.
At a time when building larger luxury homes or housing complexes makes more financial sense for developers, Utah will have to think creatively to maintain the quality of life that makes it an attractive place to raise a family and achieve homeownership.
While new construction and affordable housing programs are needed, with the right incentives Salt Lake and Utah counties could in fact free up a greater supply of single-family homes to offset the current imbalance between supply and demand in the state.
Utah is at an important crossroads with a vibrant economy, a young population and an expanding workforce. It will take wise policies to maintain growth while enhancing the state’s quality of life, a central component of which is keeping homeownership in the reach of middle-class Utah families.