Why you should care
The Beehive State’s homes are the fullest in the U.S., and with more people moving there, it faces a unique challenge.
James Wood and his wife have owned their four-bedroom home in Salt Lake City for 45 years. But they’re no longer empty nesters: As local housing prices climbed, Wood’s pregnant granddaughter, her boyfriend and their son moved in with him so they could save money for a car.
The family’s pressures aren’t unique — they’re merely symptoms of an opportunity evolving into a unique housing crisis in Utah. The state’s population grew by 14.4 percent over the past eight years, faster than any other state, according to Census Bureau population estimates. And that’s increasingly because of migration, which contributed 43 percent to the state’s population growth between 2015 and 2018, compared to 16 percent in the previous four-year period. The state capital is drawing plaudits as a “boomtown” and surrounding Salt Lake County had the state’s largest numerical population growth in 2018.
Experts credit the region’s attractive labor and business conditions as a draw for transplants, plus a thriving tech sector. Geographic advantages offer easy West Coast travel and year-round access to the outdoors for nature lovers priced out of San Francisco, Los Angeles and Seattle. But experts warn there’s growing evidence that Salt Lake City is also heading toward a housing affordability crisis that could stymie its growth before it could ever come close to those other cities.
Statewide home values climbed 14 percent over the past year, nearly double the growth rate of U.S. home rates at 8 percent, according to real estate website Zillow. Utah’s household income is rising at 0.4 percent annually, while housing prices are increasing much faster at 3.3 percent, according to the University of Utah’s Kem C. Gardner Policy Institute. For the first time in four decades, Utah is facing a housing shortage — of 54,000 units, according to the Salt Lake Chamber, the state’s largest business association. Households around or below the median income — often including teachers, nurses or firefighters — are disproportionately vulnerable, says Jen Horner, a realtor at the brokerage RE/MAX Masters in Salt Lake City. While one in eight Utah households spends more than half of its income on rent, that likelihood jumps to one in five for those under the median.
Salt Lake City could be a next California [in terms of unaffordable housing].
Wendell Cox, Demographia
In itself, a growing population leading to a housing shortage isn’t unique to Utah. Even beyond the U.S., European cities jostling for a slice of London’s financial sector due to Brexit face housing and public infrastructure challenges. But Utah is staring at a housing double whammy no other American state has to tackle. At 3.19 persons per household, Utah already has the largest average household size in the nation, according to the Gardner Policy Institute, where Wood also works as a senior fellow. Normally, doubling up with relatives or friends is a coping mechanism when housing is unaffordable, suggests Wendell Cox, principal of Demographia, a public policy firm. In Utah, that’s compounding the existing crush for space. A Gardner Policy Institute report indicates that if Utah’s housing prices and household income rise at the same rate as the past 26 years, housing affordability in 2044 will equal that of San Francisco’s current market. Salt Lake City’s home prices are already 20 percent higher than comparable cities like Boise, Las Vegas and Phoenix.
“Salt Lake City could be a next California,” says Cox, and he doesn’t mean that as a compliment.
In Wood’s home, there are the expected kerfuffles over who’s cleaning up after whom, or not doing their share of dishes. Wood says he and his wife enjoy the extra company, while his granddaughter and her boyfriend get to save. But a 2016 Harvard study suggests doubling up with extended family or non-kin is associated with lower educational attainment and greater likelihood of obesity for children.
A key reason for Utah’s unparalleled household size is its traditionally high fertility rate. Even today, only South Dakota is more fertile among U.S. states. But that statistic masks a shift. Utah’s fertility rate of 2.1 children per woman is currently at an all-time low – it was 4.30 children per woman in 1960.
Declining fertility rates only underscore the central role of migration as the driver of Utah’s recent population boom. Annual net migration stayed below 12,000 people between 2011 and 2014 but jumped above 21,000 beginning in 2015, according to Utah Population Committee (UPC) estimates. Utah competes well in terms of labor quality, supply and costs, and skews younger than the national average, says Wood. Then there’s the low cost of labor: Utah’s average yearly wage is roughly 15 percent below the national average, according to Bureau of Labor Statistics data.
Lower wages aren’t good news for workers, but Salt Lake City’s cost of living is 16 percent lower than in Denver, 37 percent lower than Seattle’s and 48 percent under San Francisco’s, according to PayScale. The state — often led personally by Governor Gary Herbert — pitches its advantages well to firms considering relocation, says Joe Vranich, whose consulting firm helps small businesses looking to move. “They will roll out the carpet for you and treat you like a king.” The approach is working. Utah’s “Silicon Slopes” — dubbed by Josh James, founder and CEO of Domo — houses a cluster of information technology, software development and hardware manufacturing firms like SanDisk, IM Flash Technologies and EA Sports. The state is home to top private cloud company Qualtrics.
Geography helps too. Flying from Salt Lake City to San Francisco takes just under two hours, a major consideration for tech companies considering relocation, Vranich says. Truck drivers can reach the West Coast from Salt Lake City overnight (trumping Denver). Quality of life appeals too: The Great Salt Lake and snow-tipped mountains of the Wasatch Range border Salt Lake City, promising four-season access to hiking, biking, skiing and kayaking. On the flip side, outward growth and developable land are limited because the state is surrounded on all sides by mountains, lakes and federal lands, says Horner.
In 2018, the Salt Lake Chamber launched the Utah Housing Coalition, which is leading a public-awareness campaign about increasing home prices and dipping affordability. The kickoff meeting brought elected officials, developers, bankers and other stakeholders together. Chamber officials intend to visit each city council in Utah, while advocating for streamlined local fees and zoning ordinances to permit a combination of housing types. High-density construction, by “building vertically up,” could address the issue while accounting for Utah’s unique geography, Horner says. An increased percentage of new development is being allocated toward affordable housing for lower-income families, she says.
Back at Wood’s home, his granddaughter hopes to own a house someday, likely a year after her baby is born. Wood says he and his wife would help her look for places and pitch in on the down payment if needed. Such family support might be the only way out of doubling up for many in Utah. The state’s dreams of prosperity through its rise as a tech hub are already beginning to unravel.