Utah needs 178,000 homes to meet projected demand, entry-level housing can help
Nov 6, 2023, 10:00 PM
New single family homes under construction in the South Jordan area of the Salt Lake Valley on Monday, Sept. 11, 2023. (Scott G Winterton, Deseret News)
(Scott G Winterton, Deseret News)
SALT LAKE CITY — Utah will need thousands of new homes to keep up with demand over the next several years. The state especially needs entry-level housing.
“When you look at what is supposed to happen with our population, by 2030 we still need to build 178,000 units just to meet our projected housing demand,” said Deanna Devey with the Utah Association of Realtors.
She said right now there are about 15% fewer homes on the market than at this time last year. She blames the shortage on people holding onto their homes because they don’t want to give up their interest rates.
“We’ve got 72% of existing mortgages in Utah that have interest rates less than 4%,” Devey said. “We actually expect the housing shortage to grow both this year and in 2024.”
Devey said we were making some headway toward decreasing the shortage before building slowed because of the economy. Devey said the shortage is why the Legislature created a program to give $20,000 to first-time home buyers.
“That program would be for homes under $450,000, new construction, and the goal of that was to incentivize new construction for that starter home, to really emphasize that’s the type of home that we want to build,” she said. “And that is the type of home that we’re missing.”
Utah is missing entry-level housing
The shortage is being felt the most in smaller, lower-priced homes often purchased by first-time home buyers.
Devey said there are some programs aimed at getting manufacturers to build these kinds of homes, but that’s not enough.
“We need entry-level housing,” she said. “What’s happening is people who would normally put their houses on the market, they’re not doing that and so it’s really hard for the first-time home buyers because that housing stock that they would normally buy, homeowners are holding on to and you’re just not seeing the housing inventory.”
She has conversations all the time with people wondering how their children are ever going to be able to afford a house.
“We need to think about how do we house our children and our grandchildren because homeownership is a pathway to gaining wealth long-term,” Devey said. “When you look at net worth of homeowners versus renters it’s a substantial difference. And so you want to help people be able to make that leap to become a first-time homebuyer and we need to be able to have enough housing to do that so that they can … become that first-time homebuyer and start building that equity.”
If we’re going to get over this shortage, she said “cities need to be willing to allow small-lot single-family homes.”
“So if you have higher density that makes the price of the land less so that they can build more units per acre,” Devey said. “That will help a lot.”
