2023 saw far fewer building permits in Utah, report says
Mar 27, 2024, 2:00 PM
FILE: Single-family homes under construction in Saratoga Springs are pictured on Tuesday, July 19, 2022. About a year after this photo was taken, building permits were down 20%. (Kristin Murphy, Deseret News)
(Kristin Murphy, Deseret News)
SALT LAKE CITY— Utah is seeing a massive decrease in the number of building permits issued. And in turn, a lot less new housing is going up.
According to analysis from online real estate search company Point2, Utah issued more than 25,000 building permits in 2023, nearly 20% less than in 2022.
The Ogden-Clearfield metro area had the biggest percentage decline year-over-year, nose-diving by 34%. Building permits in the Provo-Orem metro area dropped 25% from 2022 to 2023.
Salt Lake City saw a 7% decrease. St. George dropped 11%. Logan saw a 7% decrease in building permits.
Why this is happening
Dejan Eskic, a senior research fellow at the Kem C. Gardner Policy Institute at the University of Utah told KSL NewsRadio that interest rates are the main driver to the problem.
Between Utah’s median home price being well over $500,000 and interest rates still over 7%, Eskic said only about 25% of Utahns today can afford the median-priced home in the Beehive State.
And it’s not just people being priced out, so are builders. Eskic said builders have to hike their prices to make a profit, and since they can’t find enough buyers they are simply building less.
“Developers aren’t building it because … they can’t sell it,” Eskic said. “People are just priced out.”
Eskic said the drop in building permits has been a trend in Utah since 20222.
What’s the solution?
Eskic said some new state programs and zoning amendments to allow for more, and smaller, homes, are helping. But it will take more than that to solve the problem. He said the main issue is interest rates.
Eskic said even if rates drop it could take a couple of years for the situation to improve. Even then, nothing is guaranteed.
“It’s a complicated problem and there’s no silver bullet,” Eskic said. “It’ll take a lot of different levers for it to get in the right direction.”
Other reading:
- U.S. homebuilding sees biggest drop since April 2020
- Utah needs 178,000 homes to meet projected demand, entry-level housing can help
- Utah home prices not likely to fall soon, says real-estate expert
