- [Jason] On this episode of the Hinckley Report, Utah's rapid growth has pushed housing to a breaking point.

What's driving Utah's housing crisis?

What policies and solutions are on the table?

And what do our experts say is next for Utah's housing future?

- [Narrator] Funding for The Hinckley Report is made possible in part by the Cleone Peterson Eccles Endowment Fund, and by donations to PBS Utah from viewers like you.

Thank you.

(triumphant music) - Hello and welcome to the Hinckley Report.

I'm Jason Perry, director of the Hinckley Institute of Politics.

Covering the week, we have Natalie Gochnour, director of the Kem C Gardner Policy Institute at the University of Utah.

Steve Waldrip, Senior Advisor for Housing Strategy to Governor Spencer Cox, and Steven Bond, founder of the Utah-based nonprofit, homeownershipforyou.org.

Thank you for being with us.

Such an important issue for us to be talking about today, and we're gonna dive into housing affordability in the state of Utah.

Where are the homes?

How much are they co going to cost?

Can we get them?

This is something we're all talking about.

One of the issues of our day in Utah, certainly our policy makers are talking about it, but you three in particular have your hand on the wheel of this one.

Natalie, can we start with you for just a moment about sort of the unique demographics of the state of Utah itself?

Because if it gets to housing affordability, we gotta start with how many people are here.

Give us a lens on that.

- Yeah, happy to do that, Jason.

So Utah has about 3.5 million people from the 2010 to the 2020 census.

We were the fastest growing state in the country, grew by 18.4% over the decade.

We think over the next 40 years, we will add another 2 million people.

So we'll get upwards of 5.5 million by 20, you know, 65.

But interestingly, if you picked a word that sorta summarized Utah, I think it would be growth.

It's been our constant companion.

We've had 33 of 35 years of net in migration to our state.

We're a destination state.

People like it here.

We love it here.

And it makes, it gives us a real challenge.

It's a super opportunity.

I mean, I love what growth does for our economy and for opportunity in our state, but make no mistake about it, it's a lot of work.

- Yeah, Steve, put on a couple hats you've had before.

You're right now responsible for this issue for the state of Utah as charged by Governor Cox.

You also as a legislator, hit some of these policy issues.

Through those lenses, talk about this growth as it relates to policy when it comes to housing.

- I think there are good problems and bad problems, right?

I mean, we could be a terrible state and no one wants to come here, but we're not.

We're an amazing state.

People wanna be here.

Talking about growth, look back to 2000, 2002, right before the Olympics.

Everybody's freaking out.

We're gonna grow too much.

It's gonna be a terrible place to live in 2025.

We're in 2025, we're here.

People still wanna come here.

We do it well.

- Yeah, we have the fastest growing economy in 2024.

- That's right.

- I mean, we're prosperous.

- We're doing it really, really well.

And I think that's the silver lining to all of this is we really know how to grow well, and we've managed it well as a state.

And I think we can do that going into the future.

- Steven, but we may be growing well, but are we building enough homes?

Let's talk about how this might work, 'cause we're number four in the nation, this sounds like, and building clearly not enough.

Talk about that when it comes to how well we are thinking about the future.

- Yeah, overall supply and increase of supply is, everything is helpful.

We want to see building happening, which it definitely is, but is the right product coming to market that's needed?

Right now, the median price of homes is almost six times the median income.

In a healthy market, it needs to be three times.

And so we need to get more inventory that's actually attainable for those who are the working class, that are supporting growing families, so they can stay in Utah.

It's one thing to attract them, but can we keep them?

And if we start exporting that talent and those families, that's actually not good for the society that we're trying to build here.

How do we, oh, go ahead, Natalie, please.

- Well, and to me, one of the biggest economic issues is we're a high home ownership state.

Maybe about 70% of Utahans own their home.

As prices get more expensive, Utahans get wealthier.

But there's a huge cohort that's shut out, that's left out.

And these are mostly young Utahans who can't break it in to the home ownership market.

And in doing so, they permanently, you know, relegate their wealth creation because they stay in a rental situation and don't start creating wealth over time.

And they delay home ownership by a decade or more.

And in doing that, they're permanently disadvantaged.

- The median home price, or the median age of the first time home buyer in the nation just hit 40.

- [Natalie] Think about that.

- So this is this principle that, and now I was just talking about, Steve, you talked about this a little bit too.

So put this into perspective for us.

So if it's 10 or 20 years longer for someone to get into a home, give us a sense of the long-term impacts of that lost wealth that's generated by having that home, the appreciation, et cetera.

- Yeah, I mean, you talk about your amortizing mortgage, you know, our traditional 30 year mortgage was kind of what we have always gone off of.

You talk back with what Steven's talking about.

For 90 years, three to one was the ratio.

Three times the median wage was the price of the median home.

And we're now in Utah closer to six than that.

So now you have two wages required for the same home ownership opportunity.

And you cut that, you cut 10 years off of someone paying off their house.

You're cutting off the part where people are paying down the interest on the front end, and then you get the benefit on the back end.

And we're shortening that backend benefit where people are really creating their wealth with paying down their principle, and really generating the equity that has come to define our country.

- Steven, you were talking about needing to build more and how we get to that point.

This is some information that, you know, Natalie and the Kem C Gardner policies put out.

But some of these counties, like Utah County over the next know several years, but right today, they need somewhere around 44,000 homes just in Utah County, Salt Lake County, 42,000.

As someone who is a developer but looking at these issues, talk about how we get to those numbers of homes that are not needed in the future, but are needed today.

- Well, we have to get to it in a more efficient zoning process as well.

The problem with a development plan right now is that it takes far too long to get an approval in place.

And if you delay one home a year to get to the start of that home and then get building it, you add $30,000 in cost to that home just by that one year delay.

The cost of the capital, the cost in the labor that's going to chase that development and the back and forth with engineers and with the city.

And so it's incredibly important that we streamline the zoning process, lower the costs of bringing a home to the market, and then make those those homes where they're derestricted to owner occupants, especially more of a buy right environment where if a developer comes and wants to provide a solution to home ownership, there should be a quicker path to that development to help that part of the market out.

- Jason, there's a really easy way too, I think, to understand the economics of this in the sense that, so we know we have incredible demand, population growth, an attractive state, prosperous state.

There's so many constraints to supply.

We have constraints in labor, we have constraints in product, we have even constraints in land.

I mean, this is a state with steep slopes, with large water bodies with a lot of federal land.

And so when you constrain supply and have all of this demand, price has to go up.

And that becomes a really challenging issue.

And for me, so I'm an economist.

I think of markets as the way to do things.

Governments aren't really good at doing housing, Steve.

Am I right?

- We'll mess it up.

- I mean, public... - Welcome to your job.

- Yeah, public housing has not been a great success in this country.

What do you do?

- Well, it's really what Steven's talking about.

It is empowering the private markets to do what they do best.

And we generally, as Utahans, believe in private market solutions.

That's kind of our core.

And we're, you know, so our job as a state really is to try to get out of the way as much as possible.

And we built in all of these artificial barriers that Steven referenced with zoning and planning, and other things that elongate that process to get to where you're actually putting a shovel in the dirt.

And you think about $30,000 per home.

There's no value in that.

- Nope, just hard costs.

- We haven't created any value so it is pure economic waste, which is really, as an economist, I'm sure you know, and that makes you want to wretch a little bit.

But we're creating all of this economic waste in our housing system that isn't producing better houses.

It's not producing better neighborhoods, it's not producing anything.

It is simply wasting money, - Raising price.

- And raising price, and it falls onto the consumer at the end of the day.

- Yeah, just one more piece on the economics of this, Natalie, can you give us this perspective because you have the cost of homes are greatly outpacing income in the state, even though our income has been increasing steadily in state of Utah.

Just talk about those two things and what they output us, and ends up being on homes and our ability to get them.

- Yeah, well, a way for me to, I actually have some optimism about this.

It'd be interesting if my colleagues here think that, but this is an amazing state.

I mean, we have, I mentioned, you know, one of the most fastest growing economies.

We actually have the highest household income after you adjust for cost of living in the country right now.

That's interesting.

We have the lowest poverty rate in the country right now.

And so, you know, the way I think of this is let's figure out how to empower the market in ways that are better, get outta the way.

But also, every Utahan has a responsibility to recognize this challenge and try to put us in a situation where our children have access to homes.

And part of what that means is you gotta be willing to take different types of development, higher densities, different products on the market.

You gotta be willing to, you know, not be in the not in my backyard category.

Am I singing your song, Steve?

- We have a really great living example of this.

Less than a hundred years ago, post World War II, the world, the nation was in a very similar situation.

Home ownership percentages were closer to 40% across the US, and there was this major emphasis where the local people knew that their kids were coming home from war, and they wanted to make families, and they became the Baby Boomers.

- And this is the story for a Salt Laker of Sugar House.

Am I right?

- Yes, Sugar House.

It's throughout our whole state, these beautiful little cottage communities that were affordable, efficiently designed, and can... They changed the construction methods at that time too, to meet the market where it needed to be.

And we need that kind of awakening moment today.

And we have a state doing some great legislation to try and pave that path.

We have cities attempting to also do the same, some successful.

And we just simply need to marry that all.

We need to facilitate the demand and provide the supply.

- So Steve, give us the high level and then we'll break down the pieces of this too.

Sugar House being one of these examples.

It seems like there's a time when you built neighborhoods, when that was what was happening, which seems like that is not what we see so much anymore.

Maybe some parts of the state, but not so much.

- We have some really good examples of very good density.

Daybreak in South Jordan, fantastic community.

They retain the vast majority of people that move from there, move back into that neighborhood.

So again, we know how to do it well.

We know how to create these opportunities.

But what's happened right now, and Natalie alluded to this earlier, we have redlining going on in our country right now.

We have a history of redlining.

We know what happened, we know what that produced in a generation of black Americans.

We artificially depressed their ability to own homes, and as a result, the social welfare that goes to the descendants of that population far outpace what should be happening there.

We've now done the same thing generationally.

If you're under the age of 30, you are redlined out of a home, not because of your race or color, but just because your age.

Because it is now unaffordable.

Because you can't make enough money to buy a home.

So all of a sudden... - And the neighborhoods won't let you in.

- Yeah, and again, we're talking about, you know, people being afraid of additional density and people being afraid of different types of construction.

- I was taught something earlier in my career.

I wonder if you all agree with this, but density is not the goal.

The goal is walkability.

The goal is affordability.

The goal is choice.

The goal is, you know, opportunity.

- And mixed economic environments.

You don't want to put every single economic class in one bracket into an entire community.

You want to spread it out and have a renter next to an owner, next to a business owner, and have them all working together, 'cause that's how the fabric of society actually really develops.

- Yeah, our healthiest neighborhoods are mixed income neighborhoods.

- There's absolutely an interesting economic point on that, Jason.

So we know that Utah has really favorable upward mobility.

That's the American dream, is upward mobility, and some of the best research on upward mobility talks about how integration is what creates upward mobility.

So integration by socioeconomic class, you know, to your point, - It's the social capital piece as well.

- Absolutely.

- So let's get into the mechanics of a little bit.

And this is right up your alley, Steven, 'cause you've referenced a couple of these things.

Talk about density itself through the lens that Natalie just gave us.

But it seems like this is discussion is happening in many of our cities right now.

They're all for density in someone else's city.

It seems to be a little bit of issue for their own.

So talk about the density, the permitting and maybe some of the local pushback we're getting on a variety of density, like town homes, and condos and apartments.

- Yeah, density's incredibly important, but it's a scary word.

It immediately turns into some people thinking, it's those people.

I don't necessarily always know what that means, but it's bad.

It means crime, it means issues, it means drugs, and it really doesn't.

It just means that people are actually more close to their jobs.

They're closer to the places they like to work.

They're closer to the places they like to shop.

And it builds community.

And so if you have spread density, meaning that you don't put it all in just one place, you can actually create multiple income streams coming into the same neighborhood, helping each other, becoming a part of the community.

And so you have one project, for example, that's 10 acres, and you have condos mixed with town homes, mixed with small single family detached homes.

And they're all in one community working together, learning together, growing together.

- And supporting that notion that ownership is the key that we're targeting this 70% home ownership target that we've lived with now in our country and in our state for the last 40, 50 years.

And it's created this wave of wealth.

There's $17 trillion of equity that is going to transfer in the next 20 years from a generation that owns homes to the next generation.

Unfortunately, that's not gonna be a broad pyramid transfer.

It's gonna be a narrowing transfer.

And so that creation of broad general wealth among our middle class is what has created our society, and that's what's at risk.

- Yeah, Jason, I have another kind of growth lens, if that's okay to put on this.

I just thought of it as you were talking, Steven.

So I mentioned we're adding two million more people.

Let's think about this for a minute.

So Utah County, it currently is about 750, 760,000 people.

In four decades, it's gonna double.

So just think about it.

You're adding 770,000 more Utahans to Utah County.

They need a place to live.

I can go to Wasatch County where Hebra is.

We project that to be the fastest growing county.

They will more than double.

And then if I go down to Washington County where St.

George is, they don't double, but they almost double.

I think they're at about 250,000 people today.

They add 180,000 in our projections.

So if you start thinking about that, where are we gonna put these people?

How are they gonna live?

And what you start to learn is it's not just growth.

It's change.

You know, we're gonna change as a state.

We become more urban, we become larger, we become more diverse.

We get older.

And that's the new Utah.

That's where we're headed.

And I think it's really smart for today's leaders to be thinking a lot about how we change.

- When and to the point of what are we scarce at?

We're scarce at other resources, like water.

And if all you approve is quarter acre lots, the largest use of water is landscape, not humans.

And so we have to consider that as we're talking about these humans are coming.

Are we gonna give 'em all quarter acre lots and actually completely deplete our water supplies, or be more efficient in how we plan that water system with our real estate growth?

- Yeah, and we don't even have the water, frankly, to do that.

I mean, that's not even a realistic goal.

We just don't have it.

So we have to think differently about how we're going to grow.

- Another way I think of it just, you know, for an economist and for someone who works at university, the answer is always education.

But if we, as we change, we have to prioritize education.

'cause education is what will give people the means and the income to pay for these things.

- One more note on this, Steve.

We talk about it.

That's the pure cost of housing.

Building the homes is going up too.

Talk about that for just a minute because on top of all these other factors, that seems to be something that's also not going away.

- Yeah, we had a huge run up in price due to COVID.

That is not coming down.

We had a little regression in some of the commodities, but commodity prices are staying high.

Labor prices are staying high.

We've got immigration pressures now, which impact our construction workforce.

We've got tariff pressures now coming on.

The creation of all of that uncertainty when we look at the number of houses we're building, and this goes back to, you know, we're number four, but we're not hitting the mark yet.

We're falling behind.

We're gonna fall behind this year somewhere in the neighborhood of between six and 10,000 units less than what we need just to keep pace, and that's not even catching up with our deficit.

So the introduction of that uncertainty has really impacted the ability of builders to build.

- It's easy to think of the tariff impact, 'cause we know that Canada has great resources in lumber, timber, so that affects the cost of the home.

And then our neighbor to the south, Mexico, has a lot of gypsum and things that lend to drywall, another great, another important input in the home.

So it's not helping.

- A positive is the oil has come down and that affects a large part of the supply chain of construction.

And so a lot of those materials hopefully should see a positive trend.

It is dynamic though, incredibly dynamic right now as you're going to bid out projects.

- But I think that the end result of that is we're not going to, we're not forecasting a huge drop in the cost of housing.

The cost of housing is kind of where it is, and we'll see little fluctuations, but we don't see this foresee this huge cliff where we're gonna just all of a sudden become super affordable.

- Steve, you'll know the number exactly, but we're the ninth to 10th most expensive housing market by the measure there is a median price of a single family home.

500 and something thousand dollars, - $550,000, - 550.

- And that's just raw numbers.

We're more expensive than Connecticut and other states, where you're just going, wow.

- Yeah, you think of the coast as being expensive.

You know, you don't think of an interior western state as being the ninth or 10th most expensive housing market.

And yet we are, and it's a function of supply and demand, and what's happened in this state.

- What's a function of a great place to live?

I mean, is it a function of the draw?

We have people wanting to be here, but the challenge is now how do we keep our kids and grandkids here?

How do we provide those opportunities?

And one of the biggest things that you hear when you go to a local meeting and you hear about, we're gonna add some density or we're gonna do something different.

We're gonna add town homes or condos.

And people get really anxious about it and they say, "You're gonna change my way of life.

"You're changing my neighborhood.

"You're changing the way of life."

And and my rejoinder to that has always been the fastest way to change your way of life is to export all of our kids and import all of their replacements.

That will change the way of life of our state faster than anything else we can do.

- Do you have a comment on that, Steven?

- Well, to the point of also the types of housing that we build, it's very expensive.

And the cost of the materials we don't expect to go down very much at all.

It's a pretty fixed state.

However, we build larger square footage than any other state in the nation by almost 400 square feet larger than the next closest state.

And so do we need 5,000 square foot homes for two people that are retired?

And we have a lot of those throughout Utah.

And so we need to just rethink what is an acceptable beautiful floor plan that meets the needs of Utahans.

- Going back to post-World War II, what did we build?

We built thousand square foot homes.

And you know, my grandma's cupboards were very thin.

They weren't soft close European hinges.

You slammed them, and if they didn't have the rubber things on the back, you could hear it throughout the entire house.

- I wanna get into a couple items of what we can do.

Some things we'll see this legislative session, some things that we are trying to implement from this past session.

And so Steve, you've been working on this statewide strategic housing plan.

I wanna get to a couple pieces that are connected to that.

And we're gonna have to start talking about the local, the local cities, what we do with the cooperation there too.

But let's start with this $300 million in statewide loans that was intended from our legislature to get people into those first homes.

Talk about that program from just a moment.

- We initially intended that to be used by builders and developers who are willing to build the smaller things on smaller lots.

What we found is that the lenders have not jumped on board in the way that we hope they would.

Last year we made some adjustments and we made it available for the Utah Housing Corp to do it for condo creation.

And we now have three applications in sitting at Utah Housing Corp right now with new condos.

100% owner occupied, deed restricted for owner occupancy, and for sale at a fixed price below market.

So that will now take up some of the use of that.

We're looking at other options to utilize that to create, frankly, smaller things on smaller lots, but with a determined focus on home ownership.

- Okay, let's talk about the cities.

Steven, this is something you know quite a bit about.

This idea of what our legislature, our governors talked about it a little bit too, statewide zoning preemptions, we just give our viewers a little flavor for this.

A lot of these decisions on density, et cetera, happens in the city itself.

Talk about that for just a moment because there is talk about forcing the hand of these cities when it comes to these issues like density.

- Yeah, it's a little tenuous of a topic right now, depending on who you're speaking with.

But right now, what's misunderstood across the state is that the zoning rights are actually held by the state, and allowed to be used by the cities, which has been the process for, I don't know, Steve, how long has, forever, since Utah's been around?

- Five years, yeah.

- And so it feels like that is the way.

Unfortunately though, that allows what we call the NIMBYs to have the actual zoning voice, which is not in my backyard.

That belongs in their city.

But if every city's pointing to the next city to solve the problem of housing, nothing gets done.

And so it takes a lot of political will at the local level.

To your point, what is preemptive zoning?

It's the state taking back that zoning right to allow for the solution to take place throughout Utah.

And I believe it's not going to be a heavy hand and a force, but there's going to be a little more of a collaborative effort to truly provide a solution mechanism to increase ownership throughout Utah.

Not just forcing high-rise 20 story buildings in every nook and cranny that they can fit it in.

And I don't think that that's what's going to happen with this, so.

- One thing I'd love to see is, we use the term, surplus lands, but the Utah Department of Transportation, many school districts, cities and towns, they actually own land that could be deed restricted for affordable housing.

And it's surplus, in the sense that it's not meeting a transportation need.

It's not used.

And I'd love to see more activity there.

Think of all of the park and ride lots that connect our transit system in urban Utah.

A lot of those park and ride lots could have different types of parking and a lot of housing put there that would serve a public need.

I know you like that idea as well.

- Yeah, those are two focal points.

And again, I think when you talk about the not in my backyard crowd, they're reacting emotionally but rationally.

And so part of the challenge is just getting people to step back from that lens and say, "Okay, how are we going to solve this problem?

"Can we produce the type of housing "that we need for our kids and grandkids "and provide that ownership opportunity?"

- And using non-productive public lands is a really, really efficient way to do that, and that's something that will be tackled in this next election.

- Yeah, we have about 30 seconds now.

Maybe just follow up on that last piece right there, 'cause there's even talk about federal land that's in city boundaries being used for some of these projects.

- Yeah, I don't see any reason why our federal government should be owning land within municipalities.

This is a state that has two thirds of its land already owned by the federal government.

If the feds have land within municipal boundaries, we need to put it to affordable housing.

- The last comment on this legislative session, are we gonna see this preemption thing?

Because that's a novel idea we've heard that the state may occupy that, in the last 10, 15 seconds.

- I don't think we'll see anything significant.

I think we've got a legislature that's very concerned about protecting local rights.

I think we'll see a lot more collaborative effort, but having that sorta hammer behind the back is important to make sure that everybody's coming to the table as an honest broker.

And we've had really productive discussions with our city partners.

- Thank you all for your insights on this important issue.

And thank you for watching The Hinckley Report.

This show is also available as a podcast.

Thank you for being with us.

We'll see you next week.

- [Narrator] Funding for The Hinckley Report is made possible in part by the Cleone Peterson Eccles Endowment Fund, and by donations to PBS Utah from viewers like you.

Thank you.

(triumphant music) (upbeat music)