What is causing high home prices? | Opinion

When 76% of Utahns are unable to afford a median-priced home, we’ve reached a point of crisis. If current trends continue, up-and-coming Utahns won’t have the same opportunities as prior generations to enter homeownership, they won’t have adequate space or financial capacity for a family, and they won’t be able to build intergenerational wealth. 

But with some changes to our zoning ordinances, we can promote better affordability. And we can do it without sacrificing quality of life in other ways. 

First, it’s helpful to put the housing affordability problem in context.

This is a nationwide problem, although Utah has seen higher cost increases than most places. The root of the problem is that housing units haven’t kept up with high demand. 

That demand isn’t just people moving in from elsewhere (many of whom were born in Utah in any case), it’s also our own kids — Utah’s millennial and Z generations are a far larger percent of our population than is the case in the rest of the country. 

At the same time, multiple factors have constrained the construction of housing, including labor shortages, land and materials expenses, and, more recently, high capital interest rates.

The result is like a game of musical chairs. If you don’t have enough chairs, some people are left out, and the cost of the available chairs goes up. 

When there’s a shortage of homes, some people are forced to double up (maybe by living in their parents’ basements), and others experience homelessness. Many others settle for something much smaller, or farther away, than they’d like.

The solution is simply more housing — of all kinds. Even luxury, expensive units help, because the people who move into that housing open up homes for others. In fact, new homes will typically be more expensive than existing homes, but the new supply is critical. But if we can build more affordable new units, that’s even better. 

So how do we stimulate more housing? That also has a simple answer: make it cheaper and easier to build. One key factor is government regulation, or zoning. 

National research is clear: There is a strong correlation between strict zoning regulation and housing affordability. Areas with higher regulation tend to have lower permitting activity as well as higher prices. The converse is also true — less regulated markets often have more affordable homes.

Of course, most zoning regulations exist for a reason, so we should target reforms for those regulations that have the highest impact on cost and the lowest public benefit. 

Luckily, national research, local stakeholder discussions and Utah public opinion all point to the same three reforms: allowing smaller lots, allowing more units on the same lot or in the same building (e.g., a duplex, town home, or basement apartment), and allowing the highest densities in mixed-use centers, which are places with housing, shopping, jobs and other destinations arranged close together in a walkable design. 

Utah has made some progress in decreasing required lot sizes, but we’re still, at about 10,000 square feet per new lot, far higher than where the market would go in the absence of zoning regulations. Putting the exact same home on a 5,000 square foot lot rather than a 10,000 square foot lot can reduce the home price by 22%, while doubling the number of new units built. Yet, of 35 local governments that were sampled in a recent Envision Utah study, only nine allow lots less than 7,000 square feet in any single-family zone. The result is that starter homes are essentially illegal.

Builders have developed very attractive new homes with multiple units in the same building, in many cases designed in a way that looks like a large single-family home. These types of units form excellent starter homes for young families that start building equity. Yet this type of housing product is permitted by-right in less than 22% of zones that were surveyed.

Finally, areas with jobs, retail and other destinations are excellent places for higher-density housing like condos, apartments and smaller town homes, particularly when there’s good public transportation nearby. Not only does this kind of design reduce traffic impacts, it also makes it much more feasible for residents to get by without a car or simply by driving less. Yet less than half of local government codes that were surveyed allow any type of housing in commercial zones.

Envision Utah recently released a comprehensive report on housing affordability in Utah with 13 recommendations for zoning changes that will help put more housing within reach of more households. 

Changing zoning alone won’t solve the housing affordability problem, but it’s a clear step we can — and should — start to take.

Ari Bruening is the president and CEO of Envision Utah, a nonprofit that facilitates discussion to identify solutions to Utah’s growth-related challenges. He has almost 20 years of experience in land use planning and zoning.