Utah's Housing Market Is Thriving Despite The COVID-Induced Recession
Despite the coronavirus pandemic causing record unemployment and plunging most of the economy into a recession, housing is still a booming business in Utah.
Construction has become the fastest-growing major industry in the state and home builders set a record for new housing permits the first six months of the year, according to research released Wednesday from the Kem C. Gardner Policy Institute.
The report said that through June 2020, Utah approved the highest number of housing construction permits on record, with 13,792 units. That number marks a 1% increase from last year, and 109 more units than the previous record set in 2005.
“In my 24 years, this is the hottest market I’ve been in,” said Boyd Martin, Utah division president for D.R. Horton, one of the largest housing construction companies in the U.S. “It surpasses the great runup before the  crash.”
Most of the increases were in condo, townhouse and duplex construction, which went up by almost 18%. Single-family houses remain on top, however, accounting for just under half of all the new permits.
Speaking at a panel on Utah’s housing market Wednesday, Gardner report author Dejan Eskic said one of the main reasons the housing market has stayed strong is demand.
The state has had a housing shortage stretching back a decade. And while rapid construction has begun to close the gap from its high of 56,473 units a few years ago, the state still needs to build about 53,000 more to keep up with demand.
Another issue is that fewer people are selling houses. Eskic says the number of listings fell in April, coinciding with rising COVID-19 cases. And as of August, the state had fewer than half of the listings it normally has on the market.
“The housing shortage is an issue as it is,” he said. “Now, you took away half the units that are for sale usually. That stresses the market.”
Combine those forces with low interest rates — incentivizing more people to buy homes — competition only gets more intense and prices are driven up. Eskic said the median price for a single-family home in Utah went up 10% since April alone, now at $399,000.
Dave Robison, president of the Utah Association of Realtors, added that a lot of the demand is coming from people moving to Utah from other states, and mostly from people looking to live in the places they buy as opposed to second home buyers or investor groups.
Martin said one of the major hurdles to reducing housing prices is building more housing. While many point to increasing density as a key solution, it’s faced major challenges, both from restrictive zoning laws and opposition from local leaders and residents.
It’s a sensitive issue, according to Tara Rollins with the Utah Housing Coalition, but the conversation is changing. She said the pandemic has put added pressure on many people who were already struggling with rising housing costs, causing some to lose jobs or find ways to keep working while their kids were out of school.
“I think that people are now understanding the cost of not having housing people can afford,” Rollins said.
She pointed to a bill passed last year, which, in part, withholds transportation funding to local governments that don’t develop plans for creating more affordable housing.
But until the economy improves and housing prices go down, Rollins said people will continue to struggle. She said more temporary assistance needs to come from another federal stimulus package.