House prices and interest rates are high. Rents have also seen a steep rise in the past several years. Add in how the supply of housing units in the state has not kept up with demand and you’ve got a recipe for a housing crisis.
It’s something Republican Utah Speaker of the House Mike Schultz thinks a lot about.
“I really want to work to create opportunities for homeownership,” said Schultz, who had a career as a home builder before leaving the business last year. “Seeing the excitement on our kids’ faces as they go in and purchase their first home is something that I'll never, ever forget.”
Getting more Utahns into houses is also on Gov. Spencer Cox’s mind. A tentpole of his 2025 budget is to help build 35,000 starter homes by 2028. His $150 million funding request to that end also contains $50 million to boost the state’s first-time homebuyer assistance program, which helps buyers with a downpayment on a newly constructed home of $450,000 or less.
Schultz isn’t so sure the state government should be paying to help get the Utah housing market back on track. To him, “getting the policy right” is more important.
“There's already more demand than there are opportunities [to buy],” he said. “And so we’ve got to make sure we kind of flip that balance and get the opportunities right first so that it can meet the demand. That's what's going to keep the prices down.”
According to Schultz, that is best solved at the local level, not by the state.
“The right approach is working with the local governments to say, ‘Hey, we need to create opportunities for homeownership,’” he said. “What may be good for one community may not be good for another community. We need to be giving the local governments the flexibility to make it work inside their communities.”
The decisions concerning where housing gets built are made by local planning commissions and city and county councils, not the state. Then there’s a question of defining what a “starter home” even is. Is it a townhome or a condo? Or is it a single-family home that’s priced in a way a first-time buyer can afford? That’s a question local officials already grapple with.
“Some people have said a starter home is a home that is no more than ‘X’ dollars. That's really hard for cities to determine because cities don't set the price,” said Nick Norris, Salt Lake City’s planning director. “We're keeping a close eye on that because we obviously want to make our efforts count towards whatever the state legislature may require of cities.”
Part of the issue, Gov. Cox said, is that the most profitable projects for developers to take on have been large homes and apartment buildings. In his eyes, his proposal could help sweeten the deal to see “many, many more single-family detached starter homes.”
“I'm very focused on single-family, detached owner-occupied housing,” he said at a Dec. 5 news conference. “We know there's demand for that.”
And Cox isn’t the only one who sees a market opportunity for the right type of “missing middle” housing.
“If builders build a product that is close to where people want to live and is priced affordably, it'll get snatched up despite high interest rates,” said Rental Housing Association of Utah Executive Director Paul Smith. “The problem is land prices are expensive, construction materials are expensive and labor is expensive.”
Although Schultz believes local governments are the best place for setting housing policy, he did say the state can play some role in the location of new construction.
“[Cities] have an obligation here to provide some housing for your kids and grandkids,” he said. “Working with them to try to help them find the right locations for that is crucial because it doesn't just fit everywhere.”
The Legislature will consider the governor’s housing proposals during the 2024 general session, which starts Jan. 16.
