The Cure for the Wasatch Front’s Housing Crisis: More Affordable Homes Between North Salt Lake and Lehi

March 8, 2021 by admin
Housing, Policy/Legislative

Op-ed: Stephen G. McCutchan

This article does not necessarily reflect the attitudes or opinions of APAUT or the APAUT Executive Committee.

In November 2020, the Salt Lake Tribune posted an article about solving Utah’s housing crisis by building more single-family detached homes in the Wasatch Front’s exurbs. Think of communities like Santaquin, Plain City, and Grantsville. The authors, Joel Kotkin, a presidential fellow in urban futures at Chapman University in Southern California, and Wendell Cox, a senior fellow at the nonprofit Urban Reform Institute, talked about building “single-family detached homes on the suburban fringe rather than ‘smart growth’ strategies of higher-density homes around business centers.”

I was astonished. For years, I have been active in building new affordable housing close to jobs—“smart growth” like the article referred to. Cox’s organization, the Urban Reform Institute, is a conservative urban planning organization, which is to housing as the buggy whip is to automobiles, that unfortunately advocates for outdated policies that no longer satisfy the Wasatch Front’s housing needs or supports the region’s economy. Regardless, the Wasatch Front still needs a solution—perhaps a workable plan or proposal is a better term—for its housing crisis.

I recommend that the Wasatch Front focus its attention on building more affordable housing between North Salt Lake and Lehi, inclusive. Why this focus on an area and not the entire Wasatch Front? What kind of housing should we build? What would we need to do to accomplish this?

Why This Focused Area and Not the Entire Wasatch Front?

First, there are 3.3 million people in Utah, of which 1.3 million—or 38%—live between North Salt Lake and Lehi (NSL & L). That 38% of the population lives within just 1% of the total area in Utah. While affordable housing is a statewide crisis, it is a more significant crisis between NSL & L and affects a large percentage of Utah families.

Second, according to the US Bureau of Labor Statistics (https://www.bls.gov/eag/eag.ut.htm#eag_ut.f.p), there were 1,576,500 people employed in October 2020 in Utah. Looking at the NSL to L area, there were 774,300 people employed during the same time (https://www.point2homes.com/US/Neighborhood/UT). NSL to L had 49% of Utah’s employed in 1% of Utah’s geographic area.

What kind of housing should we build?

The simple answer is all kinds of housing—single-family detached, townhomes, and multi-family. However, the simple answer alone falls short of addressing the housing crisis. We should build all kinds of housing, but traditionally we have built many more single-family detached homes. We need to develop more townhomes.

There are enough single-family detached homes between NSL & L to satisfy the demand for many years. More so when you narrow the discussion to single-family detached homes that cost more than $600,000. But Utah is not a high-income state. A September 2018 Salt Lake Tribune article said, “’ We don’t have a lot of really high earners, and we don’t have a lot of people on the other end either. We have a lot in the middle,’ said Lecia Langston, senior economist for the Utah Department of Workforce Services.” The same article also quoted Pam Perlich, director of demographic research at the University of Utah’s Kem C. Gardner Policy Institute, “Still, despite the new top ranking, Utah is changing—and less equal over time.” Likely in the foreseeable future, the Wasatch Front will continue to be middle-income, as Lecia Langston said.

Utah’s cost of housing is rising 2.5 times faster than family income (“The Year in Charts: Utah’s Housing Market 2018” – Kem C. Gardner Policy Institute, University of Utah, April 2019), but municipal housing policies generally promote more expensive single-family detached housing over less costly townhomes. Those making city-level housing decisions likely own single-family detached homes and did not face affordability issues when they purchased their home. A January 2019 Salt Lake Tribune article stated that between two-thirds of the families living in Wasatch Front communities Herriman, Saratoga Springs, Eagle Mountain, and Lehi could not afford to purchase the home they now own. What was affordable has gone up in value much faster than family income.

We need single-family detached homes that are $300,000 to $450,000. Homes at these prices would require annual family incomes between $72,000 and $88,000. Depending upon the source, the Salt Lake County median household income is roughly $80,000 annually.

Density is the principal factor in determining whether a new single-family detached home will be affordable is density. New homes sold at 3.0 lots per acre are advertised between $600,000 and $700,000. Lots at 4.2 lots per acre are $390,000 to $460,000. Lots at 6.0 lots per acre are $350,000 and $400,000. Single-family detached home construction is developed at more than 6.0 lots per acre. Densities of 7.0 to 8.5 lots per acre are sold today. Densities up to 10.0 lots per acre are built in communities in California, Nevada, and Arizona.

To start addressing the Wasatch Front’s affordable housing crisis, all new single-family detached homes should be developed at a minimum of 7.0 lots per acre and an average of 8.0 lots per acre.

Townhomes

Traditionally, townhomes are purchased as an affordable single-family detached alternative with a small number purchased as a lifestyle choice. Again, traditionally, this was not the case. Family-oriented Utah has favored single-family detached homes.

There are changes in the housing marketplace. More young families are choosing townhomes due to both price and lifestyle. Young families are less interested in spending evenings and weekends on yard upkeep. Today, the amount of time that young wage earners work is 50 or more hours, not 40 hours. Townhomes are more in demand to fit work-dominated lifestyles.

The traditional “front-loaded” garage townhome is built at a density of between 10 and 13 units per acre. A new type of townhome, urban townhomes with a rear garage accessed from an alley, are more in demand. Urban townhomes can be developed between 15.0 and 22.0 units per acre.

Current advertised prices for townhomes in Salt Lake County range from a low of $350,000 to $460,000 for front-loaded townhomes and $300,000 to $380,000 for alley-loaded townhomes.

To start addressing the Wasatch Front’s affordable housing crisis, the number of townhomes constructed needs to rise and exceed single-family detached homes. According to “The Year in Charts: Utah’s Housing Market 2018,” published by the Kem C. Gardner Policy Institute, University of Utah, in April 2019, the number of single-family detached homes constructed in Utah in 2018 was 12,760, while the number of townhomes was 5,728, or 45% of the number of single-family detached homes. These numbers should be reversed, and the number of townhomes increased to 60% of the new housing construction.

Multi-Family Homes

Multi-family homes include “for-sale” condominiums and rental apartments, with the significant majority in rental apartments. There has been an increase in rental apartment construction. Historically, rental apartment housing construction has an annual average of 2,000 units statewide, but the numbers rose between 2013 and 2018, peaking in 2014 with 6,742 new units. Between 2014 and 2018, the number of units has averaged roughly 5,500, which is 2.75 times more than before 2013 (“The Year in Charts: Utah’s Housing Market 2018” – Kem C. Gardner Policy Institute, University of Utah, April 2019).

The most important effect of these new apartments is the monthly rental rates. The cost of amenities provided has driven the range of rental apartment prices from $700 – $1,000 to $1,500 – $2,200 per month. Rental rates this high are higher than the monthly mortgage of a townhome or a small single-family detached home.

Apartments are integral to the housing supply and will continue to grow. To be more affordable, new rental apartments with monthly rents under $1,400 per month should be emphasized and should be about 20% of the latest annual housing construction.

To summarize, I am proposing that new housing between NSL & L be 20% single-family detached homes, 60% townhomes, and 20% multi-family homes.

Critics will say that my proposal will drive up the costs of single-family detached and multi-family homes because I am limiting supply. I agree, initially, the price of these will rise, but I believe that it will slow and flatten. Single-family detached homes are already too expensive, and this will limit the demand. If affordable townhomes are available, some might have tried to buy a single-family detached home will buy a townhome. Multi-family homes will also initially rise and slow and flatten as more rental apartment dwellers choose to purchase affordable townhomes.

What would we need to do to accomplish this?

Today—and in the foreseeable future—what I propose is not possible. Not because it can’t be done, because it easily can. It’s a choice. It’s not possible because there is not enough of a crisis to make this dramatic change in housing policies and market choices. If we continue to “get by” with the housing options we have, the public will not “encourage” local politicians to take the needed “leaps” in regional planning and government.

Why regional planning and government? Between NSL & L are 20 incorporated cities and five metro townships. To be successful, each of these would need to adopt their part of a regional development plan. It’s not impossible. Many regions operate this way, the largest being Southern California and the Southern California Association of Governments. In Southern California, federal mandates to resolve air pollution have forced Southern California cities into accepting their “fair share” of affordable housing as mandated in a regional plan.

I believe that there will be a time in the not to distance future that our air quality will require federal intervention. It’s inevitable given where we are today and the fact that our predominant culture still promotes large families. The number of children that Utah families have has slowed some, but it will always be higher than the national average. This is not a problem because it’s a choice that everyone has the right to make. However, it always astonishes me when I find myself arguing for denser, affordable housing with a “no-growth advocate” who is a parent of six children, like myself.

by Stephen G. McCutchan

stevemplan@gmail.com

Stephen G. McCutchan is a Land Development Partner with Anderson Development and land planner with more than 44 years of professional experience and has lived in the Wasatch Front for more than 25 years. He is a recipient of the 1985 American Planning Association’s National Planning Award and has received several Utah APA Urban Design Awards. McCutchan has master planned more than 10,000 new dwellings over that 25 years. He is an advocate for affordable housing, smart growth, public transportation, and getting more families living in proximity to their employment to be on the freeways less and enjoy more time as a family.