Got some unsurprising, but all the same disappointing news over the weekend. And yes, I know disappointment is pretty much a surprise by definition, but work with me here.
Utah has achieved the dubious title of third-least affordable state in the USA. This is, of course, not good news, and I’ve been working on a longer project to speak to this, but it’s not ready yet. For now, however, I wanted to give a few initial thoughts to this article, and importantly, some thoughts about this housing climate.
1. Don’t panic
Don’t push the button!
Image by Gerd Altmann from Pixabay
This is a crossed threshold, but the market today is not that different than the one a month ago. We have been gradually sliding into this problem, and while I commend the publication of it, this is still a situation in which people are successfully buying and selling homes. This is not meant to minimize the difficulty faced by many homebuyers right now (indeed, I am on the frontlines of that difficulty). I get it. This sucks, and it needs to be dealt with. We’ll talk about that a bit in this article.
The main thing I want to point out is something I see glazed over in most discussions of this topic. The way affordability (including the source used for the referenced article) is calculated is by comparing median home sale price with personal income. The source used by the article used per capita income calculation (as opposed to median income), which is interesting, but I don’t find immediate problems with doing it that way.
And always remember where your towel is.
2. Remember that median is the midpoint
Look, I really wanted to find a midpoint on a spectrum, but I’m too cheap to buy images.
Image by Clker-Free-Vector-Images from Pixabay
The median home is the midpoint. From last month’s numbers on the MLS, Utah and Salt Lake Counties had a median sales price of $589,000, which (as I talked about in the market report) was a jump significant enough that it may be anomalous. It’s hard to say at this point. However, at the time I’m writing this, the lowest-priced Single Family Home in Utah and Salt Lake Counties is $275,000. It’s a rambler in Springville. If you want to go see it, call me?
It is not good that the median income can’t afford the median home. That is, in fact, edging out a population of buyers that otherwise would be in the market. But if you are making the median income (or even below it!) there are likely options available to you without having to leave the Beehive State.
3. Your financing options are probably better than you think
Pictured: like fifteen bucks
Image by Kevin Schneider from Pixabay
I am not a mortgage officer, and cannot speak to this with any real authority. What I can say is that in my experience working with many buyers, I have found that actually having a conversation with a mortgage officer, going over your income, etc. often yields more buying power than people suspect. I’ll leave this here for now, but if you’d like me to connect you with one of my trusted mortgage partners, please reach out and I’m happy to do so.
4. Prices improve as you move away from urban centers
This one doesn’t feel as good, which I’ll admit right up front, but I want you to consider it. Around the Salt Lake and Provo/Orem metro areas, prices measurably increase. There’s a fairly simple explanation that as land gets used up and the supply is more restrictive, prices rise accordingly. That’s why Utah County prices are usually lower than Salt Lake County’s, for example. But a home in Provo is going to be more expensive than the same home in Nephi.
I realize this isn’t a solution for everyone. But if you’re in a position to, for example, work remotely, then buying outside of metro centers is one way to address the affordability problem.
5. The solution to this is, ultimately, political
With those perspectives in mind, let’s return to realizing that we do need to address this problem.
Eventually, job providers do reach a breaking point where offered incomes have to rise to meet the needs of housing, but to be honest, I don’t think that’s the fastest or most likely solution here.
The Ken C Gardner Institute at the University of Utah has been raising the alarm about affordability for years now, and consistently they present the same solutions: we need to be building on smaller lots, and we need to be building more multi-unit housing.
The problem with this isn’t water—not in the way you’re thinking, anyway—but I’ll talk about water in a future article. The primary problem with this is resistance at the neighborhood level to multi-unit construction.
So the best thing you can do to help with this, then, is let your city council know that you favor the construction of multi-unit housing as a means to bring affordability under control. And if you have neighbors who are concerned about it, talk to them about their concerns, and see if they can be brought around. This, honestly, could be the topic of its own post, so I’ll leave it there for now, except to say:
6. If you don’t think this is your problem, you’re mistaken
Even if you’re currently a homeowner, or you’re somehow a renter who doesn’t mind that rent is also skyrocketing in Utah, it’s important to realize that home affordability touches every other part of the economy. Homes are where employees, shoppers, and clients live. (Oh, and human beings, naturally.) So even setting aside any ethical concerns of the fact that Millennials and Gen Z are being priced out of homes—even if you think we’re all wastrels who spend too much time online—you are also affected by home prices in indirect ways.
A common retort I hear to this is to blame Californians moving into Utah for our cheap (hah) housing, and in other ways blaming immigration for the run on demand. While Utah is bringing in a good number of immigrants, most of our housing demand comes from Utah-born natives, and expat Utahns returning home. Our demand is quite literally home-grown, and unless you think Utahns are going to stop having babies in the near future, the demand isn’t going anywhere.
So while it would be great for incomes to go up (really, if you pay employees, please look into this), the solution is most likely coming from how we approach building homes. And waiting it out is not a solution.