Utah is in the midst of a housing crisis.
Many are understandably frustrated, and everyone likes to speculate about who is to blame.
We recently visited Brigham Young University to ask students who they thought was responsible for Utah’s inflated housing prices.
Home developers and builders are a common scapegoat, but they are not to blame. In fact, they will be integral to the solution.
The government doesn’t build homes, and the vast majority of Americans have neither the skill sets nor the qualifications to build a home.
We rely on home developers and builders to construct our housing. Blaming them is like biting the hand that feeds us.
Take a closer look at what developers are or are not doing in relation to their products, but it’s clear that additional regulation is not going to solve the problem.
Every Utahn likes to complain about Californians moving to Utah. The popular sentiment is that wealthy Californians are moving here and overpaying for our homes, driving up house prices in the process.
As easy as it is to poke fun at California for essentially legalizing shoplifting or their draconian COVID-19 mandates, research conducted by the Utah Foundation indicates they are not to blame for our housing crisis.
The more people who move to Utah, the more competition there is for housing. So, in one sense, we can blame people moving to Utah, but the flip side of that coin is we’re also to blame!
Every pair of Utahns that procreates is raising future home competitors.
We can’t blame Californians any more than we can blame Utah parents. Growth is at the center of the problem, but it’s not the primary culprit.
Perhaps we’ve been too hard on the Socialists and Marxists. Maybe what’s really responsible for Utah’s broken housing market is CAPITALISM!
It’s an easy scapegoat, but this hypothesis doesn’t hold up.
A brief glance at our approval processes and what it actually takes to build a house reveal the opposite. Government bureaucracy is actually preventing a free market from blossoming in the Beehive State.
Short-Term Rentals, Like Airbnb?
Short-term rentals and Airbnbs are another easy scapegoat.
It’s true that there are perfectly good homes in Utah that are off the market because tourists are using them. Perhaps if we outlawed the practice or increased taxes to disincentivize short-term rentals, our troubles would be put to rest.
There are an estimated 19,000 short-term rentals in Utah. Even if we banned short-term rentals outright, we would still have a housing shortage. Beyond that, Utah is still growing fast and will continue to grow.
An outright ban would only be a bandaid on a bullet wound.
Who (or What) CAN We Blame?!
A lack of supply.
Utah doesn’t have enough housing, and our current laws aren’t helping the situation.
For example, consider a common local regulation that mandates property owners can only build one home on a half-acre or full acre plot. When the government enacts restrictions like this, it is effectively putting a cap on the number of homes that can exist within an area.
If we don’t address the lack of supply, we can’t solve the problem. A big part of that is tackling the underlying policies that restrict supply.
But there isn’t any one quick fix.
Solutions require coordination from multiple entities, both government and private. For example, we can’t accommodate more growth without coordinating new infrastructure (roads and water, for example), getting feedback from the community, and examining our zoning ordinances.
A Libertas Solution
One solution that addresses the issue of supply is legalizing starter homes via small lot reforms. Our Local Government Policy Analyst Lee Sands has produced an elegant proposal on the subject, which you can read here.
What are small lot reforms?
Imagine your grandmother, whom you are very close to, is no longer able to care for herself. Being the good grandson you are, you come up with a plan to split your lot in half, and build a cottage home for her on a newly-created lot of 5,500 square feet. That way she can maintain her independence, but you can keep a close eye on her and make sure all her needs are met.
But guess what? In most cities in Utah — that’s illegal!
However, implementing small lot reforms would make doing this legal.
Small lot reforms would enable Utahns to build homes on smaller lots that more people can actually afford. For context, the price of a half-acre of land in Utah commonly exceeds $300,000. This alone necessitates reforms that allow more flexibility in lot size, shape, and home placement requirements.