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What Does Governor Cox Think About Utah’s Housing Market?

In 2023, U.S. News and World Report acclaimed Utah as the leading economy in the nation and the top state overall, a status Utah’s leaders are eager to preserve in 2024.

At Salt Lake City’s Grand America Hotel on January 12, a gathering of about 1,000 influencers in business and government convened for the annual Utah Economic Outlook & Public Policy Summit. This event focused on economic projections and policy considerations for the onset of the new year.

The Gardner Policy Institute highlighted Utah’s strong economic performance in 2023, noting the state’s highest levels of workforce participation since 2010.

Despite challenges in sectors sensitive to interest rates, such as real estate, banking, and technology, Utah saw substantial growth in other areas. These included tourism, public construction, oil and gas extraction, and healthcare, as reported by the Gardner Policy Institute.

During the summit, a key point of conversation on Friday morning centered around a pressing issue: housing affordability at both state and national scales.

Housing Affordability is Utah Real Estate’s Constant Companion

Utah Governor Spencer Cox, in his introductory speech, expressed his concern. It seems that he believes the most significant risk to the future economic well-being of Utah is the cost of housing within our fair state.

He continued describing the scope of the problem as he sees it, saying something along the lines of: “This phenomenon is not unique to one location; it’s a global trend, prevalent in nearly every developed nation. However, it’s particularly pronounced in the Western regions due to our thriving economy.”

An example of this is a recent Construction Coverage study indicates that in Salt Lake City buying a home is 116.3% costlier than renting, which positions rent as a more financially sensible choice for nearly everyone.

Historically, the overall monthly costs linked to home buying, including sale prices, mortgage interests, and property taxes, were considerably less than the average rent expenses across the U.S. Yet, starting in 2022, the study’s authors discovered a mix of soaring home prices and elevated interest rates shifted the balance towards renting. As of November 2023, the standard monthly mortgage payment in the U.S. exceeds the average monthly rent by over 22%.

Citing some of these concerns, Governor Cox cautioned that without measures to address soaring housing prices, the repercussions would be dire for future generations. The essence of his remarks was that if home ownership is unattainable, then the quintessential American dream ceases to exist. He believes that owning a home is fundamental to prosperity. That it grounds us, boosts the economy, enriches culture, and strengthens communities – it’s at the heart of all we cherish.

He closed with an admonition, urging the audience to envision the United States half a century from now should an entire generation experience life devoid of home ownership. “I submit to you that is a very, very bleak picture,” he said.

A Pretty, Expensive State

Phil Dean, the lead economist and senior research fellow in public finance at the University of Utah’s Kem C. Gardner Policy Institute, disclosed findings from their economic study. Historically, Utah’s housing costs were aligned with the national average, but this is no longer the case.

“If you compare us to the national average, we are very much on the high end,” Dean stated, highlighting Utah’s position as the seventh most expensive state for single-family homes.

He echoed Cox’s concerns about the long-term impact of high housing costs on future generations.

“This has pervasive implications for the economy as a whole,” Dean observed. “It means they’re not going to have money to buy other things. … It’s our young people, it’s those who aren’t current homeowners. We really need to take care of that.”

To tackle the housing crisis, Cox has put forward a proposal to construct 35,000 starter homes over the next five years, a plan he describes as the “most ambitious in the nation at present.”

Cox, having consulted with various stakeholders, including the League of Cities and Towns, mayors, city council members, legislators, and builders, expressed confidence. He feels strongly that we can turn these trends around. That we can build 35,000 starter homes within five years, bring down housing costs, and revive the American dream.

Honeycomb Homebuyer and Utah’s Real Estate Market

What’s Honeycomb Homebuyer’s role in all this? Hard to say, we certainly drive the market up by updating and repairing homes. Frequently that’s understood to be “adding value.” And when we’ve helped clean up a vacant or distressed or derelict property, it’s easy to feel like we’re helping. The neighbors certainly always love us. But when we read that things are getting impossible for ensuing generations of Utahns, it does make us question our place in the market. In the end, primarily because our buyers are young locals, we believe we’re meeting demand in a way that benefits everyone immediately involved, which is maybe the best anyone can hope for.

If you think your home would do well on the market if it had a few updates (but you’re don’t have the time or patience to make those updates yourself), give us a call. We love properties in any condition and we donate the 3% an agent would normally take when you sell your home back to you.