ST. GEORGE — Research from a local lender may answer the question many potential homebuyers in Southern Utah ponder: Has affordability ever been this bad?
According to a study provided by Zions Bank Senior Economist Robert Spendlove and team, an analysis of the U.S. Census Bureau and Zillow data found that today’s housing market is “the most unaffordable in Utah history.”
“A typical Utah family needs to spend 5 1/2 times their annual income to buy a house, compared to just over 3 times their annual income a decade ago,” Spendlove told St. George News.
In regards to housing affordability, 72% of Utah homeowners have a mortgage rate of 4% or lower — the greatest share of homeowners in any state, Spendlove said.
“This surplus of low-rate mortgages is freezing up inventory, making it difficult for younger and lower-income families to enter the housing market,” he said.
Spendlove said homeowners who would typically sell their first home and buy another have not been doing so since the federal interest rate spikes that followed the COVID-19 pandemic.
Washington County Board of Realtors CEO Emily Merkley previously told St. George News that most of the increase in Washington County mortgage payments is due to increasing federal interest rates on home loans. Merkley said the average interest rates for the St. George metro area for the last three years are as follows:
- 2021 – 2.96%
- 2022 – 5.34%
- 2023 – 6.77%
While federal interest rates are coming down, Spendlove said other factors continue to drive the housing market, such as developers’ reluctance to build in the current market and material shortages and delays for those that do begin a new development.
Current median prices for a home in Washington County show Leeds with the highest market values at $631,000, Spendlove noted. Other current median home price values provided include:
- Central — $386,000
- Hurricane — $506,000
- St. George — $513,000
- Washington — $560,000
The Utah Commission on Housing Affordability released a study on June 25 composed of proposed solutions for lawmakers to consider.
The commission, made up of members of multiple state entities, agreed that many “homegrown Utahns” aren’t downsizing, leaving fewer homes available for young families.
Recommendations for local municipalities to potentially help with housing affordability included actions such as allowing smaller lot sizes or more than one housing unit per lot and per building, facilitating smaller homes and facilitating the use of offsite construction techniques.
Educating both the public and civic leaders about new state regulations will help, the commission concluded.
“Many local government officials feel embattled on this issue, with state mandates and perceived political pressure from the development community,” the research states. “Similarly, local governments and their constituents worry about a variety of issues related to increased density of development.”
Another report released by an independent research nonprofit, the Utah Foundation, detailed similar strategies and was titled “Boosting Utah’s homeownership affordability.”
“Utahns face at least two significant hurdles when buying a first home: high prices and relatively high mortgage interest rates,” the Utah Foundation said in the report. “While interest rates may decline over the coming months and years, it is unlikely that prices will decrease.”
The foundation’s recommendations for local civic leaders also encouraged density to improve homeowner affordability, such as considering height limits and increased or smaller lots in “neighborhoods otherwise characterized by single-family homes.”
The Utah Foundation report said while some of their proposed solutions could be considered controversial, they could potentially help housing prices to become stable. Other information provided by the foundation suggests:
- Factory-built housing can be used to improve affordability as economies of scale reduce construction costs.
- Tax policies can be used to discourage housing speculation and increase the supply of own-able and rentable housing. These might include land value, flip and vacancy taxes.
- Shared equity models and downpayment assistance can increase homeowner affordability and allow residents to access the housing ladder.
- “Not in my backyard” attitudes might be related to gaps in insurance product availability, which should inform municipal actions when advocating for certain housing policies.
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