Utah Governor Pushes for 35,000 Affordable Homes in Five Years Amid Record-High Housing Prices

In the Utah town of Plain City, young couple Miranda and Cole Potokar, aged 23 and 24, lament their ill-timed entry into the housing market.

“We would joke about what I should have been doing in third grade instead of learning multiplication – buying a house,” Miranda shares.

The Potokars grew up witnessing a steady and sharp increase in housing prices across much of the United States, with Utah now among the most expensive markets. This escalation is attributed to increasing family sizes larger than the national average, coupled with an influx of new residents.

Following their marriage two years ago, the couple opted to live in Miranda’s grandparents’ basement to save for a down payment. When they began looking at properties about a year ago, they were dismayed by the sky-high prices and rapid sales.

“One day it was there, and the next morning, it was gone,” Cole recounts. “The market moved aggressively.”

Consequently, they put their home search on hold.

Utah Governor Spencer Cox aims to address this housing crisis by setting a goal to construct 35,000 lower-cost starter homes over five years. During a housing summit last May, he expressed concern that the American dream of homeownership is slipping away for many families.

Median U.S. home prices have reached an all-time high, with Utah exceeding the national average by half a million dollars. The primary issue lies in a severe shortage of homes coupled with high inflation and interest rates, making mortgages unaffordable for numerous households. The median age of first-time homebuyers has risen to an unprecedented 38 years – a marked increase from 31 years ago.

To stimulate the construction of more affordable properties, Utah lawmakers introduced low-interest construction loans for starter homes last year and expanded the program this year to include condos. These incentives follow several laws enacted in recent years aimed at promoting denser, less expensive housing solutions.

However, builders have been slow to embrace these initiatives. At the May summit, Governor Cox emphasized that only around 5,100 starter homes had been built or were under construction.

Cox has prioritized affordable housing and frequently addresses this issue during appearances across the state. He appeals to builders to fill this market gap, even if it means potentially lower profits, and encourages local leaders to approve starter home projects despite potential opposition from residents concerned about neighborhood changes. To Utah citizens in general, Cox asks whether they are willing to be selfless and think about the future generations that will depend on affordable housing.

Finance professor Andra Ghent at the University of Utah notes that the key to building smaller, affordable homes is modifying zoning laws to allow smaller lot sizes. Several states, including Texas most recently, have taken such action, making controversial preemptions of local laws. Despite the governor’s proposal, Utah lawmakers refused to take action on this matter.

One developer north of Salt Lake City has seized the opportunity presented by Governor Cox’s challenge. Jed Nilson, head of Nilson Homes founded in 1977, is constructing a new development in Plain City with smaller starter homes. These properties sit alongside larger market-rate homes and showcase various architectural styles such as farmhouse, craftsman, and mountain modern.

Prices for these homes in this expensive market range from $370,000 for a two-bedroom model to just under $400,000 for a three-bedroom unit – figures that may still seem unattainable to some. However, a different state program caps prices for first-time buyers at $450,000, making these properties more accessible.

Priority is given to first-time buyers, teachers, first responders, and active military service members for the Plain City homes, which must be owner-occupied for a decade. Nilson reports an extraordinary waitlist for these properties.

First-time buyers Miranda and Cole Potokar were among the initial residents to move into these starter homes this past spring. They showcase their two-story 1,400 square foot home, praising its expansive dining nook, large windows, ample space for remote work, and a third bedroom suitable for starting a family. The couple enjoys going on morning walks and meeting neighbors their own age, expressing gratitude for this new opportunity to establish their home and future.

Nilson has 260 more starter homes in the pipeline and hopes his project will inspire other developers to follow suit. “I might make less money per home,” he says, “but I get to build more homes, fixing a societal problem.” A society cannot function when there is no room at the bottom for people to start their upward mobility.