“Skyrocketing rent! High-interest rates! Limited Supply! Increased Homelessness!” These are some of the headlines and issues that we have been dealing with during this housing crisis.
But why?
People often want to put the blame on the developers, people moving in from out-of-town, inflation, and zoning (this last one has a lot of merit). But what if we start analyzing the root of the problem:
The amount of developable land.
It is extremely expensive to build in Utah before you even put a shovel in the ground, thanks to the cost of the land. You might get the perception that Utah has a lot of wide open space, but looks can be deceiving.
Zoning restrictions, government protections (think national forests and other protected lands), and a lack of resources/infrastructure have a tremendous impact on how much land costs in a place like Utah. Just take a look at the graph below.
The Federal Government alone owns two-thirds of Utah. Add in state and local protected land (land with no utilities like water/electricity nearby) and land where it doesn’t make any sense to build (in a marsh, the side of a mountain) and you start to see the picture.
But wait! There’s more!
Zoning restrictions prevent residential construction all the time. Or perhaps the neighbors come out and say “Not in My Backyard!” All these actions really start to add up.
You may be asking yourself, what can be done about this? The Feds aren’t giving us our lands back any time soon. Building more infrastructure is of course more expensive. And zoning reform is happening at a snail’s pace (and we are doing what we can at Libertas to speed that up).
That leaves another option to be explored, innovation. Tune in next week to learn more about some of the innovations we should be exploring in the housing space.
