Utah Plans to Build 35,000 Starter Homes to Solve Housing Shortage

Utah recognizes it has a housing shortage. Officials are making housing a priority while taking steps to ensure that more affordable and attainable options are available to keep residents in the state.

“Utah is one of the fastest-growing states in the country, if not [the fastest-growing state], and it has been for many years,” says Chris Gamvroulas, president of Ivory Development, the land acquisition and development affiliate for Salt Lake City-based Ivory Homes. “The cumulative effect of that over the past 10 or 15 years has exacerbated the housing shortage in Utah. That’s one of the reasons we’re one of the least affordable states for housing.”

Recognizing the impact of the housing shortage, Utah Gov. Spencer Cox and Lt. Gov. Deidre Henderson shared their goal of building 35,000 new starter homes by 2028. To help achieve these goals and facilitate legislative efforts, Gov. Cox appointed Steve Waldrip as his senior adviser for housing strategy and innovation in December.

As the result of efforts from builders, developers, and various stakeholders in the state following Waldrip’s appointment, Utah recently passed a package of housing bills and was branded the “shining star” for the 2024 legislative session by Karl Eckhart, vice president of state and local government affairs for the NAHB.

According to Waldrip, housing production in Utah has been declining for years. In 2021, the state had 37,000 housing starts; that number dropped to 19,000 in 2023, and the early estimates for 2024 are 15,000 housing starts in Utah.

“We were very clearly focusing on supply and not demand. Our view is that we have a significant supply-constrained market,” Waldrip told BUILDER. “Rather than focus on creating demand incentives, we thought it would be wiser to focus on the supply end of things and see if we could juice the number of housing starts, which have dropped precipitously over the last two years.”

The focuses of initial legislative efforts were to create a liquidity fund where builders could access capital given the constrained capital markets and encourage developers and builders to build attainable homes for first-time home buyers. Waldrip says helping smaller, regional builders in Utah—which comprise 60% of the state’s home building market—was a key initiative. As part of the legislative process, home builders, including Ogden-based Nilson Homes and Ivory Homes, were engaged to help develop a housing agenda for the governor’s office.

“We at Nilson Homes are committed to being part of the solution to the housing attainability crisis in our state,” Jed Nilson, owner and president of Nilson Homes, says. “We know from our trade partners that housing attainability affects their ability to recruit and retain a skilled workforce in their industries, and that keeping our economy strong requires that we address this issue.”

Waldrip says a survey of home builders conducted by the state’s home builders associations indicated that one-third had projects ready to start, but the builders could not get financing; another third of surveyed builders said they had projects ready to start and had access to financing, but the financing was prohibitively expensive.

Nilson says he worked closely with Waldrip during the legislative process, participating on an ad hoc builder and developer committee and testified in favor of H.B. 572 State Treasurer Investment Amendments, one of the major bills to emerge from the legislative session. H.B. 572 created the Utah Homes Investment Program, which Nilson says “will help address liquidity issues that have tightened lending availability for both horizontal and vertical development in the state.”

Under the bill, the state treasurer would invest in low-cost loans that developers would use to build homes priced at attainable levels, ideally around $350,000.

Waldrip says the other bills passed in the legislative session helped address financing for infrastructure, financing for new starter home construction, and the ability to do additional density around transit hubs and midtown development areas. Additional legislation addressed land use management and inefficiencies in the cycle of subdivision approval. S.B. 168 created a statewide building code for modular homes and allows cities or counties to create Home Ownership Zones, which would allow them to “upzone” or increase density for smaller, single-family lots, among other things.

"I think it was a productive session in that we dealt with a lot of things and started addressing some of the concerns that have created the situation we are in,” Waldrip says. “[But], there is a lot more to do.”

Nilson says he and his company are continuing to collaborate with state and local officials to help create “realistic, achievable options for housing attainability.”

Gamvroulas says policy issues related to getting rid of minimum square footage requirements on lots and creating maximum setbacks remain a priority, and Ivory Development remains committed to alleviating steps that “arbitrarily create inefficiencies in land use and development.”

In conversations with home builders, Waldrip says zoning and density are areas where the home building sector hopes to achieve future legislative victories. With the cost of land continuing to rise, he adds “the only way” to create more affordability is to reduce the price of land by driving down the cost of land per housing unit, necessitating smaller lots and more density.

While builders are hopeful for additional legislative changes to help solve the housing shortage in Utah, Nilson says his company is making changes in the present in response to the legislative victories of the 2024 session.

“We have spent the past several months since Gov. Cox’s announcement working diligently internally to create new models and plans that will allow us to provide true starter homes to our local communities, at a level of quality and price point that will ensure a lasting positive impact on housing attainability in our area,” Nilson says. “With the cooperation of state and local elected officials, we plan to have new attainable homes brought to market by the end of 2024.”