Light-touch density housing could solve Utah's shortage of homes

As we approach Election Day 2024, Utah lawmakers are rightly considering policy reforms to address housing affordability in Utah. According to Sutherland Institute’s voter priority poll from earlier this year, housing affordability is at the top of voters’ list of issues that will influence their vote this year.

As Utah policymakers consider reforms, one stands out for its promise — borne out by the evidence — to significantly address the costs of housing without requiring a dime in taxpayer subsidies: promoting light-touch density (LTD) housing.

A new study released by the American Enterprise Institute’s Housing Center confirms how a modest increase in density can ignite housing abundance and rein in surging home prices.

The Housing Center studied the 230,000+ single-family detached (SFD) homes that were constructed between 2000 and 2023 and found that the median home sat on one-quarter acre. If the median lot size were one-sixth of an acre instead, 145,000 additional homes for families would have been built. With slightly smaller lots and living areas, their price would be about 10% less, thereby improving affordability. The additional supply and price of these new homes would have reduced price pressures more broadly.

If 20% of this SFD land had been used for townhomes instead, the number of new homes built from 2000-2023 would have grown to 476,000 — more than double what was actually built. At the median lot size, these townhomes would have still accommodated family-sized living areas, but they would have sold for about 30% less than a single-family home on a quarter-acre lot. Importantly, all these additional homes would have been provided by the private market, with zero housing subsidies required. This approach to housing is called light-touch density (LTD).

Utahns are rightfully proud of their homeownership rate of 71.2%, which is 12th highest among the states and about seven percentage points above the national average. However, the homeownership rate for homes built from 2010-2021 in Utah was only 66%. Meaningfully, 89% of the extra homes built with LTD would have been owner occupied.

But the past is past. What do we do today? As reported by the Housing Center, in 2023 it was harder for blue-collar workers to buy an entry-level home in Utah than in any other state, including California. In its recent Utah Housing Market Update, Kem C. Gardner Policy Institute’s “projections indicate Utah will grow from 3.5 to 4 million residents between 2024-2033, an average annual growth rate of 1.5%.” This would be nearly double the recent level of new-home construction permits.

As the saying goes, the best time to plant a tree was 20 years ago. The second best time is today. Going forward, pursuing an LTD approach would double the number of single-family homes currently being permitted for construction in Utah — providing 200,000 additional and more affordable homes over 10 years.

Where to start? First, the Utah Legislature should allow small lot development by-right — not requiring discretionary approval from cities — by setting lot size minimums for single-family homes at 5,000 square feet and for townhomes at 1,000 square feet. Second, lawmakers should avoid poison pills like unrealistically low floor area ratios, unrealistically high parking requirements and affordable housing mandates.

But isn’t it wrong to interfere with municipal zoning prerogatives? The answer is no for two reasons.

First, municipalities have largely failed to act, notwithstanding having had decades to address this burgeoning crisis. Second, these legislative actions would promote long-ignored principles of the Utah Constitution. This includes Article 1, Section 1: “All persons have the inherent and inalienable right to acquire, possess and protect property.” It also includes Article 1, Section 27: “Frequent recurrence to fundamental principles is essential to the security of individual rights and the perpetuity of free government.”

In short, these rights are inherent and inalienable to people, not to cities or the state. Framed in this manner, these suggested legislative actions seem both logical and compelling. The LTD approach to housing would be largely unnoticeable to current homeowners due to its modest changes, but its positive impact would eliminate Utah’s housing shortfall and rein in crushingly high home prices. As elected officials consider how to enact that mandate given them by voters this year, promoting light-touch density housing should be high on their priority list.

Edward J. Pinto is senior fellow and co-director at American Enterprise Institute’s Housing Center.