SALT LAKE CITY – An explosion of high-density new homes in Salt Lake County in the past decade has not resulted in lower single-family home ownership values; According to a report released on Monday, it even resulted in a slight increase in value.
The findings resulted from a study conducted by the University of Utah’s Kem C. Gardner Policy Institute that sought to find out how massive high-density housing projects affected home values in the 2010s. Higher density buildings were seen as “a politically controversial topic” by city councils because of fears of a negative impact on existing housing values.
“In particular, based on our analysis, we find that apartments have had a positive impact on the values of single-family homes,” said Dejan Eskic, a senior research fellow at Gardner Policy Institute and lead author of the study.
The development effect
One of the main findings of the report is that Salt Lake County homes within half a mile of new apartment complexes experienced an average annual increase of 10% in median value, compared to 8.6% of homes further away from the projects .
The report also stated that homes within a half mile of new apartments also had an 8.8% higher median value per square foot, on average. This is despite the fact that houses in that category were on average 11.1% smaller and seven years older than houses more than a kilometer away.
“This implies an additional 1.4 percentage points in annual price hike for homes closer to new apartment buildings,” the report states. “Similar results can be seen across most of the county, with the likely motive of new apartment construction bringing new demand and new dollars to a community and redeveloping an older piece of real estate, adding liveliness and buzz to the area . “
Researchers also found that the only real dip in housing near apartments built at the turn of the decade; However, the researchers determined that the housing crisis that developed at the end of the previous decade was the cause.
Eskic explained that the project began by examining price acceleration, as home values have continued to rise across the province since about 2012. Since housing trends were similar across the county during this time period, the research team was able to look at why some rates performed better. than others.
The team compared the values of single-family homes in Salt Lake County from 2010 to 2019 with data on new-build apartments built between 2010 and 2018. This made it possible to view both the short and the long-term effects. The data omitted downtown Salt Lake City and some land near the University of Utah; Eskic said this was due to looking at more suburban parts of the province. It left the team 9,600 apartments to analyze, even removing those sections.
They also divided the study into four quadrants. Of the four, the highest value took place in “West” Salt Lake County. That includes places like Rose Park, West Valley City, Kearns, Taylorsville, and Magna. Researchers found that values rose 13.7% annually for homes within a half-mile radius of new condos in those communities, compared to 10.5% for homes further away.
The greatest discrepancy was reported in the north-eastern part of the county, which was referred to as ‘early suburbs’. That’s an area that includes Sugar House, South Salt Lake, Millcreek, Holladay, and Murray. The paper said this was likely due to “some of the most expensive and largest homes are in the Sugar House and Holladay areas.” Nevertheless, homes in the region closer to new-build apartments experienced higher average increases in value.
Southeast Salt Lake County – including places like Midvale, Cottonwood Heights, Sandy, and Draper – was the only region where homes more than half a mile from condos experienced higher annual real estate appreciation. The difference was 7.3% for homes more than half a mile away, compared to 6.8% for homes within half a mile of high-density new construction.
Eskic explained some of the single-family homes near State Street and I-215 in the area that include some outliers in the data. He said it is unclear why that was, although it may be due to its proximity to a lot of traffic.
“It’s the only thing that stood out,” he said, “when in the rest of the county you didn’t have many single-family homes near major thoroughfares.”
What the findings mean for future growth
Researchers wrote that their findings in various places around the country over the decades were almost a reflection of previous academic literature on the subject. That is, there is no substantial negative impact from high-density housing projects.
“The public perception of high-density housing remains a point of conflict in growing communities in Utah and the country. While many stereotypes and generalizations about negative impacts are put forth in public settings, high-density development does not seem to really weigh down. home values, ”the researchers wrote.
Looking at the current development, Salt Lake County Mayor Jenny Wilson described most of the county as almost “ wall to wall ” in development, with the exception of canyons and the county west bank, the latter of which is the site of current and future housing.
It has left provincial officials looking for new ways to add housing, as the demand from people looking to move to the province still outweighs the housing supply.
“I think we’ve had to refine our practices and become more evidence-based,” she said, adding that it provides community leaders with tougher evidence about an aspect of high-density housing that they can provide voters.
“Again, times have changed. With so little land, we have to think about these choices,” she continued. “I’m glad the data is helping us get rid of weed – this may be a non-issue.”
“This doesn’t end the discussion; it doesn’t end the concern, but it’s a tremendous amount of information to start the conversation in a very constructive way.”
–Dan Lofgren, the president-CEO of the developer Cowboy Partners
Wilson spoke at a virtual roundtable hosted by the Gardner Policy Institute following the publication of the report Monday afternoon. It was a small event where some of the county’s top leaders and leading housing and development experts discussed the report’s findings.
She said the results also show that people want a wider range of living styles than the previous stereotypical white-picket fence house. That doesn’t mean that newer homes won’t be built in the future, but more, higher-density projects could be on the way.
Dan Lofgren, the president-CEO of developer Cowboy Partners, agreed with Wilson in that regard. He said the study could also move the needle for more development in the future.
“This doesn’t end the discussion, nor does it end the concern, but it’s a tremendous amount of information to start the conversation in a very constructive way,” he said. “I am grateful to have this information as part of the conversation.”
He added that he believes that while it will not completely resolve concerns about affordable housing, it “makes affordability possible.” While a lack of housing density could make housing less affordable.
Some experts say the study provides evidence for one problem, but does not address the entire problem completely.
Matt Dahl, assistant city manager for Midvale City, said there are still big talks to take place when it comes to future development. That starts with the other effects that residents can see in the vicinity of new apartments.
“Our challenges are that it is difficult for residents to feel that their home value is increasing 1.4 (percentage points) faster than people who live in another neighborhood, but they do feel it when there is more traffic or parking on the road Even if it is. Parking and traffic is well below the capacity of the affected street, ”he said. “The experience of change in these neighborhoods is important and should be taken into account when developing our policies.”
That’s why he said it’s important that cities and developers can show residents the benefits of new development early on.
Meanwhile, some view the research as a game-changer for future housing construction, especially as the state population is expected to double in the coming decades. Michael Gallegos, the director of Salt Lake County Housing & Community Development, said this study may end an argument about higher density housing; that could take a hurdle in a monumental housing project.
“With the cost of housing, the shortage of 35,000 units statewide, that’s a lot for us to respond to,” said Gallegos. “It will take time, so I think (the study) is taking the argument off the table and we can move forward.”
Correction: An earlier version of this story indicated that downtown Salt Lake City was included in the survey. Investigators later clarified that the data in downtown Salt Lake City was not included in the study.